Mr.Krishna Sharoff, Dr.Sumit Kumar, Ms.Aprajita and Mr.Shikhar Khanna, Advocates v. DELHI INTERNATIONAL ARBITRATION CENTRE AND ORS

CORAM: HON'BLE MR. JUSTICE MANOJ KUMAR OHRI JUDGMENT (ORAL)

1. The present proceedings have been instituted by the petitioners, MDD Medical Systems (India) Pvt. Ltd., and LSR Medical Pvt. Ltd., being aggrieved with the letters dated 30.07.2019 and 03.08.2019 (hereafter, „the impugned letters‟) respectively, vide which the Respondent No. 1 has revived the arbitration proceedings between the Petitioners (Non-Claimants) and the Respondent No. 3 (Claimant) and had directed the Petitioners to file Reply/Counter Claim to the Statement of Claim (hereinafter „SOC‟) filed by the Respondent No. 3.

2. To appreciate the contentions, facts in brief are that the Petitioners and Respondent No. 3 were in a business relationship. The Respondent No. 3 is an MSME unit working in the privacy and sun protection industry manufacturing rails, curtain rods, roller binds etc. and used to supply them to the Petitioners. When some dispute arose with regards to alleged failure of Petitioners in clearing outstanding dues, Respondent No. 3 approached the Respondent No. 2/Micro and Small Enterprises Facilitation Council. The Conciliation could not progress due to non-cooperation of the parties and respondent No. 2 vide reference letters dated 13.06.2018 and 21.06.2018 referred the dispute to Respondent No. 1/ Delhi International Arbitration Centre for adjudication in accordance with Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter, „MSMED Act, 2006‟). The Respondent No. 1 issued letters dated 10.09.2018 and 03.10.2018 in the case of petitioner/MDD Medical Systems and letters dated 28.07.2018 and 19.09.2018 in the case of petitioner/LSR Medical Pvt Signature Not Verified Digitally Signed By:GAUTAM ASWAL Signing Date:14.05.2025 17:18:03 W.P.(C) 10850/2019 & W.P.(C) 10859/2019 Page 2 of 11 Ltd to respondent No.3 with a direction to file the SOC, which the Respondent No. 3 failed to do. Consequently, the Respondent No. 1 closed the arbitration proceedings vide letters dated 22.10.2018 and

27.10.2018 in the matter due to non-filing of the SOC despite reminders relying on Rule 3(6) of the Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2012 (hereinafter, „2012 Rules‟). Thereafter, on 30.07.2018 and 03.08.2018, the Petitioners/ MDD Medical Systems and LSR Medical Pvt Ltd were intimated that the Respondent No. 3 has filed its SOC and directed them to file the Counter Claim, respectively.

3. The Petitioner contends that the reference to Respondent No. 1 was made under Section 18 of the MSMED Act, 2006 and Section 18(5) stipulates for completion of every reference made under this Section within a period of 90 days of reference. Consequently, Petitioners submits that the mandate given to Respondent No. 1 by MSME Facilitation Council stood terminated vide the aforesaid letters dated 22.10.2018 and 27.10.2018 and revival of such proceedings after over nine months without any fresh reference is completely against the provisions of MSMED Act, 2006 and without any authority of law. Moreover, the Petitioner contends that though Section 29A of the Arbitration and Conciliation Act, 1996 (hereinafter, „A&C Act‟), provides for extension of time up to 18 months, there is no provision for extension of time in the MSMED Act which has an overriding effect as per Section 24.

4. Reliance is placed on Section 25 of the A&C Act to argue that the mandate of Arbitral Tribunal (hereinafter, „AT‟) also stood terminated due to non-filing of SOC by the Respondent No. 3. It is contended that even if a belated SOC can be accepted as per Section 25 of the A&C Act, sufficient Signature Not Verified Digitally Signed By:GAUTAM ASWAL Signing Date:14.05.2025 17:18:03 W.P.(C) 10850/2019 & W.P.(C) 10859/2019 Page 3 of 11 cause was never shown by Respondent No. 3 for not filing the SOC. Moreover, it is argued that the Respondent No. 1 did not have the jurisdiction to revive the proceedings automatically without any fresh request and the same should have been adjudicated by the AT, however, no such request was made. To buttress his submissions, the Counsel has referred to SREI Infrastructure Finance Limited vs. Tuff Drilling Private Limited1.

5. Lastly, the Petitioners submit that the Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018 (hereinafter, „2018 Rules‟) are applicable on the arbitration proceedings. As the reference was acted upon after 01.07.2018 by the Respondent No. 1, after the 2018 Rules came into effect. He submits that there is no provision in the 2018 Rules which provides for any revival of the proceedings. The Petitioner, as an arguendo submits that even if it is accepted by this Court that the 2012 Rules are applicable, a fresh request is required to be filed as per Rule 3(6) of the 2012 Rules, which hasn‟t been filed by the Respondent No. 3.

6. Per contra, counsel for the Respondent No. 3 has raised a preliminary objection to the maintainability of the Writ Petition. He submits that the point in issue raised in the Writ Petition could be raised before the AT under Section 16 of the A&C Act as the proceedings have been revived. He submits that it is settled position of law that issues relating to the proceedings, reference or jurisdiction have to be decided by the AT itself. Reliance has been placed on Gujarat State Civil Supplies Corporation Ltd. vs. Mahakali Foods Pvt. Ltd.2, Rohan Builders (India) Pvt. Ltd. vs. Berger