Delhi HC stays arbitration proceedings for Richa Global Exports citing jurisdictional issues

The Delhi High Court has stayed the arbitration proceedings involving Richa Global Exports, a prominent player in the global garment industry.

 

The decision follows a writ petition filed by Richa Global against the Delhi International Arbitration Centre (DIAC) and the Micro & Small Enterprises Facilitation Council (MSEFC), contesting their orders dated May 30, 2022, and August 9, 2024.

 

Advocate Sumit Gehlot, representing Richa Global, argued that the MSEFC’s reference under Section 18 of the MSMED Act was made without jurisdiction, violating established precedents from the Supreme Court and Delhi High Court.

 

He highlighted cases such as Silpi Industries v. Kerala State Road Transport Corp., which clarified that benefits under the MSMED Act are not applicable retrospectively, thereby nullifying the appointment of a Sole Arbitrator by DIAC.

 

Gehlot further contended that since Concot Yarn’s registration under the MSMED Act occurred after the job work carried, the council had no authority to refer the matter to DIAC.

 

After considering these arguments, the bench of Justice Sanjeev Narula, concluded that the arbitration proceedings were indeed flawed due to jurisdictional issues, leading to the decision to stay them.

 

Richa Global is represented by Advocates from Fidelegal Advocates & Solicitors, including Sumit Gehlot and TS Thakran.

 

While passed the directions, Court further stated that if registration under Micro Small & Medium Enterprises Development Act 2006 (MEMED Act) is obtained subsequently, the benefits under the said Act would not apply.