MSMED Act provides complete mechanism for dispute adjudication between suppliers, buyers: HC
Srinagar, Jul 22: The High Court of J&K and Ladakh Tuesday held that the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 along with the Arbitration and Conciliation Act, 1996, provides a complete, efficacious and self-contained mechanism for the adjudication of disputes arising between suppliers and buyers registered under the Act.
The court said this while dismissing a plea filed by Jammu and Kashmir government through Vice Chairman Jammu and Kashmir Lake Conservation and Management Authority Srinagar wherein the Authority had challenged the arbitral award passed on January 16, 2023 by the Micro and Small Enterprises Facilitation Council (MSEFC), Kashmir Division in favour of a private firm directing authorities to pay Rs.58,56,823 along with compound interest at 19.50% per annum from June 18, 2019 until payment.
In its appeal before the High Court, the government had sought to set aside the award.
“The petitioners (government), 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 in its decision.
The Court underscored that the law is 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 Court noted that the statutory framework comprising the Micro, Small and Medium Enterprises Development Act, 2006, read holistically with the Arbitration and Conciliation Act, 1996, provides a complete, efficacious, and self-contained mechanism for the adjudication of disputes arising between suppliers and buyers registered under the MSMED Act.
It held that the statutory framework 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.
