Case: – Indian Oil Corporation Limited and Anr. v/s Union Of India and Ors.; W.P.O. NO.1624 OF 2023
In a recent judgment, the Calcutta High Court clarified the interplay between the Arbitration and Conciliation Act (A&C Act) and the Micro, Small and Medium Enterprises Development (MSMED) Act.
The dispute between the parties involved an agreement containing an arbitration clause. The respondent, facing a deadlock, invoked the arbitration clause and sought interim reliefs under Section 9 of the A&C Act. However, this plea was dismissed by the Court. Subsequently, as the respondent was registered as an MSME, they turned to the MSMED Act, filing a reference under Section 18 before the Facilitation Council. The Council admitted the reference, leading to a legal challenge by the petitioner via a Writ Petition.
The petitioner contended that the respondent’s prior application under Section 9 of the A&C Act amounted to an election of the contractual arbitration remedy over the MSMED Act. Additionally, they argued that once the arbitration agreement was invoked, seeking remedies under the MSMED Act would become ineffective.
The Hon’ble Court, in its analysis, rejected these arguments. It held that the MSMED Act does not preclude a party from seeking interim relief under Section 9 of the A&C Act before approaching the Facilitation Council. The Court emphasized that there is no inconsistency between Section 9 of the A&C Act and Section 18 of the MSMED Act. Despite the MSMED Act prevailing over the A&C Act, the Court ruled that the Section 9 remedy is not barred before approaching the Facilitation Council.
Crucially, the Court pointed out that the doctrine of election does not apply in this scenario, as there is no corresponding provision in the MSMED Act akin to Section 9 of the A&C Act.
In conclusion, the Calcutta High Court dismissed the petition, affirming the concurrent applicability of the A&C Act and the MSMED Act in situations where a party, despite invoking Section 9 of the A&C Act, later seeks recourse under the MSMED Act before the Facilitation Council.
Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate
Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/
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