BATA INDIA LIMITED Vs. AVS INTERNATIONAL PRIVATE LIMITED

JUDGEMENT

(1.) By way of the present petition under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter 'the A&C Act'), the Petitioner prays that the parties be referred to arbitration under the aegis of Delhi International Arbitration Centre to adjudicate the disputes that have arisen between the parties.

(2.) Petitioner (BATA India Ltd.), is a company manufacturing footwear. Respondent [AVS International Pvt. Ltd., also Respondent No. 1 in OMP(I)(Comm) 201/2019] is also engaged in the same business. Respondent No. 2 in OMP(I)(Comm) 201/2019, is the MSME Facilitation Council (hereinafter ?the Council?). Petitioner entered into a contract with the Government of India for supply of footwear to the Indian Navy and the Respondent agreed to manufacture and supply such footwear incompliance with the terms of the said contract. To this effect, the parties entered into an agreement dated 7th January, 2016 which was valid for a period of one year and subsequently a fresh Manufacturing Agreement was executed between the parties on 10th January, 2017. In respect of the said contract, certain disputes arose between the parties as Indian Navy raised several issues regarding the quality and/or defective supply of the footwear. In these circumstances, demands were raised by the Petitioner against the Respondent followed by legal notices dated 21 st July 2018, 8th December 2018 and 23rd January 2019. Parties attempted to resolve the disputes amicably and several meetings took place in this regard. During this process, on 23rd January 2019, Respondent apprised the Petitioner that it is a registered MSME enterprise and the provisions of MSME Development Act, 2006 are applicable to the Respondent. On 22nd April 2019, the Council sent a notice to the Petitioner on a claim/reference filed by the Respondent under the provisions of the MSME Act, 2006 (hereinafter 'the MSME Act'). Thereafter, under Section 18 of the MSME Act, Conciliation proceedings were held on 16th May 2019, which Petitioner did not attend. Accordingly, the proceeding was adjourned for 21st May, 2019. On the said date, the representative of the Petitioner was present and he informed the Council that settlement talks between the parties were in progress. On the basis of the aforesaid statement, the Council gave one month?s time to the parties to conclude the settlement talks. However on 28th May 2019, the Petitioner sent a notice to the Respondent and the Council, terminating the Conciliation proceedings under 76(d) of the A&C Act. In the same notice Petitioner also invoked the arbitration clause contained in the manufacturing agreement dated 10th January 2017.

(3.) Following the termination, the Council under Section 18(3) of the MSME Act entered upon reference, on 12th June 2019 to arbitrate the disputes between the parties and issued a notice informing the parties to appear before them. The parties were also informed that the reference would be disposed on merits on the basis of the material available before it, in terms of Section 25 of the A&C Act, read with Section 15 to 23 of the MSME Act.