GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. versus MAHAKALI FOODS PVT. LTD. (UNIT 2) & ANR

Citation: [2022] 19 S.C.R. 1094 · Decided: 31-10-2022 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Disposed off

Cited by 4 judgment(s) · cites 10 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 19 S.C.R.
[2022] 19 S.C.R. 1094
1094
GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD.
v.
MAHAKALI FOODS PVT. LTD. (UNIT 2) & ANR.
(Civil Appeal No. 8008 of 2022)
OCTOBER 31, 2022
[UDAY UMESH LALIT, CJI AND BELA M. TRIVEDI, J.]
Arbitration and Conciliation Act, 1996 – s.37 – Micro, Small
and Medium Enterprises Development Act, 2006 (MSMED Act) –
Whether the provisions of Chapter-V of the MSMED Act, 2006 would
have an effect overriding the provisions of the Arbitration Act, 1996?
– Held :One of principles of statutory interpretation relevant for
our purpose is contained in the Latin maxim “leges posteriors priores
contrarias abrogant” (the later laws shall abrogate earlier contrary
laws) – Another relevant rule of construction is contained in the
maxim “generalia specialibus non derogant” (General laws do not
prevail over Special laws) – When there is apparent conflict between
two statutes, the provisions of a general statute must yield to those
of a special one – MSMED Act, 2006 being a special law and
Arbitration Act, 1996 being a general law, the provisions of MSMED
Act would have precedence over the Arbitration Act – It is settled
legal position that no agreement entered into between the parties
could be given primacy over the statutory provisions – When the
Special Act i.e., MSMED Act, 2006 has been created for ensuring
timely and smooth payment to the suppliers who are the micro and
small enterprises, and to provide a legal framework for resolving
the dispute with regard to the recovery of dues between the parties
under the Act, also providing an overriding effect to the said law
over any other law for the time being in force, any interpretation in
derogation thereof would frustrate the very object of the Act.
Arbitration and Conciliation Act, 1996 – s.37 – Micro, Small
and Medium Enterprises Development Act, 2006 (MSMED Act) –
Whether any party to a dispute with regard to any amount due under
Section 17 of the MSMED Act, 2006 would be precluded from
making a reference to the Micro and Small Enterprises Facilitation
Council under sub-section (1) of Section 18 of the said Act, if an
independent arbitration agreement existed between the parties as
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contemplated in Section 7 of the Arbitration Act, 1996? Held : That
no party to a dispute covered under Section 17 of the MSMED Act,
2006 would be precluded from making a reference to the Facilitation
Council under Section 18(1) thereof, merely because there is an
arbitration agreement existing between the parties – S 18(1) of the
MSMED Act, 2006 is an enabling provision which gives the party
to a dispute covered under Section 17 thereof, a choice to approach
the Facilitation Council, despite an arbitration agreement existing
between the parties.
Arbitration and Conciliation Act, 1996 – s.37 – Micro, Small
and Medium Enterprises Development Act, 2006 (MSMED Act) –
Whether the Micro and Small Enterprises Facilitation Council, itself
could take up the dispute for arbitration and act as an arbitrator,
when the council itself had conducted the conciliation proceedings
under sub-section (2) of the Section 18 of the MSMED Act, 2006 in
view of the bar contained in Section 80 of the Arbitration Act,1996?
Held : In affirmative – Section 38 of the Arbitration Act, 1996
contains a bar that the Conciliator shall not act as an Arbitrator in
any arbitral proceedings in respect of a dispute that is subject of
conciliation proceedings, the said bar stands superseded by the
provisions contained in Section 18 read with Section 24 of the
MSMED Act, 2006 – The provisions of Arbitration Act, 1996 would
apply to the proceedings conducted by the Facilitation Council only
after the process of conciliation initiated by the council under Section
18(2) fails and the council either itself takes up the dispute for
arbitration or refers to it to any institute or centre for such arbitration
as contemplated under Section 18(3) of the MSMED Act, 2006.
Disposing the appeals, the Court
HELD : 1.1 The first and foremost issue involved in these
appeals is whether the provisions contained in Chapter V of the
MSMED Act, 2006 with regard to the Delayed Payments to Micro
and Small Enterprises would have the precedence over the
provisions contained in the Arbitration Act, 1996, more
particularly when the parties by execution of an independent
agreement as contemplated in Section 7 of the Arbitration Act
had agreed to submit to arbitration the dis

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