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19. Thus, the parties have agreed that both the venue as well as seat of the arbitration shall be Chennai. However, the appellant herein, being the _____________ https://www.mhc.tn.gov.in/judis ( Uploaded on: 29/09/2025 11:48:46 am )  O.S.A(CAD).No.101 of 2025 & C.M.P.No.22466 of 2025 supplier, had approached the MSMED Council at Punjab, alleging non-payment for the goods sold. The respondent had raised objections regarding lack of jurisdiction as well as made a counter claim. However, under Section 18 of MSME Act, the place of business of the supplier confers jurisdiction on the District Facilitation Council, therefore, it cannot be found fault with the MSMED Council at Punjab for entertaining the claim petition under MSME Act. This is the view of the Hon’ble Supreme Court also, as declared in Haricharan Dass Gupta vs. Union of india reported in (2025) SCC OnLine SC 1111.

20. The point which requires examination is whether, after the award was passed by the MSME Council in Punjab, the said award can be challenged under Section 34 of the Arbitration Act before the Court at Chennai.

21. When an identical question came before the Delhi High Court in Indian Oil Corporation Ltd vs. Fepl Engineering (P) Ltd and others (2019 SCC OnLine Del 10265), the Division Bench, after considering the provisions of the MSME Act, the construction of Section 18, commencing with non- abstante clause and Section 18(4), dealt with a case where the supplier instituted claim petition at Thane, invoking Section 18 (4) of the MSME Act being his _____________ https://www.mhc.tn.gov.in/judis ( Uploaded on: 29/09/2025 11:48:46 am )  O.S.A(CAD).No.101 of 2025 & C.M.P.No.22466 of 2025 place of business. The buyer challenged the award under Section 34 of the Arbitration and Conciliation Act before the Delhi High Court, relying on the terms of contract construing the seat of arbitration is at Delhi. The Delhi High Court holding that the supplier had right to institute the claim petition before the Facilitation Council at Thane as per the provision of the MSME Act, which is a special Act and have overriding effect on the Arbitration and Conciliation Act, 1996. However, the Facilitation Council at Thane is only the venue and the seat for arbitration remains to be Delhi as per the terms of the contract.

“23. Undoubtedly, the MSME Act is a special legislation dealing with Micro, Small and Medium Enterprises and would have precedence over the general law. There are decisions of several Courts holding that the provisions of MSME Act would override the provisions of the Contract between the parties. However, we are not engaged with the said controversy and, in fact, we had made it clear to the learned counsel for the Appellant, during the course of arguments, that the questions relating to the jurisdiction of the MSME Council to act as an Arbitrator and other similar issues will not be examined by us, as the learned Single Judge has not considered any of those aspects and has decided the objection petition only on the ground of territorial jurisdiction. However, this does not mean that the jurisdiction clause agreed _____________ https://www.mhc.tn.gov.in/judis ( Uploaded on: 29/09/2025 11:48:46 am )  O.S.A(CAD).No.101 of 2025 & C.M.P.No.22466 of 2025 between the parties has to be given a go-by. The overriding effect of the MSME Act, cannot be construed to mean that the terms of the agreement between the parties have also been nullified. Thus, jurisdiction of the MSME Council which is decided on the basis of the location of the supplier, would only determine the ‘VENUE’, and not the ‘SEAT’ of arbitration. The ‘SEAT’ of arbitration would continue to be governed in terms of the arbitration agreement between the parties, which in the present case as per jurisdiction Clause No. 35 is New Delhi. As a result, in terms of the decision of the Supreme Court in Indus Mobile Distribution Pvt Ltd v. Datawind Innovations Private Limited and others reported in (2017) 7 SCC 678, it would be the Courts at New Delhi that would have exclusive jurisdiction to entertain the petition under Section 34 of the Act.

(v) The same does not eclipse the agreement between the parties of foisting exclusive jurisdiction on a particular court.”

23. Pre condition to deposit 75% of the award amount:-

In terms of Section 19 of the MSME Act, an application for setting aside an award of the Facilitation Council cannot be entertained by any Court unless the appellant has deposited 75% of the amount in terms of the award. Therefore, it is the contention of the learned counsel for the appellant that the respondent, while challenging the award of the MSME Council, ought to have deposited 75% of the award amount, which includes the interest payable till the date of filing the petition. Whereas, in this case, admittedly 75% of the amount payable as on the date of filing the petition not tendered. However, the Registry has numbered the petition and taken up for consideration. The deficit in payment been raised by the appellant and relying on the expression used in Section 19 of the MSME Act and judgments which has held that it is mandatory to deposit 75 % of the award amount to file any petition challenging the MSME _____________ https://www.mhc.tn.gov.in/judis ( Uploaded on: 29/09/2025 11:48:46 am )  O.S.A(CAD).No.101 of 2025 & C.M.P.No.22466 of 2025 award. The learned counsel for the appellant contented that, for non compliance of the mandatory condition, the Learned Single judge ought to have dismissed the Original Petition inlimine.