Conciliation omission under MSMED Act cannot be raised for the first time in arbitration appeal.

The appellant challenged an arbitral award dated 12.08.2013 passed by the M.P. Micro and Small Enterprises Certification Council.

The respondent had originally approached the Council under the MSME Development Act, 2006 regarding a payment dispute.

The appellant’s application to set aside this award under Section 34 of the Arbitration and Conciliation Act, 1996, was rejected by the VIII District Judge, Bhopal, on 30.01.2023.

The appellant then moved the High Court under Section 37, alleging that the Council failed to conduct mandatory conciliation under Section 18(2) of the Act of 2006 and that the award was delayed by 15 months after the final hearing.

1. Whether the failure to refer the matter to conciliation under Section 18(2) of the MSME Act, 2006, renders the arbitral award in conflict with the public policy of India.

2. Whether an inordinate delay of 15 months between the final hearing and the passing of the award constitutes a violation of the fundamental policy of Indian law.

3. Whether the High Court can interfere with an order passed under Section 34 if the parameters for setting aside an award have not been met.

Section 37 of the Arbitration and Conciliation Act, 1996, which governs appeals against orders refusing to set aside an award.

"public policy" and "fundamental policy of Indian law" grounds under Section 34(2)(b)(ii) of the same Act.

McDermott International Inc. v. Burn Standard Co. Ltd. regarding the minimum supervisory role of courts in arbitration.

MMTC Limited v. Vedanta Limited, which establishes that Section 37 jurisdiction is narrower than Section 34 and prohibits independent merit assessments.

Principle from Dyna Technology Pvt. Ltd. v. Crompton Greaves Ltd. that awards should not be disturbed unless perversity goes to the root of the matter.

The court found that the appellant had actively participated in the Council's proceedings and filed a detailed reply on merits without ever requesting conciliation under Section 18(2) of the Act of 2006.

By electing to contest the matter on merits, the appellant waived the right to later claim that conciliation was a necessary prerequisite.

The court noted that after 16 years of litigation, remanding for conciliation would be a "futile exercise".

Regarding the delay in the award, the court observed that the appellant failed to show how this delay violated the fundamental policy of Indian law in a manner that outweighed the finality of the process.

Relying on Apex Court precedents, the court reasoned that it cannot reappraise evidence or correct errors of the arbitrator as if it were a regular civil appeal; rather, it must only ensure the Section 34 court did not exceed its jurisdiction.

The court concluded that the grounds raised by the appellant—specifically the lack of conciliation and the timing of the award—did not meet the high threshold of being contrary to public policy or jurisdictional mandates; the High Court dismissed the appeal.