Rajasthan High Court - Jaipur
Executive Engineer, Phed vs Sachdeva Metal Works ... on 15 October, 2025
Author: Pushpendra Singh Bhati
Bench: Pushpendra Singh Bhati
[2025:RJ-JP:42142-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Miscellaneous Appeal No. 1636/2023
1. Executive Engineer, Phed City Division Ii Kota Rajatshan.
2. Chief Engineer (Hq), Public Health Engineering
Department Jal Bhawan-2, Civil Lines Jaipur , Rajasthan.
3. Superintending Engineer, Public Health Enginering
Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants
Versus
1. Sachdeva Metal Works, C 33 Focal Point Extension
Jalandhar
2. Arvinder Pal Singh Partner Of Sachdeva Metal Works, C-
33. Focal Point Extension, Jhalandhar,
----Respondents
Connected With D.B. Civil Miscellaneous Appeal No. 1625/2022
1. The Executive Engineer, Phed Division, Tonk, Rajasthan.
2. Chief Engineer (Hq), Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Superintending Engineer, Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, C-33, Focal Point Extension, Jhalandhar.
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension, Jhalandhar.
----Respondents D.B. Civil Miscellaneous Appeal No. 2678/2022
1. Executive Engineer, Phed Division, Neem Ka Thana Rajasthan
2. Chief Engineer (Hq), Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Superintending Engineer, Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (2 of 17) [CMA-1636/2023] Versus
1. Sachdeva Metal Works, C 33 Focal Point Extension Jhalandhar
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension, Jalandhar.
----Respondents D.B. Civil Miscellaneous Appeal No. 3160/2022
1. Executive Engineer, Phed Division -Ii( North) Jaipur Rajasthan.
2. Superintending Engineer, Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Chief Engineer (Hq), Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, C -33 Focal Point Extension Jalandhar.
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension, Jhalandhar.
----Respondents D.B. Civil Miscellaneous Appeal No. 1124/2023
1. Executive Engineer, Phed Division Rajgarh Rajasthan
2. Superintending Engineer, Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Chief Engineer (Hq), Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, Sachdeva Metal Work C-33 Focal Point Extension Jalandhar.
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension, Jhalandhar.
----Respondents D.B. Civil Miscellaneous Appeal No. 2803/2023 The Chief Engineer (Urban And Nrw), The Chief Engineer Nrw Phed Jal Bhawan Civil Lines Jaipur Rajasthan (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (3 of 17) [CMA-1636/2023]
----Appellant Versus Rawalwasia Ispat Udyog Pvt Ltd, Hisar
----Respondent D.B. Civil Miscellaneous Appeal No. 3848/2023
1. State Of Rajasthan, Through Collector, Jaipur, State Of Rajasthan, Collectorate Circle, Bani Park, Jaipur Rajasthan.
2. Secretary, Public Health Engineering Department, State Of Rajasthan, Administrative Secretariate, Jaipur, Rajasthan.
3. Chief Engineer(Hq), Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
4. Superintending Enginner, Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, C-33, Focal Point Extention, Jalandhar
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension, Jhalandhar.
----Respondents D.B. Civil Miscellaneous Appeal No. 3875/2023
1. Executive Engineer, Phed P And D, North Division, Jaipur, Rajasthan.
2. Chief Engineer (Hq), Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Superintending Engineer, Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, C-33, Focal Point Extension, Jalandhar.
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension , Jhalandhar.
----Respondents (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (4 of 17) [CMA-1636/2023] D.B. Civil Miscellaneous Appeal No. 10/2024
1. Executive Engineer, Phed Division, Jhalawar, Rajasthan.
2. Superintending Engineer, Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Chief Engineer (Hq), Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, C-33, Focal Point Extension, Jhalandhar.
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension, Jhalandhar.
----Respondents D.B. Civil Miscellaneous Appeal No. 120/2024
1. Executive Engineer, Phed, Division, Bundi Rajasthan.
2. Chief Engineer(Hq), Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Superintending Engineer, Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, C-33, Focal Point Extension, Jhalandhar.
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension, Jhalandhar.
----Respondents D.B. Civil Miscellaneous Appeal No. 806/2024
1. Executive Engineer, Phed Division, Swaimadhopur, Rajasthan.
2. Chief Engineer (Hq), Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Superintending Engineer, Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, C-33, Focal Point Extension, (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (5 of 17) [CMA-1636/2023] Jhalandhar.
