A dispute over the revival of arbitration proceedings has led to a significant ruling by the Court in the case involving MDD Medical Systems (India) Pvt. Ltd. and LSR Medical Pvt. Ltd. against the Delhi International Arbitration Centre (DIAC) and others. The core issue before the Court was whether DIAC could resume arbitration after earlier closing the matter for non-filing of the Statement of Claim by the claimant, and whether such procedural objections should be entertained by the Court or left to the Arbitral Tribunal.

The matter arose when the claimant approached the Micro and Small Enterprises Facilitation Council (MSEFC) under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). After conciliation failed, the dispute was referred to the DIAC for arbitration. The claimant did not submit the Statement of Claim despite repeated reminders, leading the DIAC to close the proceedings in October 2018. Several months later, in 2019, the DIAC informed the appellants that the claimant had filed the Statement of Claim and directed them to submit their Statement of Defence.

Challenging this development, the appellants contended that the DIAC had no authority to revive closed proceedings without a fresh reference from the MSEFC. They argued that under Section 18(5) of the MSMED Act, a reference must be completed within 90 days, and that the closure in 2018 terminated the mandate. Citing Section 25 of the Arbitration and Conciliation Act, 1996, they further argued that the failure to file the Statement of Claim had ended the arbitral mandate, and that no sufficient cause was shown for the delay.

The Court, however, found no merit in these arguments. It clarified that the 90-day period in Section 18(5) applies to the reference process, not the arbitration itself, and that the provision is directory, not mandatory, because it does not specify consequences for non-compliance. This interpretation, the Court observed, aligns with other statutes where similar timelines have been held to be non-mandatory in the absence of penalties.

As for the revival of proceedings, the Court upheld the view of the learned Single Judge that such matters, being linked to the jurisdiction of the Arbitral Tribunal, should be addressed under Section 16 of the Arbitration and Conciliation Act. Referring to Supreme Court decisions in Vidya Drolia v. Durga Trading Corporation, Cox & Kings Ltd. v. SAP India Pvt. Ltd., and Bhaven Constructions v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd., the Court emphasized that judicial interference once arbitration has commenced is to be exercised sparingly.

In conclusion, the Court dismissed the appeals, affirming that procedural and jurisdictional challenges in arbitration should be raised before the tribunal itself. The judgment reinforces the autonomy of arbitral proceedings and clarifies that statutory timelines without explicit consequences are generally intended to be directory rather than mandatory.