Srinagar: Dismissing a petition by the Union Territory of Jammu & Kashmir, challenging a 2023 arbitral award by the Micro and Small Enterprises Facilitation Council (MSEFC), the High Court has held that law provides complete inherent mechanism for the adjudication of disputes arising between suppliers and buyers registered under the MSMED Act.
It said that that Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, along with the Arbitration and Conciliation Act, 1996, provides complete, efficacious, and self-contained mechanism for the adjudication of disputes arising between suppliers and buyers registered under the MSMED Act.
The court made the observation while dismissing a petition filed Jammu and Kashmir government through Vice Chairman Jammu and Kashmir Lake Conservation and Management Authority Srinagar, challenging the arbitral award on 16 January 2023 passed by the Micro and Small Enterprises Facilitation Council (MSEFC), Kashmir Division in favour of M/s JK Technos, directing the Petitioners to pay Rs.58,56,823 along with compound interest at 19.50% per annum from 18.06.2019 until payment.
The government had sought directions to set aside the award.
“The petitioners (authorities), despite being fully cognizant of this statutory scheme, have consciously abstained from availing themselves of the prescribed statutory remedy, and have instead chosen to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India,” a bench of Justice Wasim Sadiq Nargal said.
Underlining that the law was well settled that the writ jurisdiction is intended to reinforce, and not override, the remedies provided by statute, and cannot be employed as a convenient recourse to circumvent conditions such as statutory limitation periods and pre-deposit requirements mandated by Parliament.
The statutory framework comprising the Micro, Small and Medium Enterprises Development Act, 2006, read holistically with the Arbitration and Conciliation Act, 1996, provides complete, efficacious, and self-contained mechanism for the adjudication of disputes arising between suppliers and buyers registered under the MSMED Act,” the court said.
It added that it also prescribes a clearly delineated remedy to assail any award rendered by the Facilitation Council, through an application under Section 34 of the Arbitration and Conciliation Act, subject to compliance with the mandatory pre-deposit envisaged under Section 19 of the MSMED Act.
The court held “the statutory requirement under Section 19 of the MSMED Act to deposit seventy-five per cent of the awarded amount prior to entertain a challenge under Section 34 is not a mere technicality but a substantive safeguard designed to deter frivolous or obstructive litigation. To allow the petitioners to bypass this requirement by directly invoking writ jurisdiction would be to undermine both the letter and spirit of the legislation”.
It recorded “this Court, therefore, finds no compelling or exceptional circumstances that would warrant interference in writ jurisdiction. The consistent view adopted by coordinate Benches of this Court, as well as the binding authority of the Supreme Court in M/s India Glycose Ltd. v. Micro & Small Enterprises Facilitation Council leaves no room for doubt as to the legal position”.
Accordingly, the writ petition was held to be not maintainable and was dismissed.
