Court appoints Sole Arbitrator despite MSME registration claim and criminal allegations
In a significant ruling, the Bombay High Court has resolved a contentious arbitration dispute between Qwik Supply Chain Private Limited and CRPL Infra Private Limited. The court, presided over by Justice Amit Borkar, addressed multiple legal challenges concerning the invocation of the arbitration clause under the Arbitration and Conciliation Act, 1996.
The dispute arose from a Cold Storage Facility Service Agreement dated April 27, 2021, which included an arbitration clause. Qwik Supply Chain sought the appointment of an arbitrator following disagreements over alleged missing goods and subsequent financial claims. However, CRPL Infra contended that its status as a Micro, Small, and Medium Enterprise (MSME) required the dispute to be referred to the MSME Facilitation Council, as per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
Justice Borkar meticulously examined the arbitration clause, which contained the word "may," and ruled that it did not invalidate the clause. The court concluded that the clause demonstrated a clear intention by both parties to resolve disputes through arbitration, including a detailed mechanism for arbitration proceedings.
Despite CRPL Infra's MSME registration, the court found no evidence of a formal reference to the MSME Facilitation Council. Consequently, the court affirmed its jurisdiction to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act.
Addressing the criminal allegations of theft involved in the dispute, the court clarified that such allegations did not preclude arbitration. The court emphasized that the arbitration concerned civil disputes under the contractual agreement, separate from any criminal proceedings.
Justice Borkar appointed Mr. Vikramjit Grewal, an Advocate of the Bombay High Court, as the Sole Arbitrator. The Arbitrator is tasked with adjudicating all disputes, including jurisdictional and arbitrability issues, while adhering to the arbitration agreement's terms.
The ruling underscores the court's commitment to uphold arbitration agreements and clarifies the interplay between MSME registration and arbitration proceedings.
Bottom Line:
Arbitration and Conciliation Act, 1996 Section 11 Appointment of Arbitrator - Clause containing the word "may" in an arbitration agreement does not invalidate the arbitration clause if the entire clause shows the intention of the parties to resolve disputes through arbitration.
Statutory provision(s): Arbitration and Conciliation Act, 1996, Micro, Small and Medium Enterprises Development Act, 2006.
