MSMED Act No Bar to ABITRAL Disputes & Arbitral Claims of Buyer Against Supplier
Bar Bulletin and the Judgment dated 31.7.2026 of the High Court at Madras in Arb.O.P. (Com.Div.) No.83 of 2026 with Arb.A. Nos.1444 & 1445 of 2025 – TI Clean Mobility Pvt Ltd Vs. M/s Senatla Innovative EV Components Pvt Ltd.
The claim of the petitioner, who is also the applicant in the Arbitration Applications, that the parties have entered into the general purchase agreement, which also envisages a clause of Arbitration through a sole Arbitrator. Disputes had arisen between the parties in view of the defective chargers that was supplied which had seriously impacted in its brand reputation. He would submit that as on 30.10.2025 debit note to the tune of Rs.7,08,98,892/- towards the cost of replacement of the defective chargers was issued, as it is the obligation of the first respondent to bear it. He would submit that after adjusting a sum of Rs.2,00,83,628/- which is towards the invoices raised by the respondent for supply which is also liable not to be paid in view of the deficit services, the respondent owes a sum of Rs.5,08,15,264/- towards the cost of replacement of the defective chargers. He would submit that the respondent expressing its financial distress and inability to replace chargers had sought for waiver of the debit notes raised by it. 6. He would further submit that one Prudential Sugar Corporation Limited, who had been impleaded as Garnishee in the applications under Section 9, had entered into a Memorandum of Understanding with the respondent for acquiring 76% of the stake of the respondent. In view of the attempts that had been made by the respondent to transfer its assets by selling its stake in it with the third party, it had become necessitated for filing the interim application under Section 9 to protect the right of the petitioner’s/applicant.
The restrictions imposed under Section 18 deals with only the claim under Section 17, which would itself show that the supplier cannot also invoke the provisions of the Section 18 for any relief that falls outside the scope of Section 17 of the Act.
The said provision therefore cannot be made applicable to a claim made against a supplier who is registered under the either for a failure to supply or for a defective supply that had been made by the supplier. The MSMED Act restricts itself to the scope of recovery of unpaid amount that is liable to be paid by the buyer under Section 15 together with interest under Section 16 alone and not otherwise. The restrictions imposed under Section 18 deals with only the claim under Section 17, which would itself show that the supplier cannot also invoke the provisions of the Section 18 for any relief that falls outside the scope of Section 17 of the Act.