LI Network
Published on: November 17, 2023 at 11:50 IST
The Supreme Court, in a recent ruling, declared that filing a writ petition against an award issued by a Facilitation Council under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is not maintainable.
The bench, comprising CJI DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra, emphasized that the appropriate remedy for such cases is outlined in Section 34 of the Arbitration and Conciliation Act, 1996.
The case involved a challenge to an award issued by a Micro and Small Enterprises Facilitation Council concerning a company governed by the provisions of the MSMED Act.
Initially, a single judge of the High Court of Telangana set aside the award, citing limitation issues. However, a Division Bench later overturned this decision, stating that the petitioner should have pursued remedies under Section 34 of the Arbitration and Conciliation Act, 1996, instead of resorting to a writ petition under Article 226 of the Indian Constitution.
The Supreme Court, upon reviewing Section 19 of the MSMED Act, noted that any court could not entertain an application to set aside a Facilitation Council award unless the appellant had deposited seventy-five percent of the awarded amount.
Additionally, Section 18(4) of the MSMED Act specified that when a Facilitation Council arbitrates a dispute, the provisions of the Arbitration and Conciliation Act, 1996 would apply. Therefore, the appropriate remedy for the present case is governed by Section 34 of the Act of 1996.
The Court upheld the Division Bench’s decision, emphasizing that the petitioner’s failure to deposit 75% of the decretal amount as required by the statute rendered the writ petition non-maintainable. The Court stated that resorting to Articles 226/227 of the Constitution to avoid complying with the pre-deposit requirement under Section 19 would undermine the purpose of the special enactment by Parliament.
Case Title: M/s India Glycols Limited and Another v. Micro and Small Enterprises Facilitation Council, Medchal – Malkajgiri and Others