Delhi High Court
Geniemode Global Pvt Ltd vs Priyanka Impex Private Limited & Anr on 24 February, 2026
Author: Jasmeet Singh
Bench: Jasmeet Singh
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 09.10.2025
Judgment pronounced on: 24.02.2026
+ O.M.P. (MISC.)(COMM.)150/2025 & I.A. 4459/2025
GENIEMODE GLOBAL PVT LTD. .....Petitioner
Through:Mr Vivek Pathak, Mr Tanuj Dogra,
Mr Rakesh Pandey, Advs.
versus
PRIYANKA IMPEX PRIVATE LIMITED & ANR. .....Respondents
Through:Mr. Rakesh Gaur, Adv.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
JUDGM ENT
1. This is a petition filed under Section 39(2) of the Arbitration and
Conciliation Act, 1996 ("1996 Act") impugning the Order dated
18.01.2025 ("impugned Order") passed by empaneled Expert to
facilitate arbitration proceedings in Case Ref. No. 5710/2024, wherein
the petitioner was directed to pay the entire fee of the learned Expert
to the tune of Rs. Rs. 18,04,057/- to adjudicate the counter claim of
the petitioner.
FACTUAL BACKGROUND
2. The petitioner i.e., Geniemode Global Private Limited, a company
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incorporated under the Companies Act, 2013, is a „Micro‟ industry
duly registered under Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006 (“MSMED Act“).
3. The respondent No. 1 is Priyanka Impex Private Limited and
respondent No. 2 is Chairman, HMSEFC-cum-Director General of
MSME, Haryana.
4. The petitioner and respondent No. 1 entered into a Service Agreement
dated 09.02.2022 (“Service Agreement”), whereby the petitioner
placed orders with respondent No.1 for supply of apparels as per the
purchase orders issued by the buyers and also provided advance
payments towards for raw materials in relation to such orders.
5. The said Service Agreement contains the arbitration clauses being
Clause No. 7 read with Clause No. 11 of the Second Party Terms,
which read as under:-
“7. DISPUTE RESOLUTION: Any dispute arising from
this agreement shall be first through settled arbitration to
be held in accordance with the Arbitration and Conciliation
Act, 1996 by a sole arbitrator mutually appointed by both
FIRST PARTY and SECOND PARTY. Any arbitration
award by the arbitrator shall be final and binding upon both
FIRST PARTY and SECOND PARTY. If the parties fail to
reach an agreement after negotiation, either party may
bring a law suit in accordance with the laws of India as
applicable in Delhi. The Courts at Delhi shall have
exclusive jurisdiction.
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11. DISPUTE RESOLUTION AND GOVERNING LAWS
11.1 These terms and the Agreement shall be construed and
governed according to the laws of India as applicable in
Delhi and subject to Clause 11.2, the courts at Delhi shall
have exclusive Jurisdiction.
11.2 Any dispute arising out of or in connection with these
terms and/or the Agreement (“Dispute”), which remains to
be resolved after the FIRST PARTY and SECOND PARTY
have attempted to resolve the same amicably for 30 (thirty)
days from the raising of the Dispute by any one of them,
shall be referred to and settled by arbitration to be held in
accordance with the Arbitration and Conciliation Act, 1996
by a sole arbitrator mutually appointed by both FIRST
PARTY and SECOND PARTY. The language of the
arbitration shall be English, and the seat and venue shall be
Delhi. Any arbitration award by the arbitrator shall be final
and binding upon both FIRST PARTY and SECOND
PARTY.”
6. The petitioner and respondent No. 1 also agreed that the advance
payment made to respondent No.1 will be adjusted against the
payment for supply of goods to buyers. Further, the parties also
mutually decided that the advances given to respondent No. 1 will be
returned, upon delivery of goods by respondent No. 1 to petitioner or
the buyers, as appropriate.
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7. It is stated that from April 2022 till December 2023 the petitioner
advanced approximately Rs. 2.37 crores to respondent No.1.
