Libertatem Magazine

Silpi Industries V Appellants Versus Kerala State Road Transport Corporation & Another

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Facts of the Case 

In the recent case of the M/s. Silpi Industries v Appellants Versus Kerala State Road Transport Corporation & Anr an appeal was filled in the Apex court from an order from the Kerala high court  the brief fact of the case is as follow

Here in the case appellant /claimants filled the tender to the respondent Kerala State Road Transport Corporation (KSRTC) according to their terms for a purchase order, 90% of the total purchase price was payable to the appellants/claimants on supply of materials and the balance 10% was to be paid subject to the final performance report. But when the 10% balance amount was not paid as per the purchase order, the appellants/claimants started the arbitration proceeding in Micro, Small and Medium Enterprises Development Act (MSMED and the awards were passed in favor of the claimants and the same awards were challenged by way of applications under Section 34 of the Act but the application was dismissed. again respondents have carried the matter by way of appeals under Section 37 before the High Court of Kerala. The issues, which were formulated in paragraph 5 of the judgment and answered against the order of the High Court of Kerala where the matter in issue is Whether the Limitation Act, 1963 applies to arbitration proceedings? And  Whether the counterclaim is entertainable in the arbitration proceedings under the act? ‘’ 

Deciding all the issues the court put the reliance upon the section 17 and 18 of the arbitration act and allowed the application for the appointment of the 2nd arbitrator and also allowed the other claims,  the decision was again challenged in the apex court. 

 Issues before the Apex court 

The same was challenged via an appeal in the apex court where court after hearing both the sides had made two matters in issues the issue raised are –

  1. Whether the provisions of the Indian Limitation Act, 1963 apply to arbitration proceedings initiated under Section 18(3) of Micro, Small, and Medium Enterprises Development Act, 2006?
  2.  (ii) Whether, the counterclaim is maintainable in such arbitration proceedings?

Court’s opinion and Court’s decision 

Deciding the first issue of the applicability of the limitation act on the arbitration proceedings court had undertaken the few provision of section 17 and 18 of the arbitration act they had the right to seek remedy under this for alternative proceeding, and talking about the limitation act arbitration is covered under section 43 and the limitation act applies to all arbitration proceedings  . also referred the reason decision of High court to the judgment and held that arbitration is covered by the section under section 18(3)  as a plain reading of Section 43 itself makes it clear that the Limitation Act, 1963 shall apply to the arbitrations, as it applies to proceedings in court too. When the settlement concerning a dispute between the parties is not arrived at under Section 18 of the 2006 Act, necessarily, the Micro and Small Enterprises Facilitation Council shall take up the dispute for arbitration under Section 18(3) of the 2006 Act or it may refer to institution or center to provide alternate dispute resolution services and provisions of Arbitration and Conciliation Act are made applicable on section 43 of the Arbitration and Conciliation Act,  held that Limitation Act, 1963 applies to the arbitration proceedings and held, no further elaboration is necessary. 

Talking about the second issue It is also not in dispute that the appellant approached the District Industrial Centre and filed an entrepreneur memorandum under Section 8 of the MSMED Act and later has approached the Council invoking the provisions of the MSMED Act by applying Section 18 of the Act. It is the specific case of the respondent that the appellant has abandoned the incomplete work having made deficient and defective supplies in 2015. In that view of the matter, is in the firm view that the appellant is not entitled to invoke the provisions of Chapter V and seek reference to arbitration under Section 18 of the MSMED Act, 2006. Further, it is also not in dispute that there is an agreement for arbitration between the parties for resolution of dispute U/s 42 disputes according to their contract,  this view High Court has rightly allowed their application under Section 11(6) for the necessary action for the counterclaim and the appointment of the arbitrator, same was being held by the apex court concluding all the mater court said that the appellant is not entitled to invoke the provision and seek for the arbitration under section 18 of the act, further there is no question or the dispute regarding the agreement between the parties for the resolution of the dispute to their contract so the held that high court has rightly allowed the application filed by the responded. and the appeal was dismissed with no order and cost. 




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