2. Arvindar Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension, Jhalandhar. ----Respondents D.B. Civil Miscellaneous Appeal No. 851/2024
1. Executive Engineer, Phed Division, Hindaun, Hindaun City, Rajasthan.
2. Chief Engineer (Hq) Public Health Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Superintending Engineer, Public Health And Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, C-33, Focal Point Extension, Jhalandhar.
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works, C-
33, Focal Point Extension, Jhalandhar, Punjab, India. Email- [email protected].
----Respondents D.B. Civil Miscellaneous Appeal No. 4379/2024
1. Executive Engineer, Phed, Public Health And Engineering Division, Sikar, Rajasthan.
2. Superintending Engineer, Public Health And Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
3. Chief Engineer (Hq), Public Health And Engineering Department, Jal Bhawan-2, Civil Lines, Jaipur, Rajasthan.
----Appellants Versus
1. Sachdeva Metal Works, C-33, Focal Point Extension, Jalandhar, Punjab, India.
2. Arvinder Pal Singh, Partner Of Sachdeva Metal Works C-
33, Focal Point Extension, Jalandhar, Punjab, India. E- [email protected]. ----Respondents For Appellant(s) : Ms. Mahi Yadav, AAG For Respondent(s) : Mr. Saransh Kumar Mr. Ashrut Sethi (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (6 of 17) [CMA-1636/2023] HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE BALJINDER SINGH SANDHU Order Reportable 15/10/2025
1. The matters comes up on applications under Section 5 of the Limitation Act seeking condonation of delay in filing the instant appeals bearing D.B. Civil Misc. Appeal Nos.1636/2023, 1124/2023, 2803/2023, 3875/2023, 120/2024, 851/2024 & 4379/2024.
1.1 For the reasons mentioned in the applications, the same are allowed. The delay in filing the aforementioned appeals is condoned.
2. With the consent of learned counsel for the parties, the matters are heard finally.
3. The broader controversy in the present cases is that certain NITs were invited by the appellants for supply of ISI marked Sluice valves and after going through the process, the contract / agreement was executed between the parties and the work commenced. The respondents made a reference under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (for short 'the Act of 2006') claiming certain amount as principal along with interest, whereupon an award dated 17.05.2021 (in D.B. Civil Misc. Appeal No.1625/2022) was passed by the District Level Micro and Small Enterprises Facilitation Council, Jalandhar (for short, 'MSEFC') in favour of the contractor.
The said instant D.B. Civil Misc. Appeal No.1625/2022, for the sake of brevity and convenience, is taken as a lead case in the present adjudication.
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4. The appellants in the present case being aggrieved by the aforementioned award dated 17.05.2021 of the MSEFC preferred an appeal under Section 34 of the Arbitration and Conciliation Act, 1996 (for short 'Act of 1996') before the learned Commercial Court No.1, Jaipur Metropolitan-II, which came to be dismissed for lack of territorial jurisdiction, vide the impugned order dated 27.04.2022. The operative part of the impugned order reads as follows:-
"9. बहस उभयपक सुनने व पतावली पर उपलब दसावे जों के शवलोकन के उपरान इस नायालय का ववनम मत वनम पकार है -
जहां तक ववदान ववभागीय अवधवका का यह तकर है वक पककारों के बीच एगीमेट gqvk था, वजसके कोज 21 के अनुसार समस वववधक कायरवावहयां केवल राजसान * ससत नायालयों मे ही संससत की जा सकती है अन जगह नही ं। उक वबंदु अपाथर / आपवतकतार के दारा ववदान MSMED COUNCIL जालंधर के समक उठाया जा चुका है और वजस पर वववादक सं 2 वववनवशत कर उसका वनररय MSMED COUNCIL ने वकया हआ है , वजसके गुरावगुर पर वकसी पकार की कोई वटपरी इस से ज पर वकया जाना उवचत पतीत नही ं होता है ।
10. इस नायालय के ववनम मत मे जबवक MSMED ACT, 2006 के अनगरत सुनवाई का केतावधकार उस MSMED COUNCIL को पदत वकया हआ है , जहां पर आपूवतरकतार औदोवगक इकाई ससत है , भले ही केz ता कही ं का हो, तो ऐसी दशा मे जबवक केतावधकार वववध के पावधानों के अनगरत सष है तो उक केतावधकार को पककार एगीमेट के जररये समाप नही ं कर सकते है ।
