MSME Arbitral Tribunal Must Follow Arbitration And Conciliation Act, Allahabad HC Reiterates
Bajaj Electrical Ltd was represented by Mr. Navin Sinha, Sr Advocate, Mr. Imran Ullah, Mr. Mohammad Khalid, Advocates along with Mr. Samarjit Patnaik, Mr. Varun Kumar, Mr. Vikas Gogna and Ms. Aprajita Budhwar, Advocates from Karanjawala & Co. Alpha Communication Ltd was represented by Mr. Amit Saxena, Sr Advocate along with Mr. Aman Gupta, Advocate.
The Allahabad High Court allowed a Petition filed by Bajaj Electricals Private Limited against an Order of MSME Arbitral Tribunal, Meerut whereby the Learned Tribunal dismissed the right to lead evidence in a Claim running into more than 20 Crores.
The MSME Arbitral Tribunal is set up under the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”) as an alternative dispute resolution mechanism. Under Section 18 and 19 of the said Act, all Arbitral proceedings before MSME shall follow the mandate of the Arbitration and Conciliation Act, 1996 and must be conducted in accordance with its provisions unless contrary provisions exist withing the MSMED Act itself.
It was the plea of the Petitioner, Bajaj Electricals before the Allahabad High Court that due process and principles of natural justice were not followed by MSME Tribunal as it was not given an opportunity to bring on record necessary documents and lead evidence. The Petitioner argued that dispute of high value could not result in a fair or just ruling and that there will be irreparable loss and injury caused to a Party if the proceedings were to continue without leading evidence. The Petitioner had also argued that any finding arrived at by the Tribunal without hearing their case would be “perverse or irrational” if relevant evidence is ignored.
The Court appreciated the submissions of Bajaj electricals Ltd and emphasised on the need for due process to be followed in judicial and quasi-judicial proceedings. The Court further noted that denying the Petitioner a chance to present their defence by bringing on record their supporting evidences was in violation of the principles of natural justice and of the mandate of the A&C Act, which as argued by the Petitioner, recognizes the right to be heard. The Court recognised that the Tribunal is liable to follow principles of natural justice and that all parties appearing before it, even those which are not a MSME, reserve the right to fair adjudication. The Court observed that both MSME and non MSME member must have equal opportunity to present their respective case based on principles of natural justice and provisions of Arbitration and Conciliation Act. This is also the intention of the A&C Act, as is visible from the statute itself and subsequent judicial precedents. In light of Sections 18 and 19 of the MSMED Act, the MSMEFC is also bound by this intention and must proceed accordingly.
The Court issued directions to MSME Tribunal, Meerut to allow the Petitioner a reasonable opportunity to present their case by adducing necessary evidence to substantiate their pleadings. It further directed that the Tribunal, going forward, must proceed with the adjudication in accordance with the provisions of the A&C Act.
Bajaj Electrical Ltd was represented by Mr. Navin Sinha, Sr Advocate, Mr. Imran Ullah, Mr. Mohammad Khalid, Advocates along with Mr. Samarjit Patnaik, Mr. Varun Kumar, Mr. Vikas Gogna and Ms. Aprajita Budhwar, Advocates from Karanjawala & Co.
Alpha Communication Ltd was represented by Mr. Amit Saxena, Sr Advocate along with Mr. Aman Gupta, Advocate.
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