Bombay HC dismisses petition which seeks for arbitration when the conciliation proceeding was abruptly terminated.
TITLE : Bafna udyog v Micro and Small enterprises, Facilitation council
CORAM : Hon’ble Justice Neela Gokhale
DATE : 16th January 2024
CITATION : Arbitration Petition No.201 of 2023
FACTS
The petitioner seeks appointment of a retired judge to conduct the arbitration proceedings. The petitioner also requests the court to direct the respondent to produce all records required for the proceedings. The petitioner is registered under MSMED Act, 2006. The respondent owes Rs. 92,41,072 to the petitioner with future interest as per the act.
The dispute among the parties remained unsolved. The petitioner contends that the respondent acknowledged the debt he owes. The petitioner filed a conciliation proceeding which upon getting failed has approached for arbitration under Section 11(6) of the arbitration act. The respondents did not show up during the proceedings even after issuing notice.
LAWS INVOLVED
Section 11(6) states that an arbitrator would be appointed by the arbitral forum if none of the parties take initiative to appoint an arbitrator or fails to seek for an arbitrator.
ISSUES
Whether the petitioner was right in asking for an arbitration proceeding?
JUDGEMENT
The court observed that the arbitration proceeding would be invalid as per the MSMED Act. There is an alternative remedy available in law to first observe failure of conciliation proceeding and then approach for arbitration. In the present matter, the conciliation proceeding was terminated which is against Section 18(3) of the MSMED Act which states that only after failure of conciliation proceeding, an arbitration recourse can be proceeded with.
The petiton was dismissed on the grounds of maintainability.
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Written by- Sanjana Ravichandran