11. ऐसी दशा मे इस पंच वनररय के ववरद आपवत पाथरना पत सुनवाई का केतावधकार केवल और केवल जालंधर ससत वसववल / वावरसजक नायालय को है और ऐसी दशा मे इस नायालय को पथम दषया ही इन पाथरना पतों की सुनवाई का केतीय केतावधकार (Territorial Jurisdiction) पाप नही ं है । अतः पाथरना पत आदे श 7 वनयम 11 मे उठाई गई अन आपवतयों पर कोई वटपरी वकये वबना आदे श 7 वनयम 10 सीपीसी के अनगरत धारा 34 के आपवत पाथरना पत को मय सगन पाथरना पत सवहत सकम नायालय मे वनयमानुसार पसुत करते हे तु लौटाया जाना उवचत है ।"
5. Learned Additional Advocate General appearing on behalf of the appellants submits that as per Clause 21 of the Rate Contract, it was agreed upon that all legal proceedings, if necessary arises to the institute, may be by any of the parties (Government or (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (8 of 17) [CMA-1636/2023] contractor) shall have to be lodged in the Courts of jurisdiction in Rajasthan and not elsewhere.
5.1. Learned Additional Advocate General further submits that in light of such agreement, learned Commercial Court was not right in refusing to hear the controversy, on count of lack of territorial jurisdiction. In support of such submissions, she relies upon the judgment rendered by the Hon'ble Supreme Court in the case of Swastik Gases Private Limited Vs. Indian Oil Corporation Limited: (2013) 9 SCC 32, the relevant paragraphs whereof read as under:-
"31. In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, the Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of Clause 18 of the agreement, the jurisdiction of the Chief Justice of the Rajasthan High Court has been excluded?
32. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (9 of 17) [CMA-1636/2023] words like "alone", "only", "exclusive" or "exclusive jurisdiction" have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties--by having Clause 18 in the agreement--is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like Clause 18 in the agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner.
33. The above view finds support from the decisions of this Court in Hakam Singh [Hakam Singh v. Gammon (India) Ltd., (1971) 1 SCC 286] , A.B.C. Laminart [A.B.C. Laminart (P) Ltd. v. A.P. Agencies, (1989) 2 SCC 163] , R.S.D.V. Finance [R.S.D.V. Finance Co. (P) Ltd. v. Shree Vallabh Glass Works Ltd., (1993) 2 SCC 130] , Angile Insulations [Angile Insulations v. Davy Ashmore India Ltd., (1995) 4 SCC 153] , Shriram City [Shriram City Union Finance Corpn. Ltd. v. Rama Mishra, (2002) 9 SCC 613] , Hanil Era Textiles [Hanil Era Textiles Ltd. v.
Puromatic Filters (P) Ltd., (2004) 4 SCC 671] and Balaji Coke [Balaji Coke Industry (P) Ltd. v. Maa Bhagwati Coke Gujarat (P) Ltd., (2009) 9 SCC 403 : (2009) 3 SCC (Civ) 770].
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34. In view of the above, we answer the question in the affirmative and hold that the impugned order [Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd., Civil Arbitration Application No. 49 of 2008, order dated 13-10-2011 (Raj)] does not suffer from any error of law. The civil appeal is, accordingly, dismissed with no order as to costs. The appellant shall be at liberty to pursue its remedy under Section 11 of the 1996 Act in the Calcutta High Court.
MADAN B. LOKUR, J. (concurring)-- Leave granted. While I agree with the conclusion arrived at by my learned Brother Lodha, J. this judgment has been penned down to raise the question -- Is it really necessary for this Court to repeatedly affirm the legal position ad nauseam? I believe the law on the subject is well settled and it is to nobody's advantage if the same law is affirmed many times over.
36. The clause in the agreement that is sought to be interpreted reads as follows:
"The agreement shall be subject to jurisdiction of the Courts at Kolkata."
37. In my opinion, the very existence of the exclusion of jurisdiction clause in the agreement would be rendered meaningless were it not given its natural and plain meaning. The use of words like "only", "exclusively", "alone" and so on are not necessary to convey the intention of the parties in an exclusion of jurisdiction clause of an agreement. Therefore, I agree with the conclusion that jurisdiction in the subject-matter of the proceedings vested, by agreement, only in the courts in Kolkata."
