Dismissed

Power Mech Projects Limited v. Micro and Small Enterprises Facilitation Council Msefc and Ors.

Delhi HC15 May 2024W.P.(C)/4513/2024

Case brief

AI extract

What is this about?

The Delhi High Court examined whether the Micro and Small Enterprises Facilitation Council (MSEFC) had jurisdiction to refer a dispute involving a medium enterprise to arbitration under the MSMED Act. Relying on a pre-decisional finding that the respondent is a medium enterprise, the Court held the MSMED Act does not apply. The reference to arbitration was set aside and the petition dismissed. The

What did the court decide?

The impugned order referring the matter to arbitration is set aside; parties directed to take steps available under law for dispute resolution.

Power Mech Projects Limited Vs Micro and Small Enterprises… — Arbitration | Delhi HC (2024)

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$~60

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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- W.P.(C) 4513/2024 & CM APPLs. 18427/2024, 26764/2024

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POWER MECH PROJECTS LIMITED ..... Petitioner

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Through: Mr. Arjun D. Singh and Mr. Vishnu Thulasi Menon, Advocates.

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versus

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MICRO AND SMALL ENTERPRISES FACILITATION COUNCIL MSEFC AND ORS. ..... Respondents Through: Mr. Sumit Kumar, Mr. Samuel Mathew and Mr. Gokul, Advocates for R-3.

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CORAM:

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HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD

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O R D E R

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% 15.05.2024

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This Court on 27.03.2024 has passed the following order:-

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“1. The writ petition has been filed with the following

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prayer:-

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“Issue an appropriate writ, order or direction in the nature of Certiorari, seeking for calling of the records of the Impugned Order dated 10.01.2023 vide MSEFC/ North /DL/06/ S/DNC/01336 issued by the 1st Respondent as well as call for the records of the Arbitral proceedings currently pending before the 2nd Respondent and quash the same;

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2. Respondent No.3- M/s Zillion Infra Projects Private Limited filed a reference on 16.09.2022 under Section 18 of The Micro, Small and Medium Enterprises Development [“MSMED”] Act, 2006 before the Micro & Small Enterprises Facilitation Council [“MSEFC”]. After considering the matter, MSEFC concluded that petitioner was not interested in conciliation regarding the disputed amount and conciliation was not possible.

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Page 1 of 3

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W.P.(C) 4513/2024

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 18/05/2024 at 11:41:52

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As a result, MSEFC decided to terminate the conciliation proceedings and referred the case under Section 18 (3) of the Act to Delhi International Arbitration Centre [“DIAC”] for arbitration proceedings as per the Arbitration and Conciliation Act, 1996.

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3. Learned counsel for the petitioner has submitted that respondent No.3- M/s Zillion Infra Projects Private Limited is a medium enterprise and therefore, the matter could not have been referred to arbitration by MSEFC. Learned counsel in support of his arguments has relied on the judgment of this Court in the case of Sterlite Power Transmission Limited vs EPC Solutions LLP & Anr 2023 SCC Online Del 3890; wherein, dealing with the question as to whether Micro and Small Enterprises Facilitation Council [“MSEFC”] can entertain reference to arbitration to Medium Enterprises, the Court in paragraph 22 held that the scheme of Chapter V of MSMED Act excludes Medium Enterprises under section 2(g) and only applies to micro and small industries.

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4. Learned counsel for the petitioner further submits that sole arbitrator has already been appointed by DIAC.

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5. Issue notice.

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6. Mr. Sumit Kumar, Advocate accepts notice on behalf of respondent No.3.

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7. Counter affidavit be filed within four weeks. Rejoinder, if any, be filed within two weeks thereafter.

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8. Notice of the petition and CM APPL. 18427/2024 be issued to respondent No.1.

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Page 2 of 3

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W.P.(C) 4513/2024

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 18/05/2024 at 11:41:52

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9. Learned counsel for respondent No.3 undertakes to inform the Arbitrator about the pendency of the Writ Petition.”

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There is no dispute that Respondent No.3 is a medium enterprise, and therefore, the matter could not have been referred to arbitration by the Micro & Small Enterprises Facilitation Council (MSEFC) under Section 18 of the Micro, Small and Medium Enterprises Development Act since it only applies to micro and small industries.

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In view of the above, the impugned order is set aside. It is open to the parties to take such steps as available under law for resolution of their disputes.

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The petition is disposed of along with pending application(s), if any.

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SUBRAMONIUM PRASAD, J

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MAY 15, 2024 hsk

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Page 3 of 3

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W.P.(C) 4513/2024

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 18/05/2024 at 11:41:52

Power Mech Projects Limited v. Micro and Small Enterprises Facilitation Council Msefc and Ors.

Case brief

What is this about?

What did the court decide?

Power Mech Projects Limited v. Micro and Small Enterprises Facilitation Council Msefc and Ors.

Case brief

What is this about?

What did the court decide?

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