Facts
The Petitioner approached the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator to resolve disputes arising from a Service Order dated 02.02.2023
Source reference: p. 1, para 1; p. 2, para 2The Respondent objected to the petition's maintainability, asserting its status as a registered enterprise under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006
Source reference: p. 2, para 3The Respondent had already invoked the jurisdiction of the Jharkhand MSME Facilitation Council under Section 18 of the MSMED Act on 22.01.2026
Source reference: p. 2, para 4The Petitioner contended that the underlying agreement was a "Works Contract," which allegedly falls outside the protection of the MSMED Act
Source reference: p. 4, para 7; p. 5, para 9Issues
1. Whether the Court should appoint an arbitrator under Section 11 of the Arbitration Act when the Respondent has invoked the jurisdiction of the MSME Facilitation Council.
Source reference: p. 2, para 3; p. 6, para 132. Whether the determination of the nature of the contract (as a "Works Contract") is within the scope of judicial scrutiny under Section 11(6) of the Arbitration Act.
Source reference: p. 4, para 15; p. 10, para 16Law Applied
The Court primarily applied Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the appointment of arbitrators
Source reference: p. 1It relied on the non-obstante provisions of Sections 18 and 24 of the MSMED Act, 2006, which mandate that the Special Act prevails over the general Arbitration Act
Source reference: p. 3, para 5The Court followed the principles established in SBI General Insurance Co. Ltd. v. Krish Spinning, which limited the scope of Section 11 to a prima facie examination of the existence of the arbitration agreement
Source reference: p. 6, para 14It further applied Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods (P) Ltd. to affirm that Facilitation Councils have the power to rule on their own jurisdiction
Source reference: p. 4, para 16Idemia Syscom India Pvt. Ltd. v. M/s Conjoinix Total Solutions Pvt. Ltd. regarding triable issues under the MSMED Act
Source reference: p. 3, para 6Reasoning
The Court observed that its jurisdiction under Section 11(6) is strictly circumscribed and facilitative, intended only to confirm the prima facie existence of an arbitration agreement without delving into "laborious enquiries"
Source reference: p. 7, para 114; p. 10, para 15The Court noted that the parties were in conflict regarding whether the agreement constituted a "Works Contract"
Source reference: p. 4, para 15It reasoned that such a determination requires detailed appreciation of evidence and contractual interpretation, which are "triable issues" unsuitable for the referral stage
Source reference: p. 10, para 16-17Furthermore, because the MSMED Act is a special statute with non-obstante clauses, the MSME Facilitation Council is the appropriate forum to decide on its own jurisdiction and the nature of the contract
Source reference: p. 3, para 5; p. 4, para 16The Court emphasized that arbitral autonomy and minimal judicial interference must be maintained, leaving complex jurisdictional and factual questions to the specialized tribunal or Council
Source reference: p. 9, para 121; p. 10, para 18Holding
The Court held that the MSME Facilitation Council is the appropriate forum to determine the issues raised, including the nature of the contract
Consequently, the Court declined to exercise its power under Section 11(6) to appoint an arbitrator.
Source reference: p. 11, para 19The petition and all pending applications were disposed of, directing the parties to seek adjudication before the Jharkhand Micro and Small Enterprises Facilitation Council
Source reference: p. 11, para 19Original Court PDF
Jindal Ferrous LimitedvsA To Z Company
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