Additionally, the petitioner also raised various invoices on respondent
No. 1 with respect to raw material supplied to respondent No.1, which
amount to Rs. 1.88 crores approximately.
8. Subsequently, on account of outstanding dues of respondent No. 1
towards the petitioner, both the parties entered into an Affiliate
Agreement dated 30.06.2023 (“Affiliate Agreement”), wherein the
respondent No. 1 acknowledged liability of Rs. 3,12,80,821/- towards
the petitioner as on 30.06.2023.
9. The said Affiliate Agreement also contains an arbitration clause and
jurisdiction clause being Clause No. 12 and Clause No. 13,
respectively, which read as under:-
“12. DISPUTE RESOLUTION: Any dispute arising from
this agreement shall be first settled through mutual
agreement. If no resolution is achieved the dispute the
Courts at Delhi shall have exclusive jurisdiction for any
suits or dispute resolutions by legal recourse.
13. GOVERNING LAW AND JURISDICTION: This
Agreement shall be construed in accordance with the laws
of India and subject to the arbitration clause above,
competent courts in Delhi, Haryana shall have exclusive
jurisdiction in respect of any matter.”
10. The petitioner continued to advance money to respondent No. 1 to
purchase raw materials and also supplied raw material for
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manufacturing goods. It is stated that respondent No. 1 failed to make
any repayments to petitioner and that respondent No.1 is in default of
payment of Rs. 4,25,97,247/-, which comprises of Rs. 1,88,41,092/-
for the invoices raised for supply of apparel and a sum of Rs.
2,37,56,155/- paid by the petitioner as advances to respondent No.1.
11. Consequently, in view of respondent No. 1‟s default in repayment of
outstanding amounts, the petitioner issued a Demand Notice dated
15.04.2024 under Section 8 of the Insolvency and Bankruptcy Code,
2016 read with Rule 5(1)(b) of the Insolvency and Bankruptcy Board
of India (Application to Adjudicating Authority) Rules, 2016,
demanding payment of the outstanding dues of Rs. 4,25,97,247/- as on
13.04.2024. The respondent No. 1 replied to the same on 24.04.2024.
12. Later, the petitioner also filed an application under Section 9 of the
Insolvency and Bankruptcy Code, 2016 seeking initiation of
insolvency proceedings against respondent No.1 before the National
Company Law Tribunal (“NCLT”), Chandigarh and a Notice was
issued by NCLT, Chandigarh.
13. On 29.05.2024, respondent No. 1 filed a reference under Section 18 of
the MSMED Act before the MSME Facilitation Council at Panchkula
claiming recovery of Rs. 2,93,72,124/-, pursuant to which a Notice
dated 02.08.2024 was issued to the petitioner.
14. Subsequently, the MSME Facilitation Council conducted two virtual
meeting and vide Order dated 05.11.2024 terminated the conciliation
proceedings and converted itself into a Multi Member Arbitration
Tribunal. Later, vide Order dated 19.12.2024, the Multi Member
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Arbitration Tribunal appointed a Former Judge Punjab and Haryana
High Court, as an „Expert‟ to facilitate arbitration proceedings.
15. The petitioner filed its counter claim before the learned Expert and the
learned Expert vide the impugned Order dated 18.01.2025 directed the
petitioner to pay the learned Expert‟s fee to the tune of Rs. 18,04,057/-
to adjudicate the counter claim.
16. Being aggrieved by the impugned Order, the petitioner has filed the
present petition.
SUBMISSIONS ON BEHALF OF THE PETITIONER
17. Mr. Pathak, learned counsel for the petitioner, submits that this Court
has the jurisdiction to entertain the present petition. The dispute arose
from the Service Agreement and Clause No. 7 of read with Clause No.
11 of the Second Party Terms of the said Agreement (as reproduced
above), vests exclusive jurisdiction on the Courts of Delhi.
