Dispute Referred To Arbitration Under MSME Act; Court Can Extend The Mandate Of Arbitrator Under Section 29A Of A&C Act: Gujarat High Court

The Single Bench of Chief Justice Aravind Kumar held that in view of Section 18(3) of the MSME Act, the provisions of the A&C Act would be applicable once the dispute is referred to arbitration under the MSME Act, and hence, the Court can extend the mandate of the Arbitral Tribunal under Section 29A of the A&C Act.

The applicant M/s Magirsha Industries made a reference before the Micro, Small and Medium Enterprise Facilitation Council (MSMEFC) under Section 18(3) of the MSME Act.

Thereafter, a sole arbitrator was appointed constituting the Arbitral Tribunal, and the arbitral proceedings were commenced. Since, the time limit of 12 months, as envisaged under Section 29A (1) of the A&C Act, for passing an arbitral award was completed, the applicant filed an application before the Gujarat High Court seeking extension of the mandate of the Arbitral Tribunal.

The parties, in support of their application, placed before the Court the decision rendered by the Gujarat High Court in the case of Nilesh Ramanbhai Patel and Ors. versus Bhanubhai Ramanbhai Patel and Ors. (2018), wherein the Court had examined the scope and the power of the Court to extend the mandate of the Arbitral Tribunal.

The respondent M/s Gujarat State Fertilizer and Chemicals Limited, however, disputed the power of the Court to extend the mandate of the Arbitral Tribunal, in cases where the reference to arbitration had been made under the MSME Act.

The Court observed that Section 18(3) of the MSME Act provides that once the dispute has been referred to arbitration under the MSME Act, the provisions of the A&C Act shall apply to the dispute as if the arbitration was in pursuance of an arbitration agreement under Section 7 of the A&C Act.

Hence, the Court ruled that even in respect of the references made under the MSME Act, the provisions of A&C Act would be applicable and hence, the Court was empowered under Section 29A of the A&C Act to extend the mandate of the Arbitral Tribunal where the period prescribed under the A&C Act for concluding the arbitration proceedings had expired.

The Court, thus allowed the application and passed an order extending the mandate of the Arbitral Tribunal by 12 months.

Case Title: M/s Magirsha Industries versus M/s Gujarat State Fertilizer and Chemicals Limited

Citation: 2022 LiveLaw (Guj) 269

Counsel for the Applicant: Rushabh H Shah

Counsel for the Respondent: Gandhi Law Associates

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