J&K High Court Dismisses Writ Against Rs 11.5 Crore MSME Award | Holds Supreme Court Judgments Remain Binding Despite Reference To Larger Bench
Sanchayita Lahkar
The High Court of Jammu & Kashmir and Ladakh Single Bench of Justice Moksha Khajuria Kazmi has held that a writ petition under Article 226/227 of the Constitution challenging an arbitral award passed by the Micro and Small Enterprises Facilitation Council is not maintainable. The Court dismissed the petition on grounds of statutory bar under Section 19 of the MSMED Act, 2006, and granted liberty to the petitioner to pursue the remedy under the Arbitration and Conciliation Act, 1996. The decision was pronounced on 21 April 2025.
The dispute arose from a contract for the supply of ISI-marked GMS tubes of various diameters invited through e-NIT No. PHE/M&P/01 of 2018-19 by the Jal Shakti Department, Union Territory of Jammu & Kashmir. Among six bidders, M/s JTL Infra Limited was declared the lowest bidder and was issued three supply orders for both light and medium class categories. As per the contract, supplies were made and payments disbursed periodically in accordance with the terms and conditions.
The department later claimed that delays in finalising the contract occurred due to the supplier’s own delay in supplying materials, which in turn impacted settlement of the contract. It was submitted that after final confirmation, penalties were applied and net payable amounts were settled and paid accordingly.
Subsequently, the supplier, M/s JTL Infra Limited, approached the Micro and Small Enterprises Facilitation Council, SAS Nagar, Punjab, under Section 18 of the MSMED Act, 2006, for recovery of ₹19,38,92,339, including a principal claim of ₹16,89,79,714.26 and interest of ₹2,49,12,624.74 up to 31 December 2019. The Council passed an award on 1 June 2023, granting the claimant ₹2,75,65,355 as principal and ₹8,77,32,279 as interest up to 20 April 2023, totalling ₹11,52,97,635, along with future interest on delayed payments.
Challenging the award, the petitioner contended that the Council acted beyond its jurisdiction, especially in the absence of any contractual clause regarding delayed payment interest. It was further argued that the ex-parte award was passed without providing a fair opportunity of hearing and that the Facilitation Council lacked jurisdiction due to territorial constraints. The petition was filed directly before the High Court without depositing 75% of the awarded amount as mandated under Section 19 of the MSMED Act.
The petitioner relied on multiple precedents, including Gammon Engineers and Contractors Private Limited v. Rohit Sood, Tamil Nadu Cements Corporation Limited v. MSEFC and Another, and UT of J&K v. Aibak Electric Industries Barzulla, to argue that the Council had exceeded its authority.
Responding to the petition, the supplier maintained that the Council followed statutory procedure under Section 18 of the MSMED Act, including failed conciliation and subsequent arbitration. The respondent argued that adequate opportunity had been granted and the claim was determined in accordance with law. It was contended that the proper remedy against such an award lay under Section 34 of the Arbitration and Conciliation Act, 1996, subject to the precondition under Section 19 of the MSMED Act for deposit of 75% of the awarded amount. Therefore, the writ petition was submitted to be non-maintainable.
It was also argued that since the dispute was adjudicated at SAS Nagar, Punjab, in line with the statutory mandate, the High Court of Jammu & Kashmir lacked territorial jurisdiction.
The respondent relied on judgments including India Glycols Limited v. MSEFC, Medchal Malkajgiri, NBC India Ltd. v. State of West Bengal, and Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd., among others, to support its submission that a writ petition is not a permissible remedy in such matters.
Justice Moksha Khajuria Kazmi recorded: “It is specifically stated in Section 19 of MSMED Act that no application for setting aside any award made by the Council shall be entertained by any court, unless the appellant has deposited 75% of the awarded amount.”
The Court stated: “The entertaining of a petition under Articles 226/227 of the Constitution, in order to obviate compliance with the requirement of pre-deposit under Section 19, would defeat the object and purpose of the special enactment which has been legislated upon by Parliament.”
Referring to binding precedent, the Court observed: “It has been held by a three-judge bench of Supreme Court that petition under Article 226/227 of the Constitution instituted by the applicant is not maintainable under MSMED Act. The appellant therein, was directed to take recourse to the proceedings under section 34 of the Act of 1996.”
The Court acknowledged the pendency of a reference to a larger bench in Tamil Nadu Cements Corporation Ltd. v. MSEFC, but held: “Mere reference to a larger Bench does not unsettle declared law… Till such time as the decisions cited at the Bar are not modified or altered in any way, they continue to hold the field.”
It was stated: “The High Courts will proceed to decide matters on the basis of the law as it stands. It is not open, unless specifically directed by this Court, to await an outcome of a reference or a review petition.”
In response to the petitioner's reliance on UT of J&K v. Aibak Electric Industries Barzulla, the Court recorded: “The judgment passed in said case is not applicable on account of the fact that Section 19 of MSMED Act and the judgment passed by Supreme Court supra, which have relevance in the instant case, have not even been discussed therein.”
The Court concluded: “From the above, the court has come to the conclusion that petition under Article 226/227, thereby challenging award passed by Facilitation Council MSMED Act, is dismissed as not maintainable.”
The Court dismissed the petition filed under Article 226/227 of the Constitution challenging the award passed by the Facilitation Council under the MSMED Act, holding it as not maintainable.
However, liberty was granted to the petitioner to take recourse to appropriate proceedings in terms of the MSMED Act.
Advocates Representing the Parties
For the Petitioner: Mr. Abdul Rashid Malik, Senior Additional Advocate General; Mr. Mohammad Younis, Assisting Counsel
For the Respondents: Mr. Jahangir Iqbal Ganai, Senior Advocate; Ms. Mehnaz Rather, Advocate
Case Title: Union Territory of J&K through Executive Engineer, PHE M&P Division v. M/s JTL Infra Limited and Another
Case Number: WP(C) 2673/2024
Bench: Justice Moksha Khajuria Kazmi
[Read/Download order]
