Malani Construction Company Vs Delhi International Arbitration Centre And Ors (Delhi High Court)
The Delhi High Court considered petitions challenging the Micro & Small Enterprises Facilitation Council (MSEFC) order dated 27.01.2022, whereby disputes between Malani Construction Company and LSR Medical Private Limited were referred to arbitration before the Delhi International Arbitration Centre (DIAC) in MSEFC Case Nos. 75/2018 and 76/2018.
According to the petitioner, Respondent No. 3 had supplied goods and services under various invoices between July 2012 and March 2015 in one case and November 2012 and February 2015 in the other. The respondent obtained registration as a Micro Enterprise under the MSMED Act only on 26.05.2017. Thereafter, legal notices were issued in October 2018 demanding payment of outstanding amounts with interest under the MSMED Act, and applications were filed before the MSEFC on 22.11.2018. After initial proceedings, the MSEFC referred both disputes to arbitration on 27.01.2022. DIAC thereafter appointed a sole arbitrator, following which the petitioner challenged the MSEFC’s jurisdiction and the applicability of the MSMED Act. The High Court stayed the references on 13.07.2022.
The petitioner raised three principal submissions. First, it contended that the MSEFC was required to adhere to the timeline prescribed under Section 18(5) of the MSMED Act. Secondly, it argued that before making a reference, the MSEFC ought to examine whether the supplier was registered under the MSMED Act at the relevant time, relying upon Silpi Industries Etc. v. Kerala State Road Transport Corporation & Anr. Thirdly, it submitted that since all supplies had been completed before the respondent obtained MSME registration, the MSMED Act was inapplicable. It was also contended that the claims were barred by limitation because the applications before the MSEFC were filed more than three years after the last invoices.