18. On merits, it is submitted that under Section 31(8) read with Section
31A and Section 38(1) of the 1996 Act the power of the Arbitral
Tribunal to fix costs needs to be apportioned between the parties in
equal share, as per Section 38(2) of the 1996 Act. Although the
learned Expert has divided the cost of adjudicating claims equally
between the parties, however, the petitioner has been directed to pay
the entire cost for adjudicating its counter claim, which is in violation
of Section 38(2) of the 1996 Act and also Section 18 of the 1996 Act,
which advances for equal treatment of the parties.
19. Further, it is submitted that Rule 4 of the Delhi International
Arbitration Centre (DIAC) (Administrative Cost & Arbitrators Fee)
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Rules 2018 also provides that the Administrative Cost and Fees shall
be equally shared between the parties, which remain subject to cost of
the arbitration as may decided as per Section 31A of the 1996 Act. It
is further submitted that the Arbitrator‟s discretion to award cost in
favour of either party arises at the award stage.
20. It is submitted that while the learned Expert has included the interest
in the „sum in dispute‟ for Fees calculation payable in terms of the
Schedule IV of the 1996 Act, however, there is no provision in the
1996 Act which provides for inclusion of interest within the term „sum
in dispute‟ in order to calculate the fees of the Arbitrator.
SUBMISSIONS ON BEHALF OF THE RESPONDENT NO. 1
21. At the outset, Mr. Gaur, learned counsel for the respondent No. 1, has
challenged the jurisdiction of this Court to entertain the present
petition.
22. It is submitted that the present petition is not maintainable before this
Court since the arbitration proceedings, arising from reference before
the MSME Facilitation Council, were conducted in Faridabad,
Haryana and all hearings, proceedings, and orders emanated
therefrom. Hence, the seat of arbitration is Faridabad and as per the
settled law, the seat of arbitration determines the exclusive
supervisory jurisdiction over the arbitral process. Reliance is placed
on BGS SGS Soma JV v. NHPC Ltd.1, Indus Mobile Distribution
Pvt. Ltd. v. Datawind Innovations Pvt. Ltd.2 and Bharat Aluminium
1
(2020) 4 SCC 234.
2
(2017) 7 SCC 678.
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Co. v. Kaiser Aluminium Technical Services Inc.3. Therefore, it is
argued that only the courts at Faridabad, Haryana, are competent to
entertain proceedings under Section 39(2) of the 1996 Act.
23. On merits, it is submitted that as per Section 31A (a) of the 1996 Act
the Arbitrator have the discretion to determine “Whether costs are
payable by one party to another”.
24. Further, it is submitted that the petitioner has approached multiple
forums for the same dispute, namely, NCLT Chandigarh for
proceedings under the IBC; the Council at Panchkula, Haryana for
MSME reference; Arbitration proceedings at Faridabad, Haryana and
then the present petition before this Court. Such conduct of the
petitioner constitutes forum shopping and the same is condemned by
the Hon‟ble Supreme Court. Reliance is placed on Union of India v.
Cipla Ltd.4.
25. Lastly, it is submitted that Section 39(2) of the 1996 Act provides a
specific appellate remedy against an order of the Arbitral Tribunal,
only before the Court having jurisdiction over the seat. Therefore,
filing of any petition in any other court is barred. Hence, in view of
the lack of territorial jurisdiction, and abuse of process as
demonstrated above, the stay is liable to be vacated.
ANALYSIS AND FINDINGS
26. The matter was heard and reserved on 09.10.2025. However, since
neither party referred the judgement of Harcharan Dass Gupta v.
3
(2012) 9 SCC 552.
4
(2017) 5 SCC 262.
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Union of India5, the mater was listed for clarification and submissions
on the judgement of Harcharan Dass Gupta (supra) on 09.01.2026,
14.01.2026, 30.01.2026 and 17.02.2026.