6. On the other hand, learned counsel for the respondents, while opposing the aforesaid submissions made on behalf of the appellants, submit that the Act of 2006 will prevail the private agreements in any kind of arbitration agreement. Learned counsel (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (11 of 17) [CMA-1636/2023] also submit that the impugned order is justified in law, because under the Act of 2006 the MSEFC has already passed an order in Jalandhar and remedy, if any, lies there within the same territorial jurisdiction. Learned counsel relied upon the judgment rendered by the Honb'le Apex Court in the case of M/s Harcharan Dass Gupta Vs. Union of India (Civil Appeal No.6807 of 2025, decided on 14.05.2025, relevant portion whereof reads under:-
"6. In view of the specific terms of the agreement dated 11.09.2017 contained in Clauses 25 and 25A providing for settlement of disputes, it was agreed that the seat of arbitration shall be at Bengaluru. In view of the contractual clauses, the High Court held that the proceedings conducted by the Delhi Arbitration Centre and the arbitration to be without jurisdiction, and as such illegal and contrary to law.
7. We have heard the submissions by Ms. Priya Kumar, learned senior counsel appearing on behalf of the appellant and Mr. Vikramjit Banerjee, learned A.S.G. appearing on behalf of the respondent.
8. We have given our anxious consideration to the submissions of both the parties. In our view, the issue is no more res integra and is covered by the decision of this Court in Mahakali. As we need to do nothing more than refer to the relevant portions of the binding precedent, the reasoning, as well as the conclusion in this decision are extracted herein for ready reference. At the outset, the following two paragraphs clearly explain the principle on the basis of which the court holds that the MSMED Act overrides the Arbitration Act:
"42. Thus, the Arbitration Act, 1996 in general governs the law of Arbitration and Conciliation, whereas the MSMED Act, 2006 governs specific nature of disputes arising between specific categories of persons, to be resolved by following a specific process through a specific forum. Ergo, the MSMED Act, 2006 being a (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (12 of 17) [CMA-1636/2023] special law and the Arbitration Act, 1996 being a general law, the provisions of the MSMED Act would have precedence over or prevail over the Arbitration Act, 1996. In Silpi Industries case [Silpi Industries v. Kerala SRTC, (2021) 18 SCC 790] also, this Court had observed while considering the issue with regard to the maintainability and counter-claim in arbitration proceedings initiated as per Section 18(3) of the MSMED Act, 2006 that the MSMED Act, 2006 being a special legislation to protect MSMEs by setting out a statutory mechanism for the payment of interest on delayed payments, the said Act would override the provisions of the Arbitration Act, 1996 which is a general legislation. Even if the Arbitration Act, 1996 is treated as a special law, then also the MSMED Act, 2006 having been enacted subsequently in point of time i.e. in 2006, it would have an overriding effect, more particularly in view of Section 24 of the MSMED Act, 2006 which specifically gives an effect to the provisions of Sections 15 to 23 of the Act over any other law for the time being in force, which would also include the Arbitration Act, 1996.
43. The Court also cannot lose sight of the specific non obstante clauses contained in sub- sections (1) and (4) of Section 18 which have an effect overriding any other law for the time being in force. When the MSMED Act, 2006 was being enacted in 2006, the legislature was aware of its previously enacted Arbitration Act of 1996, and therefore, it is presumed that the legislature had consciously made applicable the provisions of the Arbitration Act, 1996 to the disputes under the MSMED Act, 2006 at a stage when the conciliation process initiated under sub-section (2) of Section 18 of the MSMED Act, 2006 fails and when the Facilitation Council itself takes up the disputes for arbitration or refers it to any institution or centre for such arbitration. It is also significant to note that a deeming legal fiction is created in Section 18(3) by using the expression "as if"
for the purpose of treating such arbitration as if it was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of the Arbitration Act, 1996. As held in K. Prabhakaran v. P. Jayarajan [K. (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (13 of 17) [CMA-1636/2023] Prabhakaran v. P. Jayarajan, (2005) 1 SCC 754 : 2005 SCC (Cri) 451], a legal fiction presupposes the existence of the state of facts which may not exist and then works out the consequences which flow from that state of facts. Thus, considering the overall purpose, objects and scheme of the MSMED Act, 2006 and the unambiguous expressions used therein, this Court has no hesitation in holding that the provisions of Chapter V of the MSMED Act, 2006 have an effect overriding the provisions of the Arbitration Act, 1996."
