Writ petition challenging an award of the Facilitation Council under the MSMED Act is not maintainable : Supreme Court
In the recent case of India Glycols Limited and Another v. Micro and Small Enterprises Facilitation Council, Medchal - Malkajgiri and Others, the Supreme Court ruled that a writ petition challenging an award by a Facilitation Council under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is not maintainable. The court, consisting of CJI DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra, held that the appropriate remedy against such an award is provided under Section 34 of the Arbitration and Conciliation Act, 1996. In this specific instance, the appellant had challenged the award in a writ petition under Article 226 of the Indian Constitution, but the Supreme Court affirmed the Division Bench's decision that this approach was impermissible.
The Court noted that Section 19 of the MSMED Act requires the appellant to deposit seventy-five percent of the awarded amount for an application to set aside the Facilitation Council's award to be entertained by any court. Additionally, Section 18(4) of the MSMED Act stipulates that when a Facilitation Council arbitrates a dispute, the provisions of the Arbitration and Conciliation Act, 1996 apply. Consequently, the appropriate remedy for the award in question was under Section 34 of the Act of 1996.
The Court justified the 75% deposit requirement under Section 19 as a security measure for enterprises, and failure to comply with this condition rendered the petition unsustainable. It emphasized that seeking recourse under Articles 226/227 of the Constitution to avoid the deposit requirement would undermine the legislative intent of the MSMED Act. The Supreme Court affirmed the Division Bench's decision, stating that the petition under Articles 226/227 of the Constitution filed by the appellant was not maintainable.