27. I have heard learned counsels for the parties.
28. At the outset, the learned counsel for the respondent No. 1 has
challenged the jurisdiction of this Court to entertain the present
petition on the ground that that the seat of arbitration is Faridabad
since the arbitration proceedings arises from reference before the
MSME Facilitation Council, which were conducted in Faridabad,
Haryana.
29. The primary issue of territorial jurisdiction in the present case is
squarely covered by the judgment of Harcharan Dass Gupta (supra).
In the said case, the appellant being a registered supplier under the
MSMED Act was declared as a successful bidder of a tender bid
invited by the respondent therein, pursuant to which an agreement was
executed between the parties and the specific clauses of the said
agreement i.e., Clauses No. 25 and 25A, provided seat of arbitration at
Bengaluru. Since there were disputes between the parties, the
appellant invoked the jurisdiction of the Facilitation Council at Delhi
under Section 18 of the MSMED Act and the Facilitation Council
referred the disputes to arbitration. The respondent filed a writ petition
before the High Court of Karnataka challenging the jurisdiction of the
Delhi Arbitration Centre and conduct of arbitration proceedings in
Delhi, which was allowed by the High Court of Karnataka. The same
5
2025 SCC OnLine SC 1111.
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was challenged before the Hon‟ble Supreme Court, wherein the
Hon‟ble Supreme Court answered the jurisdictional dispute regarding
the arbitration proceedings under MSMED Act i.e., whether the Delhi
Arbitration Centre could conduct arbitration despite the agreement
specifying Bengaluru as the arbitration seat, in affirmative. The
Hon‟ble Supreme Court while reaffirming its decision in Gujarat
State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd.6
held as under:-
“8. We have given our anxious consideration to the
submissions of both the parties. In our view, the issue is no
more res integra and is covered by the decision of this
Court in Mahakali. As we need to do nothing more than
refer to the relevant portions of the binding precedent, the
reasoning, as well as the conclusion in this decision are
extracted herein for ready reference. At the outset, the
following two paragraphs clearly explain the principle on
the basis of which the court holds that the MSMED Act
overrides the Arbitration Act:
“42. Thus, the Arbitration Act, 1996 in general governs
the law of Arbitration and Conciliation, whereas
the MSMED Act, 2006 governs specific nature of disputes
arising between specific categories of persons, to be
resolved by following a specific process through a
specific forum. Ergo, the MSMED Act, 2006 being a6
(2023) 6 SCC 401.
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special law and the Arbitration Act, 1996 being a general
law, the provisions of the MSMED Act would have
precedence over or prevail over the Arbitration Act,
1996. In Silpi Industries case [Silpi Industries v. Kerala
SRTC, (2021) 18 SCC 790] also, this Court had observed
while considering the issue with regard to the
maintainability and counter-claim in arbitration
proceedings initiated as per Section 18(3) of the MSMED
Act, 2006 that the MSMED Act, 2006 being a special
legislation to protect MSMEs by setting out a statutory
mechanism for the payment of interest on delayed
payments, the said Act would override the provisions of
the Arbitration Act, 1996 which is a general legislation.
Even if the Arbitration Act, 1996 is treated as a special
law, then also the MSMED Act, 2006 having been
enacted subsequently in point of time i.e. in 2006, it
would have an overriding effect, more particularly in
view of Section 24 of the MSMED Act, 2006 which
specifically gives an effect to the provisions of Sections
15 to 23 of the Act over any other law for the time being
in force, which would also include the Arbitration Act,
1996.
43. The Court also cannot lose sight of the specific non
obstante clauses contained in sub-sections (1) and (4) of
Section 18 which have an effect overriding any other law
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for the time being in force. When the MSMED Act,
2006 was being enacted in 2006, the legislature was
aware of its previously enacted Arbitration Act of 1996,
and therefore, it is presumed that the legislature had
consciously made applicable the provisions of
the Arbitration Act, 1996 to the disputes under
the MSMED Act, 2006 at a stage when the conciliation
process initiated under sub-section (2) of Section 18 of
the MSMED Act, 2006 fails and when the Facilitation
Council itself takes up the disputes for arbitration or
refers it to any institution or centre for such arbitration.
