(MENAFN- KNN India)
New Delhi, Dec 2 (KNN) In a significant ruling, the Delhi High Court has dismissed a writ petition challenging an arbitral award passed by the Micro and Small Enterprises Facilitation Council (MSFEC).
The petition, filed by Omaxe Ltd, was heard by a bench led by Justice Sanjeev Narula, who emphasised that invoking writ jurisdiction to challenge an arbitral award would circumvent the statutory pre-deposit requirement under Section 19 of the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006. This, according to the Court, would defeat the legislative intent behind the Act.
The petitioner's counsel had argued that the non-obstante clause in Section 5 of the Arbitration and Conciliation (A&C) Act did not restrict the Court's supervisory power under Article 227 of the Constitution, citing the case of DD Auto Private Limited v. Pivotal Infrastructure Private Limited (2024) to support this claim.
Additionally, the petitioner expressed concern over the mandatory pre-deposit of 75 per cent of the awarded amount under Section 19 of the MSMED Act, contending that this was a significant hurdle preventing them from seeking relief under the A&C Act.
However, the Court disagreed with the petitioner's submissions, stating that the A&C Act is a self-contained statute designed to minimise judicial interference.
Drawing from precedents such as Deep Industries Limited v. ONGC and India Glycols Limited v. Micro and Small Enterprises Facilitation Council (2023), the bench reinforced that the High Court's jurisdiction under Articles 226 and 227 should only be invoked in exceptional circumstances.
The Court noted that the pre-deposit requirement under Section 19 of the MSMED Act was intended to discourage frivolous challenges and ensure timely payments to micro and small enterprises, thus promoting the legislative intent.
The bench also clarified that while Section 34 of the A&C Act allows for a challenge to arbitral awards on limited grounds, the statutory process cannot be bypassed by invoking writ jurisdiction. The petition was consequently dismissed.
The case is titled Omaxe Ltd v. Micro and Small Enterprises Facilitation Council (2024 LiveLaw (Del) 1297), with the case number W.P.(C) 16112/2024, CM APPL. 67705-67706/2024. The counsel for the appellant was Ramesh Singh, Senior Advocate, with briefing counsel.
(KNN Bureau)
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