Recently, in Microvision Technologies Private Limited v. Union of India,14 the High Court decided, inter alia, that an arbitration agreement between the parties could not be abrogated, regardless of the powers conferred by the Facilitation Council under section 18.3 of the MSMED Act, to stand as an arbitrator or to refer the dispute to arbitration. The High Court invoked the judgment of the Bombay High Court in Steel Authority of India Ltd.15, which held, inter alia, that an independent arbitration agreement between the parties would not lose its effect simply because Section 18 provides for an arbitration forum. In the Steel Authority case, the Bombay High Court prohibited the Facilitation Council from acting in accordance with the provisions of section 18(3) of the MSME Act for an independent arbitration agreement between the parties. The High Court also distinguished between judgments in (i) Paper and Board Converters vs. U.P. State Micro & Small Enterprises Facilitation Council, Kanpur 2014 (5) AWC 4844, adopted by the Allahabad High Court and (ii) Principal Chief Engineer vs. Manibhai &Brothers First Appeal No. 637 of 2016 decided on 20 June 2016, adopted by Gujarat High Court. The High Court therefore decided that, although the Facilitation Council may continue to open a dispute for mediation or refer it to an arbitration institution or centre, regardless of what is contained in an arbitration agreement between the parties, the arbitration agreement remains valid, also taking into account the powers conferred by the Facilitation Council under section 18 of the MSMED Act. .
Private Limited.15. However, the Chhattisgarh High Court judgment does not deal with section 19 of the MSMED Act. It deals only with the MSMED act, arbitration under arbitration. the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A &C Act”) for simplicity, which calls into question an arbitral award rendered on 05.08.2016 by Micro & Small Enterprises Facilitation. The precedent is mandatory in section 19 of the Micro, Small & Medium Enterprises Development Act, 2006 (hereinafter referred to as “MSMED Act”) 3. We think it is appropriate to extract from it. With respect to the validity of a contractual arbitration mechanism following a reference to the MSMEF Council under the KKMU Act, the law appears to have been settled as a result of initial differences between the supreme courts. At the time when conciliation fails, Article 18(3) of the SPAM Act takes precedence over the contractual arbitration framework of the parties. . . .