Bombay High Court Appoints Sole Arbitrator, Takes Note Of Failure Of MSME Council In Initiating Conciliation Proceedings
The Bombay High Court has appointed a sole arbitrator in a case where the Micro Small Enterprises Facilitation Council, Nashik (MSEFC), had failed to initiate conciliation proceedings as a precursor to arbitration in terms of Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006.
The Petition before the High Court was filed under Section 11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act ) in view of the Respondent- Micro Small Enterprises Facilitation Council, Nashik, not having initiated the conciliation proceedings.
The Single Bench of Justice Somasekhar Sundaresan said, “A plain reading of these three provisions, namely, Section 18 of the MSME Act, coupled with Section 7 and Section 11 of the Arbitration Act, would make it clear that this Court would have jurisdiction to appoint an arbitrator in the event of a failure by the MSEFC, Nashik.”
Advocate Sagar Kasar represented the Petitioner.
Factual Background
The Petitioner had executed a purchase order placed by the second Respondent. Various supplies were made, and invoices were raised. As per the Petitioner’s claim, the amounts payable under the invoices remained unpaid. Consequently, a reference was made to the MSEFC, Nashik. It was the case of the Petitioner that the MSEFC, Nashik, had not acted at all. This Application had been filed under Section 11 of the Arbitration Act on the premise that the arbitral institution, which is meant to appoint the arbitrator, had failed to do so.
Reasoning
Referring to Section 18 of the MSME Act, coupled with Section 7 and Section 11 of the Arbitration Act, the Bench held that the High Court would have jurisdiction to appoint an arbitrator in the event of a failure by the MSEFC, Nashik. Section 7 of the Arbitration Act creates an arbitration agreement. Section 18 requires an institution (the MSEFC, Nashik) to appoint an arbitrator. “Failure to do so, brings the matter within the jurisdiction of Section 11 of the Arbitration Act”, it noted.
It was further noticed that the matter had remained pending for two years after it was filed in this Court. “I am satisfied that the approach of this Court has been made only after the failure by the MSEFC, Nashik to appoint an arbitrator. It has not even initiated statutory mediation before arbitration”, the Bench said while also adding, “Consequently, I am satisfied that a case has been made out to directly appoint an arbitrator, particularly, since the MSEFC, Nashik has not acted on its statutory mandate of initiating a process for the appointment of an arbitrator.”
The view of the High Court was fortified by decisions in Microvision Technologies Pvt. Ltd. Vs. Union of India (2023) and Vallabh Corporation Vs. SMS India Pvt. Ltd. (2025), where in identical circumstances, the Section 11 Court proceeded to appoint an arbitrator.
Thus, the Bench disposed of the Petition by appointing a Sole Arbitrator to adjudicate upon the disputes and differences between the parties arising out of and in connection with the Agreement in question.
Cause Title: M B Sugars & Pharmaceuticals Private Limited v. Micro Small Enterprises Facilitation Council & Anr. (Neutral Citation: 2025:BHC-AS:24871)
Appearance
Petitioner: Advocates Sagar Kasar, Vivekanand Krishnan, Chaitali Bhogle, Rishabh Tiwari
