Delhi High Court
Mdd Medical Systems (India) Pvt Ltd vs Delhi International Arbitration … on 1 August, 2025
Author: Tushar Rao Gedela
Bench: Tushar Rao Gedela
$~41 & 42
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ LPA 492/2025, CM APPL. 46777/2025, CM APPL. 46778/2025,
CM APPL. 46779/2025 & CM APPL. 46780/2025
MDD MEDICAL SYSTEMS (INDIA) PVT LTD .....Appellant
Through: Mr. Animesh Kumar, Mr. Nishant
Kumar, Ms. Krishna Saraff, Dr.
Sumit Kumar, Ms. Aprajita, Ms.
Palak Joshi and Mr. Shikhar Khanna,
Advocates.
versus
DELHI INTERNATIONAL ARBITRATION CENTRE & ORS.
.....Respondents
Through: Mr. Tushar Sannu, Mr. Aman Kumar
and Ms. Ishika Jain, Advocates for
R-2.
Mr. Shreesh Chadha, Mr Aman
Singh Bakhshi, Mr. Divjot Singh
Bhatia, Mr. Shaurya Agarwal and
Mr. Vidhit Verma, Advocates for R-
3.
Mr. Farman Ali, Senior Panel
Counsel with Ms. Laavanya
Kaushik, GP, Ms. Usha Jamwal and
Ms. Khyaati Bansal, Advocates for
UOI.
(42)
+ LPA 493/2025, CM APPL. 46783/2025, CM APPL. 46784/2025,
CM APPL. 46785/2025 & CM APPL. 46786/2025
LSR MEDICAL PVT LTD .....Appellant
Through: Mr. Animesh Kumar, Mr. Nishant
Kumar, Ms. Krishna Saraff, Dr.
Sumit Kumar, Ms. Aprajita, Ms.
Palak Joshi and Mr. Shikhar Khanna,
Advocates.
Signature Not Verified
Digitally Signed LPA 492 & 493 of 2025 Page 1 of 8
By:MADHU SARDANA
Signing Date:06.08.2025
16:50:52
versus
DELHI INTERNATIONAL ARBITRATION CENTRE & ORS.
.....Respondents
Through: Mr. Tushar Sannu, Mr. Aman Kumar
and Ms. Ishika Jain, Advocates for
R-2.
Mr. Shreesh Chadha, Mr Aman
Singh Bakhshi, Mr. Divjot Singh
Bhatia, Mr. Shaurya Agarwal and
Mr. Vidhit Verma, Advocates for R-
3.
Mr. Farman Ali, Senior Panel
Counsel with Ms. Laavanya
Kaushik, GP, Ms. Usha Jamwal and
Ms. Khyaati Bansal, Advocates for
UOI.
% Date of Decision: 01.08.2025
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE TUSHAR RAO GEDELA
JUDGEMENT
TUSHAR RAO GEDELA, J: (ORAL)
1. The present Letters Patent Appeals have been filed by the appellants
challenging the order dated 25.04.2025 passed by the learned Single Judge
in W.P.(C) 10850/2019 & W.P.(C) 10859/2019 titled “MDD Medical
Systems (India) Pvt. Ltd. vs. Delhi International Arbitration Centre &
Ors.“, and “LSR Medical Pvt Ltd vs. Delhi International Arbitration
Centre & Ors.“, whereby the learned Single Judge dismissed the petitions
holding that the appellants may raise all questions as to the jurisdiction of
the Arbitral Tribunal or the maintainability of the proceedings before the
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Arbitral Tribunal under section 16 of the Arbitration & Conciliation Act,
1996, which could adjudicate upon the same as a preliminary issue.
2. We are not noting the facts already recorded by the learned Single
Judge and shall refer to only such facts as are germane to the present
appeals.
3. As per the appellants, the respondent no.3 approached the respondent
no.2/Micro and Small Enterprises Facilitation Council (hereinafter referred
to as “MSEFC”) under section 18(3) of Micro, Small and Medium
Enterprises Development Act, 2006 (hereinafter referred to as “MSMED
Act“). The respondent no.2/MSEFC closed the conciliation proceedings
vide reference letters dated 13.06.2018 and 21.06.2018 and referred the
dispute to the respondent no.1/Delhi International Arbitration Centre
(hereinafter referred to as “DIAC”). The DIAC issued letters dated
10.09.2018 and 03.10.2018 in the case of the appellant/MDD Medical
systems and letters dated 28.07.2018 and 19.09.2018 in the case of the
petitioner/LSR Medical Pvt Ltd to respondent no.3 with a direction to file
the Statement of Claim (hereinafter referred to as “SOC”), which the
respondent no.3 failed to do, despite reminder letters sent by the DIAC on
03.10.2018.
