Madras High Court Prodigy Hydro Power Pvt. Ltd vs M/S.Khyaati Engineering on 6 September, 2017 DATED 06.09.2017 CORAM THE HONOURABLE DR.JUSTICE ANITA SUMANTH O.P.No.617 of 2017 Prodigy Hydro Power Pvt. Ltd., No.32, 28th Cross, Industrial Layout, Banashankari 2nd Stage, Bangalore 560 070, Karnataka, represented by its Director Mr. Harish Yechreddy .. Petitioner vs M/s.Khyaati Engineering, 218, New Tiny Sector, Post Office Road, Ambattur Industrial Estate, Chennai 600 058. Tamilnadu, represented by its Partners, 1.Mr.N.S.Thiruvambalam and 2.Mr.M.A.Ravikumar .. Respondents Prayer: Petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 praying to appoint second arbitrator to decide the dispute that has arisen between the petitioner and the respondents pursuant to the breach of the Terms and Conditions of Contract dated 23.7.2011 marked as ANNEXURE  B. For Petitioner : Mr.N.P.Vijay kumar For Respondents : Mr.C.Rajan ORDER This petition is filed in terms of Section 11(6) of the Arbitration and Conciliation Act, 1996 (in short, 'Act') praying for the appointment of a second Arbitrator to decide upon disputes that have been arisen between the parties pursuant to alleged breach of terms and conditions of 'Contract Agreement for supply of HydroMechanical equipments for 2 x 3 MW Baner  II SHP', dated 23.7.2011. ' 2. The Settlement of disputes is provided for under clause No.6 of the agreement that reads as under: 'Settlement of Disputes (GCC Clause 6) GCC 6.1.3  Replace the words an hourly with the words a daily in line 1 Adjudicator's daily fee GCC 6.1.4 Appointing Authority for Adjudicator: GCC 6.2.3 Any dispute, controversy or claim arising out of, or relating to this contract breach, termination or invalidity there of which has not become final and binding pursuant to G.C.C. Clause 6.12, shall be settled by arbitration by arbitral tribunal as under. The arbitral tribunal shall have full power to openup, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Project Manager and any Recommendation(s) of the Adjudicator related to the dispute. (i) A dispute with an Indian Contractor shall be finally settled by arbitration in accordance with the Arbitration & Conciliation Act, 1996, or any statutory amendment thereof. The arbitral tribunal shall consist of three arbitrators, one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the Parties and shall act as Presiding arbitrator. In case of failure of the two arbitrators, appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding arbitrator shall be appointed by the President of the Institution of Engineers (India). For the purpose of this subclause, the term Indian Contractor means a contractor who is registered in India and is a juridic person created under Indian law as well as a joint venture between such a contractor and a Foreign Contractor.' 3. Heard Mr. N.P. Vijay Kumar appearing for the petitioner and Mr.C.Rajan appearing for the respondent. 4. The main objection raised by the respondent is to the effect that he has already moved the Micro, Small and Medium Enterprises Development Council ('MSMEDC' in short) for resolution of disputes that have admittedly arisen between the parties. In view of the same, the petitioner could, according to him, well participate in proceedings before the MSMEDC without resorting to and insisting upon the present proceedings now initiated. 5. Per contra, learned counsel appearing for the petitioner would submit that the MSMEDC has been constituted primarily to deal with disputes that are raised by the supplier 'to a transaction and does not envisage the raising or adjudication of counter claims by other parties to a transaction. 6. I find force in the petitioner's arguments. The respondent is a 'supplier', as per the definition of the term under section 2(n) of the Micro, Small and Medium Enterprises Development Act, 2006 (in short 'MSMED Act'). The recovery of amounts due are dealt with in terms of section 17 of the MSMED Act in the following terms: '17. Recovery of amount due For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under section 16.' 7. Thereafter, section 18 dealing with 'Reference to the Micro and Small Enterprises Facilitation Council' states in subsection (1) that, notwithstanding anything contained in any other law for the time being in force, any party to a dispute may