Gujarat HC Dismisses Writ Against Arbitrator’s Interim Order for Lack of Exceptional Circumstances

Conart Engineers Limited Vs Arbitrator (Gujarat High Court)

The Gujarat High Court considered a petition challenging an order dated 13.04.2023 passed by the Sole Arbitrator rejecting a preliminary issue raised by the petitioner during arbitration proceedings. The petitioner, a registered Micro, Small and Medium Enterprise (MSME), had entered into an agreement with respondent No.1 pursuant to a work order issued by M/s Brink Foods Pvt. Ltd. (later renamed M/s Desai Brother Pvt. Ltd.) and had subsequently awarded the work to respondent No.2. According to the petitioner, the contract with respondent No.2 was terminated due to poor quality and delayed performance, following which supplementary work was entrusted to another contractor. Respondent No.2 thereafter issued a legal notice claiming compensation for breach of contract and subsequently initiated proceedings before the Micro and Small Enterprises Facilitation Council under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The Council referred the dispute to the GCCI Arbitration, Mediation, Conciliation and Alternate Dispute Resolution Centre, where a Sole Arbitrator was appointed.

The petitioner contended that a Chartered Accountant’s calculation submitted by respondent No.2 before the MSME Council was a forged document. It relied upon correspondence from the Institute of Chartered Accountants of India indicating that the document was neither signed nor sealed by the concerned Chartered Accountant. On that basis, the petitioner requested the Arbitrator to decide, as a preliminary issue, whether the claim deserved to be summarily dismissed as abusive, sham and vexatious because it had allegedly been initiated on the basis of a forged and fraudulent document. The Sole Arbitrator rejected the preliminary issue, giving rise to the present petition.