It is also significant to note that a deeming legal fiction is
created in Section 18(3) by using the expression “as if”
for the purpose of treating such arbitration as if it was in
pursuance of an arbitration agreement referred to in sub-
section (1) of Section 7 of the Arbitration Act, 1996. As
held in K. Prabhakaran v. P. Jayarajan [K.
Prabhakaran v. P. Jayarajan, (2005) 1 SCC 754 : 2005
SCC (Cri) 451], a legal fiction presupposes the existence
of the state of facts which may not exist and then works
out the consequences which flow from that state of
facts. Thus, considering the overall purpose, objects and
scheme of the MSMED Act, 2006 and the unambiguous
expressions used therein, this Court has no hesitation in
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Act, 2006 have an effect overriding the provisions of
the Arbitration Act, 1996.”
9. Further, the Court proceeds to hold that even the
agreement between the parties stands overridden by the
statutory provisions under the MSMED Act:
“44. The submissions made on behalf of the counsel for
the buyers that a conscious omission of the word
“agreement” in sub-section (1) of Section 18, which
otherwise finds mention in Section 16 of the MSMED Act,
2006 implies that the arbitration agreement
independently entered into between the parties as
contemplated under Section 7 of the Arbitration Act,
1996 was not intended to be superseded by the provisions
contained under Section 18 of the MSMED Act,
2006 also cannot be accepted. A private agreement
between the parties cannot obliterate the statutory
provisions. Once the statutory mechanism under sub-
section (1) of Section 18 is triggered by any party, it
would override any other agreement independently
entered into between the parties, in view of the non
obstante clauses contained in sub-sections (1) and (4) of
Section 18. The provisions of Sections 15 to 23 have also
overriding effect as contemplated in Section 24 of
the MSMED Act, 2006 when anything inconsistent is
contained in any other law for the time being in force. ItO.M.P. (MISC.) (COMM.) 150/2025 Page 13 of 19
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cannot be gainsaid that while interpretating a statute, if
two interpretations are possible, the one which enhances
the object of the Act should be preferred than the one
which would frustrate the object of the Act. If submission
made by the learned counsel for the buyers that the party
to a dispute covered under the MSMED Act, 2006 cannot
avail the remedy available under Section 18(1) of
the MSMED Act, 2006 when an independent arbitration
agreement between the parties exists is accepted, the very
purpose of enacting the MSMED Act, 2006 would get
frustrated.
45. …
46. The submission therefore that an independent
arbitration agreement entered into between the parties
under the Arbitration Act, 1996 would prevail over the
statutory provisions of the MSMED Act, 2006 cannot be
countenanced. As such, sub-section (1) of Section 18 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. Absence of the word “agreement” in the said
provision could neither be construed as casus omissus in
the statute nor be construed as a preclusion against the
party to a dispute covered under Section 17 to approachO.M.P. (MISC.) (COMM.) 150/2025 Page 14 of 19
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the Facilitation Council, on the ground that there is an
arbitration agreement existing between the parties. In
fact, it is a substantial right created in favour of the party
under the said provision. It is therefore 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.
47. The aforesaid legal position also dispels the
arguments advanced on behalf of the counsel for the
buyers that the Facilitation Council having acted as a
Conciliator under Section 18(2) of the MSMED Act,
2006 itself cannot take up the dispute for arbitration and
act as an arbitrator. …. As held earlier, the provisions
contained in Chapter V of the MSMED Act, 2006 have an
effect overriding the provisions of the Arbitration Act,
1996. The provisions of the 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.
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48. When the Facilitation Council or the institution or the
centre acts as an arbitrator, it shall have all powers to
decide the disputes referred to it as if such arbitration
was in pursuance of the arbitration agreement referred to
in sub-section (1) of Section 7 of the Arbitration Act,
1996 and then all the trappings of the Arbitration Act,
1996 would apply to such arbitration. It is needless to say
that such Facilitation Council/institution/centre acting as
an Arbitral Tribunal would also be competent to rule on
its own jurisdiction like any other Arbitral Tribunal
appointed under the Arbitration Act, 1996 would have, as
contemplated in Section 16 thereof.”
