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2025 (1) TMI 1090 - SC - Indian LawsMaintainability of petition - whether a writ petition under Article 226 of the Constitution would be maintainable against an order passed by the Micro and Small Enterprises Facilitation Council (MSEFC) in exercise of power under Section 18 of the Micro Small and Medium Enterprises Development Act 2006? - interplay between the MSMED Act and the Arbitration and Conciliation Act 1996 (A C Act) especially regarding the roles of conciliation and arbitration. HELD THAT - This is a case of statutory arbitration that is mandatory. It is possible to argue that it bars a party from moving the court of law under Section 9 of the Code of Civil Procedure 1908. Section 18 also overrides the principle of party autonomy when they enter into an arbitration agreement which prescribes the procedure for the appointment of an arbitrator and conduct of arbitral proceedings. The statute further prescribes an undoubtedly high rate of interest three times the Reserve Bank rate of interest presently 6.5 per cent i.e. 19.5 per cent. The interest is compounded with monthly rests - Pre-deposit is a condition for hearing a decision on the objections to the award. The issue therefore which arises and needs consideration is whether there would be an absolute and complete bar to invoke writ jurisdiction under Article 226 of the Constitution even in exceptional and rare cases where fairness equity and justice may warrant the exercise of writ jurisdiction. The access to High Courts by way of a writ petition under Article 226 of the Constitution of India is not just a constitutional right but also a part of the basic structure. It is available to every citizen whenever there is a violation of their constitutional rights or even statutory rights. This is an inalienable right and the rule of availability of alternative remedy is not an omnibus rule of exclusion of the writ jurisdiction but a principle applied by the High Courts as a form of judicial restraint and refrain in exercising the jurisdiction. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and the same is not limited by any provision of the Constitution and cannot be restricted or circumscribed by a statute. It is deemed appropriate to refer the following questions raised in the present appeal to a larger Bench of five Judges namely (i) Whether the ratio in M/s India Glycols Limited (supra) that a writ petition could never be entertained against any order/award of the MSEFC completely bars or prohibits maintainability of the writ petition before the High Court? (ii) If the bar/prohibition is not absolute when and under what circumstances will the principle/restriction of adequate alternative remedy not apply? (iii) Whether the members of MSEFC who undertake conciliation proceedings upon failure can themselves act as arbitrators of the arbitral tribunal in terms of Section 18 of the MSMED Act read with Section 80 of the A C Act? The first and second question will subsume the question of when and in what situation a writ petition can be entertained against an order/award passed by MSEFC acting as an arbitral tribunal or conciliator - The Registry is directed to place the papers before the Chief Justice so that an appropriate decision can be taken on the administrative side for the constitution of a larger Bench in the present case. Conclusion - The writ jurisdiction is discretionary and not barred by the existence of alternative statutory remedies. A final determination is not provided but instead the significant questions are raised to a larger bench for comprehensive resolution. The judgment from the Supreme Court addresses several critical legal issues concerning the maintainability of writ petitions under Article 226 of the Constitution against orders passed by the Micro and Small Enterprises Facilitation Council (MSEFC) under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The judgment also delves into the interplay between the MSMED Act and the Arbitration and Conciliation Act, 1996 (A&C Act), especially regarding the roles of conciliation and arbitration. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:
2. ISSUE-WISE DETAILED ANALYSISIssue 1: Maintainability of Writ Petition under Article 226
Issue 2: Role of MSEFC as Conciliator and Arbitrator
3. SIGNIFICANT HOLDINGS
The judgment underscores the complexities arising from the intersection of statutory arbitration under the MSMED Act and constitutional writ jurisdiction. It calls for a larger bench to address these issues, ensuring clarity and consistency in the application of law.
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