9. Further, the Court proceeds to hold that even the agreement between the parties stands overridden by the statutory provisions under the MSMED Act:
44. The submissions made on behalf of the counsel for the buyers that a conscious omission of the word "agreement" in sub-section (1) of Section 18, which otherwise finds mention in Section 16 of the MSMED Act, 2006 implies that the arbitration agreement independently entered into between the parties as contemplated under Section 7 of the Arbitration Act, 1996 was not intended to be superseded by the provisions contained under Section 18 of the MSMED Act, 2006 also cannot be accepted. A private agreement between the parties cannot obliterate the statutory provisions. Once the statutory mechanism under sub-section (1) of Section 18 is triggered by any party, it would override any other agreement independently entered into between the parties, in view of the non obstante clauses contained in sub-
sections (1) and (4) of Section 18. The provisions of Sections 15 to 23 have also overriding effect as contemplated in Section 24 of the MSMED Act, 2006 when anything inconsistent is contained in any other law for the time being in force. It cannot be gainsaid that while interpretating a statute, if two interpretations are possible, the one which enhances the object of the Act should be preferred than the one which would frustrate the object of the Act. If submission made by the learned counsel for the buyers that the party to a dispute covered under the MSMED Act, 2006 cannot avail the remedy available under Section 18(1) of the MSMED Act, 2006 when an independent arbitration agreement between the parties exists is accepted, the very purpose of enacting the MSMED Act, 2006 would get frustrated.
45. ...
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46. The submission therefore that an independent arbitration agreement entered into between the parties under the Arbitration Act, 1996 would prevail over the statutory provisions of the MSMED Act, 2006 cannot be countenanced. As such, sub-section (1) of Section 18 of the MSMED Act, 2006 is an enabling provision which gives the party to a dispute covered under Section 17 thereof, a choice to approach the Facilitation Council, despite an arbitration agreement existing between the parties. Absence of the word "agreement" in the said provision could neither be construed as casus omissus in the statute nor be construed as a preclusion against the party to a dispute covered under Section 17 to approach the Facilitation Council, on the ground that there is an arbitration agreement existing between the parties. In fact, it is a substantial right created in favour of the party under the said provision. It is therefore held that no party to a dispute covered under Section 17 of the MSMED Act, 2006 would be precluded from making a reference to the Facilitation Council under Section 18(1) thereof, merely because there is an arbitration agreement existing between the parties.
47. The aforesaid legal position also dispels the arguments advanced on behalf of the counsel for the buyers that the Facilitation Council having acted as a Conciliator under Section 18(2) of the MSMED Act, 2006 itself cannot take up the dispute for arbitration and act as an arbitrator. Though it is true that Section 80 of the Arbitration Act, 1996 contains a bar that the Conciliator shall not act as an arbitrator in any arbitral proceedings in respect of a dispute that is subject of conciliation proceedings, the said bar stands superseded by the provisions contained in Section 18 read with Section 24 of the MSMED Act, 2006. As held earlier, the provisions contained in Chapter V of the MSMED Act, 2006 have an effect overriding the provisions of the Arbitration Act, 1996. The provisions of the Arbitration Act, 1996 would apply to the proceedings conducted by the Facilitation Council only after the process of conciliation initiated by the Council under Section 18(2) fails and the Council either itself takes up the dispute for arbitration or refers to it to any institute or centre for such arbitration as contemplated under Section 18(3) of the MSMED Act, 2006.
48. When the Facilitation Council or the institution or the centre acts as an arbitrator, it shall have all (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (15 of 17) [CMA-1636/2023] powers to decide the disputes referred to it as if such arbitration was in pursuance of the arbitration agreement referred to in sub-section (1) of Section 7 of the Arbitration Act, 1996 and then all the trappings of the Arbitration Act, 1996 would apply to such arbitration. It is needless to say that such Facilitation Council/institution/centre acting as an Arbitral Tribunal would also be competent to rule on its own jurisdiction like any other Arbitral Tribunal appointed under the Arbitration Act, 1996 would have, as contemplated in Section 16 thereof."
