MSMED Act Does Not Prevent Interim Relief Under Section 9 Of The A&C Act, Before Approaching Facilitation Council : Calcutta High Court

The Calcutta High Court has held that MSMED Act does not prevent a party from seeking an interim relief under Section 9 of the A&C Act anytime before approaching the Facilitation Council. The bench of Justice Sabyasachi Bhattacharyya held that the reference of dispute to facilitation council cannot be refused merely on the ground that before making such a reference under Section 18 of the MSMED Act, the seller had approached the Court under Section 9 of the A&C Act for certain interim measures. The Court held that there is no inconsistency between Section 9 of the A&C Act and Section 18 of the MSMED Act, therefore, despite MSMED Act prevailing over the A&C Act, Section 9 remedy before approaching the Facilitation Council is not barred. The Court also held that the doctrine of election would not come into play as there is no corresponding provision similar to Section 9 of the A&C Act under the MSMED Act. Facts The parties entered into an agreement that contained an arbitration clause. A dispute arose between the parties, accordingly, the respondent invoked the arbitration clause and approached the Court under Section 9 of the A&C Act to seek certain interim reliefs. However, the petition was dismissed. Thereafter, since the respondent was registered as an MSME, it invoked the remedy under the MSMED Act and filed a reference under Section 18 of the MSMED Act before the Facilitation Council. The Council admitted the reference, aggrieved thereby, the petitioner challenged the order of the Council by filing a Writ Petition. Grounds of Challenge The petitioner challenged the order on the following grounds: That the respondent had itself filed an application under Section 9 of the A&C Act, therefore, it had elected the remedy of contractual arbitration over the remedy provided under the MSMED Act. Once the arbitration agreement has been invoked, the remedy available under the MSMED Act would become infructuous. Analysis by the Court The Court observed that the respondent had filed an application under Section 9 of the A&C Act, however, the same was dismissed by the Court. Thereafter, the respondent approached the facilitation council under Section 18 of the MSMED Act. The Court held that MSMED Act does not prevent a party from seeking an interim relief under Section 9 of the A&C Act anytime before approaching the Facilitation Council. The Court held that the reference of dispute to facilitation council cannot be refused merely on the ground that before making such a reference under Section 18 of the MSMED Act, the seller had approached the Court under Section 9 of the A&C Act for certain interim measures. The Court held that there is no inconsistency between Section 9 of the A&C Act and Section 18 of the MSMED Act, therefore, despite MSMED Act prevailing over the A&C Act, Section 9 remedy before approaching the Facilitation Council is not barred. The Court also held that the doctrine of election would not come into play as there is no corresponding provision similar to Section 9 of the A&C Act under the MSMED Act. Accordingly, the Court dismissed the petition. Case Title: IOCL v. Union of India, WPO No. 1624 of 2023 Date: 17.11.2023 Counsel for the Petitioners: Mr. Soumya Majumdar, Adv., Ms. Sharmistha Ghosh, Adv., Mr. Amit Ghosh, Adv. Counsel for the Respondents: Ms. Sarda Sha, Adv, Mr. Pranit Bag, Adv., Ms. Swarupa Ghosh, Adv., Ms. Minakshi Nag, Adv., Mr. Abhirup Chakraborty, and Mr. Debangshu Dinda, Adv. Click Here To Read/Download Order

MSMED Act Does Not Prevent Interim Relief Under Section 9 Of The A&C Act, Before Approaching Facilitation Council : Calcutta High Court

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MSMED Act Does Not Prevent Interim Relief Under Section 9 Of The A&C Act, Before Approaching Facilitation Council : Calcutta High Court

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