4. Consequently, the DIAC closed both the arbitration proceedings vide
letter dated 22.10.2018 and 27.10.2018 in the matter due to non-filing of
the SOC. Thereafter, on 30.07.2019 and 03.08.2018, the appellants were
informed that respondent no.3 has filed its SOC and DIAC directed the
appellants to file their Statement of Defence (hereinafter referred to as
“SOD”).
5. Aggrieved by the said communication, the appellants filed the
underlying writ petition seeking to quash the communications dated
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By:MADHU SARDANA
Signing Date:06.08.2025
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30.07.2019 and 03.08.2019 issued by the DIAC. These writ petitions were
disposed of by the learned Single Judge relegating the appellants to
approach Arbitral Tribunal under section 16 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as “A&C Act”). Assailing
the said judgement, the instant appeals have been preferred.
6. Learned counsel for the appellants submits that the moot questions
that require consideration by this Court are twofold: i) Whether the DIAC
has power to revive the reference given by MSEFC after closure or not? ii)
Whether the question of maintainability of proceedings on the ground of
procedural lapses by the DIAC can be looked into by the Arbitrator under
section 16 of the A&C Act ?
7. Learned counsel for the appellants submits that the reference to
DIAC was made under section 18 of the MSMED Act and section 18(5)
stipulates for completion of every reference made under this section within
a period of 90 days of reference. Consequently, learned counsel submits
that the mandate given to DIAC by MSEFC stood terminated vide the
aforesaid letters dated 22.01.2018 and 27.10.2018 and revival of such
proceedings after over nine months without any fresh reference is
completely against the provisions of MSMED Act and without any
authority of law.
8. Learned counsel for the appellants draws attention of this Court to
section 25 of the A&C Act to argue that the mandate of Arbitral Tribunal
also stood terminated due to non-filing of SOC by the respondent no.2. He
contends that even if a belated SOC can be accepted as per section 25 of
the A&C Act, sufficient cause was never shown by the respondent no.3 for
not filing the SOC. Moreover, he contends that the DIAC did not have the
jurisdiction to revive the proceedings automatically without any fresh
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request and the same should have been adjudicated by the Arbitral
Tribunal, however, no such request was made.
9. We have heard the learned counsel appearing for the appellants and
perused the impugned order.
10. Learned counsel for the appellants was at pains to contend that
section 18(5) of the MSMED Act mandates that a reference made under the
said Act ought to be completed within a period of 90 days of the reference.
Since the same stood terminated by the letters dated 21.02.2018 and
27.02.2018, the question of revival of the closed proceedings that too
without a fresh reference is contrary to the provisions of MSMED Act and
is non-est in law. We are unable to appreciate the said argument for the
reason that the period stipulated in section 18(5) of the MSMED Act only
refers to completion of the reference within 90 days and not the arbitral
proceedings. It is apparent that the appellants have misinterpreted and
misconstrued the provisions of the said Act. Broadly, section 18 of the
MSMED Act is in respect of, and the procedure to be followed while
referring to a dispute. Nothing more can or ought to be read into such a
provision else, such overarching interpretation would do violence to the
said provision.
11. Moreover, learned Single Judge has rightly observed that though
section 18(5) prescribes a timeline, it does not lay down any consequences
of its breach and, therefore, the timeline prescribed is directory and not
mandatory. Learned Single Judge has, and rightly so, contrasted the
provisions of section 18(5) of the MSMED Act with section 29A of the
A&C Act and concluded that since clear consequences of non-adherence to
the timelines prescribed in the A&C Act are stipulated i.e. termination of
the mandate of the arbitrator, the non-specification of the consequences of
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Signing Date:06.08.2025
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violation of provisions of section 18 of the MSMED Act, would render it
directory. We concur with such reasoning. That apart, there are a number
of Acts like The Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002, the Industrial Disputes Act,
1947 etc., where certain timelines are provided for certain procedures
prescribed therein without consequences and those have been held to be
directory. [See: C. Bright vs. The District Collector & Ors.: (2021) 2 SCC
392 and Remington Rand of India Ltd. vs. Workmen: AIR 1968 SC 224].
