Supreme Court Asks Delhi International Arbitration Centre To Appoint Arbitrator In MSME Dispute

The Supreme Court recently asked the Delhi International Arbitration Centre (DIAC) to appoint a suitable arbitrator to resolve the disputes between M/s Patel Infrastructure Limited and M/s Aditya Construction, an MSME, under the Arbitration and Conciliation Act, 1996.

A Bench of Justices Sanjay Kumar and Sanjeev Sachdeva noted that the appeal raised an interesting question of law: whether a buyer of goods or services from a micro or small enterprise, governed by the Micro, Small and Medium Enterprises Development Act, 2006, can independently initiate arbitration proceedings against the MSME by taking recourse to the Arbitration and Conciliation Act.

The question was raised in the appeal filed by Patel Infrastructure Limited. Counsel for the appellant, Advocate Tanyiya Bansal, advanced arguments in support of the appellant's case and relied on earlier decisions of the Delhi High Court in Uniseven Engineering and Infrastructure Pvt. Ltd. vs. Micro and Small Enterprises Facilitation (MSEF) Council, District (South), and another (2023) and the Calcutta High Court in Essar Oil and Gas Exploration and Production Limited vs. Gargi Travels Private Limited (2023).

However, Sanjay Bhaseen, senior counsel appearing for the respondent MSME, stated on instructions that M/s Aditya Construction was agreeable to the appointment of an arbitrator through the aegis of the Delhi International Arbitration Centre to resolve the inter se disputes between the parties through arbitration under the Arbitration and Conciliation Act, 1996.

He submitted that since the appellant has its registered office in Ahmedabad, Gujarat, while the respondent MSME, a proprietorship, has its office in Basti, Uttar Pradesh, the venue of the arbitration may be fixed as New Delhi for the convenience of both parties.

“Accepting the fair offer made by the senior counsel so as to give a quietus to the matter without further ado,” the Bench disposed of the appeal and requested the Delhi International Arbitration Centre to appoint a suitable arbitrator to resolve the disputes between Patel Infrastructure Limited and Aditya Construction under the Arbitration and Conciliation Act.

The Bench directed that the venue of the arbitration would be New Delhi and asked the appellant to approach the Delhi International Arbitration Centre within two weeks.

While disposing of the appeal, the Supreme Court made it clear that the question of law raised in the case has not been decided. It said the issue is left open to be considered in an appropriate case in future.

Case Title: M/s. Patel Infrastructure Limited Vs M/s Aditya Construction

Bench: Justices Sanjay Kumar and Sanjeev Sachdeva

Date of Judgment: August 5, 2026