10. The issue relating to „seat of arbitration‟ in all cases
covered under the MSMED Act is settled in view of the
pronouncement of this Court in Mahakali. This position is
also true by virtue of the specific provision of the MSMED
Act, that is, sub-Section (4) of Section 18, which vests
jurisdiction for arbitration in the Facilitation Council where
the supplier is located:
“(4) Notwithstanding anything contained in any other
law for the time being in force, the Micro and Small
Enterprises Facilitation Council or the centre providing
alternate dispute resolution services shall have
jurisdiction to act as an Arbitrator or Conciliator under
this section in a dispute between the supplier locatedO.M.P. (MISC.) (COMM.) 150/2025 Page 16 of 19
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within its jurisdiction and a buyer located anywhere in
India.”
11. There is no dispute about the fact that the appellant-
MSME is located in Delhi and as such the Facilitation
Council, (South-West), GNCTD, Old Terminal Tax
Building, Kapashera, New Delhi-110037. In exercise of its
power, the said Council entrusted the conduct of arbitration
through the institutional aegis of the Delhi Arbitration
Centre. The conclusions drawn by us are the logical
consequence of the statutory regime as also declared by this
Court in Mahakali.”
(Emphasis added)
30. A perusal of the aforesaid judgment clearly shows that the Hon‟ble
Supreme Court, by relying on Mahakali Foods (supra), held that
MSMED Act is a special legislation to protect MSMEs and would
override the provisions of the 1996 Act, being a general and a prior
enactment. Additionally, in terms of Section 18(4) of the MSMED
Act, the jurisdiction vests in the Facilitation Council where the
supplier is located.
31. In the present case, undisputedly the arbitration clauses in the Service
Agreement i.e., Clause No. 7 and Clause No. 11 of Second Party
Terms, provide the Courts of Delhi with exclusive jurisdiction and in
clear words states “the seat and venue shall be Delhi”.
32. However, the respondent No. 1, also being the supplier in the present
case, approached the Facilitation Council at Panchkula, Haryana. The
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Facilitation Council, MSME issued notice to the petitioner and after
failure of conciliation proceedings appointed the Arbitrator.
33. Since it is the Facilitation Council at Panchkula, Haryana which has
dealt with the issue in controversy, appointed the Arbitrator,
conducted the arbitration proceedings, applying the principles of
Harcharan Dass Gupta (supra) and Mahakali Foods (supra) as
discussed above, is the Courts at the location of Facilitation Council
where the supplier is located which will have jurisdiction. This Court
lacks the jurisdiction to entertain and try the present petition.
34. When the matter was put for clarification, the learned counsel for the
petitioner primarily relied upon judgment of Gammon Engineers &
Contractors (P) Ltd. v. Rohit Sood7. However, the judgement of
Gammon Engineers (supra) is prior to Harcharan Dass Gupta
(supra) and I am bound by the view of Hon‟ble Supreme Court in
Harcharan Dass Gupta (supra).
CONCLUSION
35. In view of the aforesaid discussion, the present petition is dismissed
for want of territorial jurisdiction. Consequently, all pending
application(s), if any, are also disposed of.
36. The petitioner is at liberty to approach the competent Court in
accordance with law and this Court while dismissing the present
petition has not adjudicated upon the merits of the controversy.
37. The Interim Stay granted by this Court vide order dated 01.05.2025
shall continue for a period of 4 weeks from today, to enable the
7
2024 SCC OnLine Bom 3304.
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petitioner to approach the Court having territorial jurisdiction in the
matter.
JASMEET SINGH, J
FEBRUARY 24, 2026 / (HG)
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