The relevant paragraph of Remington Rand of India Ltd. (supra) is
extracted hereunder:-
“3. Mr Gokhale also referred us to the case of State of Uttar Pradesh v.
Babu Ram Upadhya [(1961) 2 SCR 679 @710] where there is an
elaborate discussion as to whether the use of the word “shall” in a
Statute made the provision mandatory. It was observed by Subba Rao, J.
(as he then was) speaking for the majority of the Court that:
“For ascertaining the real intention of the legislature the Court
may consider, inter alia, the nature and the design of the statute,
and the consequences which would follow from construing it one
way or the other, the impact of other provisions whereby the
necessity of complying with the provisions in question is avoided,
the circumstances, namely, that the statute provides for a
contingency of the non-compliance with the provisions, the fact
that the non-compliance with the provisions is or is not visited by
some penalty, the serious or trivial consequences that flow
therefrom, and, above all, whether the object of the legislation
will be defeated or furthered.”
Keeping the above principles in mind, we cannot but hold that a
provision as to time in Section 17(1) is merely directory and not
mandatory. Section 17(1) makes it obligatory on the Government to
publish the award. The limit of time has been fixed as showing that the
publication of the award ought not to be held up. But the fixation of the
period of 30 days mentioned therein does not mean that the publication
beyond that time will render the award invalid. It is not difficult to
think of circumstances when the publication of the award within thirty
days may not be possible. For instance, there may be a strike in the
press or there may be any other good and sufficient cause by reason of
which the publication could not be made within thirty days. If we were
to hold that the award would therefore be rendered invalid, it would be
attaching undue importance to a provision not in the mind of the
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legislature. It is well known that it very often takes a long period of
time for the reference to be concluded and the award to be made. If the
award becomes invalid merely on the ground of publication after thirty
days, it might entail a fresh reference with needless harassment to the
parties. The non-publication of the award within the period of thirty
days does not entail any penalty and this is another consideration
which has to be kept in mind. What was said in the earlier passage from
the judgment in Sirsilk Ltd. v. Government of Andhra Pradesh merely
shows that it was not open to Government to withhold publication but
this Court never meant to lay down that the period of time fixed for
publication was mandatory.”
(emphasis supplied)
12. Learned counsel relied upon provisions of section 25 of the A&C
Act to argue that the action on the part of the DIAC in closing the
proceedings on the failure of submission of SOC by the
respondent/claimant, culminated in termination of the mandate of the
arbitral tribunal. Additionally, he submits that even if a belated SOC could
be accepted, no sufficient cause was shown by the respondent/claimant and
thus the DIAC, suo moto, could not have extended a timeline which action
is illegal, unlawful and non-est in law.
13. In so far as the aforesaid argument is concerned, we have perused
para 11 of the impugned judgment and find that the question as to the
revival of the proceedings was justified or not was left open by the learned
Single Judge in order to be raised before the arbitrator on the premise that it
essentially questions the jurisdiction of the Arbitral Tribunal itself. In order
to arrive at the aforesaid opinion, the learned Single Judge relied upon the
judgment of the Hon’ble Supreme Court in Vidya Drolia vs. Durga
Trading Corporation: (2021) 2 SCC 1 and Cox & Kings Ltd vs. SAP India
(P) Ltd.: (2024) 4 SCC 1. Apart from the fact that the aforesaid judgments
of the Hon’ble Supreme Court are an enunciation of law in respect of the
jurisdiction of the Arbitral Tribunal under Section 16 of the A&C Act, the
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Hon’ble Supreme Court has in Bhaven Constructions vs. Executive
Engineer, Sardar Sarovar Narmada Nigam Ltd. & Anr.: (2022) 1 SCC
75, clearly held that once arbitral proceedings are commenced, Courts
would ordinarily not exercise the power under Article 226 of the
Constitution of India except in rare occasions. In other words, having
regard to the fact that the arbitral proceedings have already commenced and
the issued raised by the appellants appears to be intrinsically intertwined
with the very jurisdiction of the tribunal, it would be appropriate to relegate
the appellants to their remedies under section 16 of the A&C Act and
refrain from interfering with the arbitration proceedings.
14. We do not find any merit in the instant appeals. Accordingly, the
appeals are dismissed alongwith pending applications, if any.
TUSHAR RAO GEDELA, J
DEVENDRA KUMAR UPADHYAYA, CJ
AUGUST 1, 2025/rl/yrj
Signature Not Verified
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By:MADHU SARDANA
Signing Date:06.08.2025
16:50:52