Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 07 September 2026

Case Overview

  • Parties: M/s Maa Bhairabi Traders (Appellant) vs. The Deputy General Manager (Elect) and Anr. (Respondents).
  • Background: The appellant, registered under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, was awarded a contract by the respondent through a work order dated 08‑02‑2016. A dispute arose, leading the appellant to file a claim before the Micro and Small Enterprises Facilitation Council. An arbitration award was passed, which the appellant challenged under Section 34 of the Arbitration and Conciliation Act, 1996, unsuccessfully. The respondent subsequently challenged the award before the High Court under Section 37; the High Court set aside the award, holding that no reference for conciliation under Section 18(2) of the MSMED Act had been made.
  • Submissions: Mr. Suresh Chandra Tripathy, learned AoR for the appellant, submitted additional affidavit on 18‑04‑2026 asserting that conciliation had been attempted. Mr. Sajan Poovayya, learned Senior Counsel for the respondent, countered that no mediation was conducted and that arbitration proceeded without the mandatory conciliation.
  • Court’s Observations: The Court noted that irrespective of whether conciliation had occurred, proceeding without it would cause further delay. If conciliation was not carried out, the matter should return to the Facilitation Council for mediation before arbitration; if conciliation had been carried out, the matter should be remitted to the High Court for merits‑based consideration. After reviewing the documents, the Court was not convinced that any conciliation/mediation had been attempted by the Facilitation Council.

Final Outcome

  • With the consent of the parties, the Court appointed Dr. Justice A. K. Rath, former Judge of the Orissa High Court (Mobile No. 87633‑58600), as the sole Arbitrator to adjudicate the disputes.
  • The Arbitrator is free to determine his fee in consultation with the parties and must apply the rigour of the MSMED Act while settling the claims.
  • The Registry is directed to send a copy of this order to Justice (Retd) A. K. Rath.
  • The appeals are disposed of in terms of the signed order.
  • Any pending applications, if any, are stood rejected.

Topics: Arbitration, MSME Regulation