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Arbitral Award of Facilitation Council – Limitation – Section 18(5) of MSME Act & Section 29A of AA –

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Vas India – small enterprise – was given contract of Digital Asset Management of the Maharashtra Public Service Commission on 3.1.2011.  The work was completed on 22.10.2012.

In August, 2018, Vast India made reference to the Facilitation Council under MSME Act for unpaid dues of Rs.2.03 crores.

After failure of conciliation, the arbitration was initiated.

On 16.6.2021, MPSC filed statement of defence. Six hearings took place.  After 13 months, the MPSC filed counter claim for Rs.152 crores

The Council passed the Arbitral Award dated 16.12.2022 in favour of Vast India rejected the counter claim of MPSC.

This was challenged in section 34 petition on the grounds that – it was not passed within outer limit of 90 days provided in Section 18(5) of MSME Act, it was passed after expiry of 12 months under section 29A of AA and mandate of the Arbitral Tribunal.

HELD that the timeline of 90 days in Section 18(5) of MSME Act is not mandatory.  Once the Council takes up arbitration, the Arbitration Act would govern and Section 29A would run its course.

However, by filing the counter claim on 27.7.2022, the MPSC reset the period of 12 months and new dead line was 26.7.2023.   Therefore, the impugned Award passed on 16.12.2022 is within limitation.

Facilitation Council can entertain counter claim in arbitration proceedings.

Judgment dated 11.2.2025 of the High Court of Bombay in Commercial Arbitration Petition (L) No.7555 of 2023 of Maharashtra Public Service Commission Vs. Vas India Pvt Ltd with connected matters

 

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