10. The issue relating to 'seat of arbitration' in all cases covered under the MSMED Act is settled in view of the pronouncement of this Court in Mahakali. This position is also true by virtue of the specific provision of the MSMED Act, that is, sub-Section (4) of Section 18, which vests jurisdiction for arbitration in the Facilitation Council where the supplier is located:
"(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India."
11. There is no dispute about the fact that the appellant- MSME is located in Delhi and as such the Facilitation Council, (South-West), GNCTD, Old Terminal Tax Building, Kapashera, New Delhi-110037. In exercise of its power, the said Council entrusted the conduct of arbitration through the institutional aegis of the Delhi Arbitration Centre. The conclusions drawn by us are the logical consequence of the statutory regime as also declared by this Court in Mahakali.
12. Mr. Vikramjit Banerjee, learned ASG submits that the decision of this Court should not in any way prejudice any rights or contentions that his client may legitimately raise and contest before the arbitral tribunal. We have no hesitation in clarifying that we have not touched upon the merits of the matter. We also direct the learned arbitrator (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (16 of 17) [CMA-1636/2023] to permit the parties to raise and argue all questions of law and fact as are legally permissible.
13. In view of the above, we allow the present appeal and set aside the impugned order dated 22.04.2024 passed by the Karnataka High Court in Writ Petition No. 27269 of 2023 (GM-RES) and direct conduct and conclusion of arbitral proceedings.
14. With these directions, the civil appeal is disposed of. There shall be no order as to costs."
7. After hearing learned counsel for the parties as well as perusing the record of the case, this Court finds that the controversy involved herein is covered by the judgment rendered in the case of M/s Harcharan Dass Gupta (supra) wherein the Hon'ble Supreme Court referring to the judgment rendered in the case of Gujarat State Civil Supplies Corporation Ltd. Vs. Mahakali Foods Pvt. Ltd. : (2023) 6 SCC 401 has specifically dealt with issue of the jurisdiction arising out of the Act of 2006 considering it to be a special law and the Act of 1996 to be a general law and also holding that the Act of 2006 would have precedence over the Act of 1996. The Hon'ble Apex Court has also held that considering the overall purpose, objects and scheme of the Act of 2006 and the unambiguous expressions used therein, the provisions of Chapter V of the Act of 2006 will have an effect overriding the provisions of the Act of 1996.
7.1. The Hon'ble Apex Court in the said judgment has also held that a private agreement between the parties also would not obliterate the statutory provisions and once the statutory mechanism under sub-section (1) of Section 18 is triggered by any party, it would override any other agreement independently (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) [2025:RJ-JP:42142-DB] (17 of 17) [CMA-1636/2023] entered into between the parties, in view of the non obstante clauses contained in sub-sections (1) and (4) of Section 18 of the Act of 2006. The Hon'ble Apex Court also held that the provisions of Sections 15 to 23 have an overriding effect as contemplated under Section 24 of the Act of 2006 when anything inconsistent is contained in any other law for the time being in force. In the present case, the said legal proposition gives sufficient support to the contentions raised on behalf of the respondents.
8. Thus, this Court relying upon the judgment rendered in the case of M/s Harcharan Dass Gupta (supra) finds that the impugned orders do not suffer from any legal infirmity so as to warrant any interference by this Court.
9. However, at this juncture, learned counsel for the appellants submits that on count of the issue of territorial jurisdiction, in accordance with the Act of 2006, the appellants will require some time to avail appropriate remedy and thus a reasonable time deserves to be given to them to approach the appropriate Forum at Jalandhar.
10. Consequently, the appeals are dismissed. However, in light of the aforesaid submission made on behalf of the appellants, pertaining to requirement of some time to approach the appropriate Forum, which this Court finds reasonable, it is directed that no coercive steps shall be taken against the appellants in pursuance of the impugned orders, for a period of three months from today. All pending applications stand disposed of.
(BALJINDER SINGH SANDHU),J (DR. PUSHPENDRA SINGH BHATI),J DANISH USMANI /23-35 (Uploaded on 29/10/2025 at 01:19:40 PM) (Downloaded on 31/10/2025 at 11:51:29 PM) Powered by TCPDF (www.tcpdf.org)