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Gujarat HC: Proceedings u/s 34 Arbitration Act Can’t be Maintained Before Two Benches

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Gujarat High court Law Insider

Shashwati Chowdhury

Published on: July 21 2022 at 15:48 IST

The Gujarat High Court noted that the petitioner had “conveniently” initiated two proceedings—one before the Current Bench and another before the District Court under Sec. 34 the Arbitration & Conciliation Act, 1996 – while dismissing the petitioner’s civil application, which challenged the the award of the relevant arbitration. The High Court rejected the petition in light of this situation.

The Petitioner had challenged the Chairman of the Micro and Small Enterprise Facilitation Council in Gandhinagar’s order, which stated that the arbitration proceedings under Section 18(3) of the Micro; Small and Medium Enterprises Development (MSMED) Act, 2006 would strictly be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996. These were the basic facts of the case.

The petitioner’s main contentions were that Section 65 of the Arbitration Act would apply to this type of dispute and that Section 18 of the MSMED Act, which established the Micro and Small Enterprises Facilitation Council, required the Council to conduct concilliation either on its own or with the help of other institutions.

In addition, in cases where the conciliatio initiation was failed, the Council is required by Section 18(3) of the MSMED Act, 2006 to either arbitrate the issue itself or refer it to some other institutions in accordance with the Arbitration Act. As a result, the Council was not permitted to act as an arbitrator pursuant to Section 18(3) of the Act once the conciliation proceedings were started by the Council.

Regarding the petitioner’s dual-nature of proceedings, the Bench comprising of Justice A S Supehia stated: “The very contention that is made before this Court has been rejected by the interim order, and the challenge in Letters Patent Appeal is also withdrawn. As a result, the interim order rejecting the contention brought before this Court has been made final.”

“The arbitration has concluded and the arbitral award, dated 3.9.2021/12.10.2021, is passed. The same is being contested through Civil Misc. Application No. 66 of 2022, which is still pending before the District Court in Gandhinagar.”

“As a result, the present writ petition would not survive due to the petitioner’s action in initiating proceedings under Section 34 of the Act and the withdrawal of the Letters Patent Appeal.”