The High Court of Calcutta has held that the decision of the MSME Council on its jurisdiction is an order under Section 16 of the A&C Act and it cannot be termed as an interim award that can be directly challenged under Section 34 of the Act pending adjudication on the other issues.
The Single Bench of Justice Ravi Krishan Kapur has held that the order of the MSME Council that pertains to its jurisdiction has to pass the drill of Section 16(5) and Section 16(6) of the Act and the aggrieved party must wait till the passing of the final award.
The parties entered into a work order dated 22.11.2011 for Four Yearly Survey and Dry Dock Repair of Tug Bijoy Singha situated at Marine Operation Division at the Haldia Dock Complex. A dispute arose between the parties in regards to the deduction in payments made by the petitioner.
The respondent filed the reference before the MSME Council. The conciliation proceedings failed and the Council commenced the arbitral proceedings. The petitioner objected to the jurisdiction of the council on the ground that it had already invoked the contractual arbitration, therefore, the council has no jurisdiction.
The Council vide an order dated 12.05.2021, which is described as an interim award, dismissed the objection of the petitioner. Aggrieved by the order, the petitioner challenged the order under Section 34 on the ground that the order was an interim award, therefore, it can be directly challenged notwithstanding adjudication on the other issues and the petitioner need not await the final award.
Contention Of The Parties
The petitioner challenged the order of the Council on the following grounds:
- The Council does not have the jurisdiction to adjudicate upon the disputes as the petitioner had already invoked the arbitration clause.
- The order of the tribunal is an interim award that can be directly challenged under Section 34 of the Act and the petitioner need not await the passing of the final award.
The respondent objected to the maintainability of the petition on the following grounds:
- The provisions of the MSMED Act override the arbitration clause between the parties and the Council has exclusive jurisdiction to adjudicate upon the disputes.
- The order of the Council pertains to its jurisdiction, therefore, the drill of Sections 16(5) & (6) has to be followed and the petitioner must await the passing of the final award.
Analysis By The Court
The Court held that the order passed by the Council certainly pertained to its jurisdiction as it had interpreted the provisions of the MSMED Act and adjudicated upon whether the contractual arbitration clause gets overridden by the provisions of the MSMED Act and dismissed the objection raised by the petitioner.
The Court held that since the order is on the jurisdiction of the Council, it does not pass the test of an interim award permitting an application under Section 34 of the Act at this stage of the proceedings.
Accordingly, the Court dismissed the petition.
Case Title: Board of Trustees for the Syama Prasad Mookerjee Port, Kolkata v. Marinecraft Engineers Private Limited, Arbitration Petition No. 442 of 2021
Case Citation: 2022 LiveLaw (Cal) 194
Counsel for the Petitioner: Mr. Kishore Datta, Sr. Adv. Ms. Ashok Kumar Jena, Mr. Abhra Jena.
Counsel for the Respondent: Mr. Sabyasachi Chaudhury, Mr. S. E. Huda, Mr. Arjun Mookerjee, Mr. Abhijit Guha Ray.