The Hon’ble High Court of Calcutta in its Order dated 15th December 2025 in Rishi Chemical Works Pvt. Ltd. v. Enviro Cleanroom Projects Pvt. Ltd., AP-COM/828/2025, has held that a Court can grant a party relief under Section 9 of the Arbitration and Conciliation Act 1996 in spite of the Conciliation proceedings going on under MSME.
Brief Facts
Rishi Chemical (Petitioner) engaged Enviro Cleanroom (Respondent) to establish a cleanroom laboratory and allied production facility at its Haridwar unit. The engagement was based on a price quotation and final price agreement dated 17 July 2023.
The agreement stipulated that joint measurements would determine the final payable amount upon completion. The Petitioner paid an aggregate of Rs. 1,01,76,808 between May 2023 and October 2024. However, possession was handed over on 7 May 2025 with the Petitioner alleging incomplete work and expressly reserving the right to inspect and point out deficiencies.
The Petitioner received a notice from the MSME Facilitation Council, and the matter is currently at the conciliation stage with no arbitrator appointed yet. Fearing irreparable loss due to the undocumented status of the incomplete work, the Petitioner moved the High Court under Section 9 of the Arbitration and Conciliation Act, 1996.
Issues
- Is a Section 9 petition for interim protection maintainable when conciliation proceedings are pending before the MSME Council?
- Does the appointment of a Special Officer to inspect and measure the site amount to impermissible “evidence collection”?
Contentions of the Parties
The Petitioner argued that the Section 9 permits interim measures to protect the subject matter and prevent irreparable injury even before arbitral proceedings commence. They relied on the Delhi High Court’s decision in Prima Developers v. Lords Co-op. Group Housing Society Ltd. to support the appointment of a receiver to document the status of the site.
The Respondent on the other hand challenged maintainability on two grounds:
- MSME Exclusivity: Citing Supreme Court judgments in Silpi Industries and Khyaati Engineering, they argued that once an MSME Council is seized of the matter, the statutory procedure must be strictly followed without parallel remedies.
- Evidence Collection: They contended that the Section 9 application was merely a ploy to “collect evidence,” which is impermissible.
The Court’s Findings
The Court looked at the specific wording of Section 9(1)(ii)(c), (d), and (e), which empowers the Court to authorize inspection, detention, or preservation of the subject matter. The Court emphasized that these powers exist to ensure the arbitral process is not rendered ineffective.
- Preservation vs. Evidence Collection: The Court rejected the Respondent’s argument that the Petitioner was trying to collect evidence. It held that the relief sought of inspection, measurement, and inventory was confined to documenting the existing status of the works and materials. This falls squarely within the “preservation” mandate of Section 9, rather than creating new evidence.
- MSME Act is not a bar to interim protection: The Court distinguished the Silpi Industries and Khyaati Engineering judgments. While those cases affirm the overriding effect of the MSME Act regarding the procedure of adjudication (Section 18), the Court held they do not preclude the grant of interim protective measures necessary to safeguard the subject matter while conciliation is ongoing.
- Balance of Convenience: Adopting the principles from Prima Developers, the Court found that the balance of convenience lay in favor of the Petitioner. Denying the relief would result in prejudice because the current state of the incomplete works would remain undocumented pending the resolution of the dispute.
Order and directions
The Court allowed Prayer (a) and appointed Ms. Mousumi Bhowal as the Special Officer with the following directions :
- Scope: Inspect the premises, measure services rendered, inventory goods (both installed and packed/unpacked), and record deficiencies indicated by the Petitioner.
- Fees: Remuneration fixed at Rs. 75,000 plus travel expenses, payable by the Petitioner.
- Assistance: The local police (Officer-in-Charge) were directed to provide necessary assistance.
- Next Hearing: The next hearing in the matter is on 27 January 2026.
AMLEGALS Remarks
- Clarification on MSME Proceedings: This order is significant for construction and infrastructure disputes involving MSME vendors. It clarifies that the pendency of MSME conciliation does not strip the Commercial Court of its power to grant Section 9 relief, provided the relief is strictly for preservation of the subject matter.
- Drafting Section 9 Petitions: The Court’s distinction between “collecting evidence” and “preserving status” provides a drafting blueprint. Petitions seeking inspection should focus on the necessity of capturing the “current status” to prevent the factual landscape from changing, rather than broadly asking to prove a claim.
- Bottom Line: If a project is stalled and the site condition is changing, a party can secure a court-appointed commissioner to freeze the facts on the ground, even if the dispute is locked in MSME conciliation.
Case Details:
Name – Rishi Chemical Works Pvt. Ltd. v. Enviro Cleanroom Projects Pvt. Ltd.
Citation – AP-COM/828/2025
Court – Calcutta High Court
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