Bombay High Court
Neutral Glass And Allied Industries ... vs Sagar Rubber Products Private Limited on 12 October, 2022
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
Digitally signed
by LAXMI
13 carap 247-21..doc
LAXMI SUBHASH
SUBHASH SONTAKKE
SONTAKKE Date:
2022.10.14
17:35:08 +0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION APPLICATION NO. 247 OF 2021
Neutral Glass & Allied Industries Pvt. Ltd. ..Applicant
Vs.
M/s. Sagar Rubber Products Pvt. Ltd. ..Respondent
Mr. Karl Tamboly, a/w Anuj Desai & Ahsan Allan i/b. J. Sagar
Associates, for the Applicant.
Mr. Rahul Narichania, Senior Advocate a/w Mr. Sagar Divekar and
Abhimanyu Mhapankar for the Respondent.
CORAM:- B. P. COLABAWALLA,J.
DATE :- OCTOBER 12, 2022.
P. C.:
1. The above Arbitration Application is filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act") seeking the constitution of the Arbitral Tribunal. The disputes between the parties arise out of the Distributorship Agreement dated 7 th November, 2014.
2. It is the case of the Applicant that the Applicant had supplied certain goods under the Distributor Agreement to the Laxmi page 1 of 7 13 carap 247-21..doc Respondent who has not made payment, and hence the disputes. The Distributor Agreement can be found at Exhibit-A to the Application and contains an Arbitration Agreement as reflected in Article 12. It reads thus:
"Article 12 Governing Law & Arbitration This Agreement shall be governed and interpreted by the laws of India. In case that any dispute or controversy arises out of or in relation to this Agreement between both parties shall be settled amicably but, in case of failure, these disputes or controversies shall be finally settled in Mumbai by arbitration in accordance with Arbitration Act where the award shall be final binding upon the parties hereto."
3. Since disputes arose between the parties, the arbitration clause was invoked by the Applicant vide its letter dated 24 th January, 2020. This invocation was replied to by the Respondent vide their letters dated 27th January, 2020, 12th February, 2020 and 25th March, 2020 respectively. Since the parties could not arrive at a consensus for appointing an Arbitrator, the above Section 11 Application is filed seeking the constitution of the Arbitral Tribunal.
4. Mr. Narichania, the learned Senior Advocate appearing on behalf of the Respondent, submitted that since the Respondent has already approached and filed a reference before the Micro and Small Laxmi page 2 of 7 13 carap 247-21..doc Enterprise Facilitation Council (for short "MSEFC") as contemplated under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (for short the "MSME Act"), the present Application is not maintainable. He submitted that the Respondent having approached the MSEFC, the Applicant herein can also approach the said Council and file its counterclaim in the said proceedings. This is the only argument canvassed to oppose the above Section 11 Application.
5. Having heard Mr. Narichania on this aspect, I find no merit in this argument. Chapter V of the MSME Act deals with delayed payments to Micro or Small Enterprises and consists of Section 15 to 25. Section 15 stipulates that where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing, or, where there is no agreement in this behalf, before the appointed day. The proviso to the said Section stipulates that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty five days from the day of acceptance or the day of deemed acceptance.
6. Thereafter, Section 16 provides for the interest that would Laxmi page 3 of 7 13 carap 247-21..doc have to be paid by the buyer and Section 17 stipulates that for any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with the interest thereon as provided under Section 16.
7. Thereafter, Section 18 contemplates a Reference to the Micro and Small Enterprises Facilitation Council (MSEFC). When one goes to the provisions of the Act, it is clear that Chapter V applies to only Micro and Small Enterprises. In fact the Reference to the Micro and Small Enterprises Facilitation Council (MSEFC) can also be made only by a Micro or a Small Enterprise. In the facts of the present case, it is not in dispute that the Respondent is not a Micro or a Small Enterprise as contemplated under the MSME Act. This being the case, the reference made under Section 18 itself is non est and the MSEFC has no jurisdiction to entertain the reference filed by the Respondent.
8. I must mention that Mr. Tamboly, the learned Advocate appearing on behalf of the Applicant, also argued that in any event, in the facts of the present case, the provisions of the MSME Act would not apply because the Respondent herein is in fact not a supplier but is the purchaser of goods from the Applicant. He therefore submitted that in such a scenario the provisions of Section 15 to 25 could in any event not be invoked by the Respondent. Considering that I have held that the Respondent is not a Micro or a Small Enterprise and hence could not Laxmi page 4 of 7 13 carap 247-21..doc take recourse to Section 18, I have not gone into this aspect of the matter. This argument is left open to be considered in an appropriate case.
9. In view of the foregoing discussion, the following order is passed:
a) Mr. Justice Akil Kureshi, (the Retired Chief Justice of the Rajasthan High Court) is hereby appointed to act as a Sole Arbitrator to decide the disputes and differences between the Applicant and the Respondent arising out of and/or in connection with and/or in relation to the Distributorship Agreement dated 7th November, 2014.
b) A copy of this order shall be communicated to the learned Sole Arbitrator by the advocates for the Applicant within a period of one week from today.
c) The learned Sole Arbitrator is requested to forward his Statement of Disclosure under Section 11(8) read with Section 12 (1) of the Arbitration Act to the advocates for the Applicant so as to enable them to file the same in the Registry of this Court. The Registry of Laxmi page 5 of 7 13 carap 247-21..doc this Court shall retain the said Statement on the file of this application and a copy of the same shall be furnished by the advocates for the Applicant to the advocates for the Respondent.
d) The parties shall appear before the learned Sole Arbitrator on such date and at such place as he nominates to obtain appropriate directions with regard to fixing a schedule for completing pleadings, etc. The Arbitral Tribunal shall give all further directions with reference to the arbitration and also as to how it is to proceed.
e) The contact and communication particulars shall be provided by both sides to the learned Sole Arbitrator within a period of one week from today. This information shall include a valid and functional email address as well as the mobile numbers of the respective advocates.
f) The Sole Arbitrator shall charge his fees as per the 4 th Schedule of the Arbitration and Conciliation Act, 1996 read with the Bombay High Court (Fee payable to Arbitrators) Rules, 2018. All the arbitral costs and the fees of the Arbitrator will be borne by both sides equally and will be subject to the final Award that may be passed by the Tribunal.
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10. The above Section 11 Application is disposed of in the aforesaid terms. No order as to costs.
11. This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
( B. P. COLABAWALLA, J. )
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