Madras High Court Holds Arbitrator Nominated U/S 18(3) of MSMED Act Erred in Deciding Merits After Finding Respondent Not MSME; Upholds Setting Aside of Award

The Madras High Court ruled that an arbitrator nominated under Section 18(3) of the MSMED Act erred in deciding the merits of a case after determining that the respondent was not an MSME. The court upheld the setting aside of the arbitration award, emphasizing that the arbitrator exceeded their jurisdiction. This decision reinforces the importance of adhering to statutory limits in arbitration proceedings and ensuring that arbitrators act within the scope of their authority. The ruling highlights the judiciary’s role in maintaining the integrity of the arbitration process and safeguarding the rights of parties involved.