The Supreme Court of India, comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva, has disposed of an appeal concerning whether a buyer purchasing goods or services from a micro or small enterprise (MSME) can independently initiate arbitration under the Arbitration and Conciliation Act, 1996. Following a consent offer made by the respondent enterprise to resolve disputes through arbitration, the Court referred the matter to the Delhi International Arbitration Centre (DIAC) while keeping the foundational legal issue open for future consideration.
Background of the Case
The appeal arose out of Special Leave Petition (C) No. 3250 of 2026, filed by M/s. Patel Infrastructure Limited against respondent M/s. Aditya Construction.
The matter raised an important legal question regarding whether a buyer of goods or services from a micro or small enterprise governed by the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) can seek to initiate arbitration proceedings in respect of its claim against such an MSME by independently taking recourse to the Arbitration and Conciliation Act, 1996.
Arguments of the Parties
Learned counsel Ms. Taniya Bansal appeared on behalf of the appellant, M/s. Patel Infrastructure Limited, and presented arguments relying on precedent to support her contentions. She placed reliance on two specific High Court rulings:
- Uniseven Engineering and Infrastructure Pvt. Ltd. vs. Micro and Small Enterprises Facilitation (MSEF) Council, District (South), and another (Delhi High Court, W.P. (C) 11233/2021)
- Essar Oil and Gas Exploration and Production Limited vs. Gargi Travels Private Limited (Calcutta High Court, A.P. No. 73 of 2023)
During the hearing, Mr. Sanjay Bhaseen, learned senior counsel appearing on instructions for the respondent MSME, M/s. Aditya Construction, stated that the respondent was agreeable to appointing an arbitrator through the aegis of the Delhi International Arbitration Centre (DIAC) to resolve the inter se disputes under the provisions of the Arbitration and Conciliation Act, 1996.
Addressing the issue of forum convenience, the learned senior counsel submitted that as the appellant has its registered office at Ahmedabad, Gujarat, and the respondent MSME, being a proprietorship, has its office at Basti in Uttar Pradesh, New Delhi should be fixed as the venue of arbitration for the convenience of both parties.
Court’s Analysis and Decision
Accepting the proposal put forward by the respondent, the Supreme Court decided to resolve the proceedings without delving into an adjudication on merits. The Court observed:
“Accepting the fair offer made by the learned senior counsel so as to give a quietus to the matter without further ado, the appeal is disposed of requesting the Delhi International Arbitration Centre to appoint a suitable arbitrator to undertake the resolution of the disputes between the appellant, M/s Patel Infrastructure Limited, and the respondent, M/s Aditya Construction under the provisions of the Arbitration and Conciliation Act, 1996.”
The Court mandated that the venue of arbitration shall be at New Delhi and directed the appellant to approach the Delhi International Arbitration Centre within two weeks from the date of receipt of a certified copy of the order.
Addressing the primary statutory question raised in the petition, the bench explicitly noted:
“The question of law raised in this appeal is, however, left open to be considered in an appropriate case in future.”
The apex court granted leave, disposed of the appeal in the above terms, and directed that the parties shall bear their own costs.
Case Details
Case Title: M/s. Patel Infrastructure Limited v. M/s. Aditya Construction
Case No.: Civil Appeal No. _____ of 2026 (Arising out of SLP (C) No. 3250 of 2026)
Bench: Justice Sanjay Kumar and Justice Sanjeev Sachdeva
Date: August 5, 2026
