Article 226 Can Be Invoked Against Non Est MSME Award Violating Statutory Provisions: Bombay High Court

The Bombay High Court on 2 April, held that a writ petition under Article 226 is maintainable against an award passed by the Micro and Small Enterprises Facilitation Council when such award is non est in law and contrary to mandatory statutory provisions.

Justice S.G. Chapalgaonkar observed that where an impugned award is passed in violation of the mandatory provisions of the MSMED Act, 2006 and the Arbitration and Conciliation Act, 1996, it cannot be treated as a valid arbitral award in the eyes of law. He observed:

“However, it can be observed that when the impugned award is nonest being contrary to mandatory provisions under MSMED Act, 2006, as well as the Arbitration and Conciliation Act, 1996, it cannot be termed as Arbitral award in the eye of law. Hence, when the order impugned is without recourse to the mandatory provisions of the Special Act and in utter regard to the provisions of Arbitration and Conciliation Act, 1996, this Court finds that Constitutional Remedy to access writ court cannot be foreclosed.”

The case arose from a dispute between GG Construction Company and Engg. Susmita Punjabrao Suryawanshi under a work contract dated 1 August 2019 for execution of road construction works in Nanded district. The respondent, acting as a sub-contractor, approached the Micro and Small Enterprises Facilitation Council, Chhatrapati Sambhajinagar, seeking recovery of Rs. 2,54,39,416 towards unpaid invoices.

An ex parte award dated 13 June 2025 was passed directing the petitioner to pay the said amount along with interest.

The Court found multiple procedural and legal infirmities in the award. It noted that the award lacked the signature of one of the tribunal members without any explanation, in violation of Section 31 of the Arbitration and Conciliation Act, 1996.

It further observed that mandatory conciliation under Section 18(2) of the MSMED Act was not undertaken before proceeding to arbitration. Additionally, the dispute arose out of a works contract, which may fall outside the scope of the MSMED Act.

Accordingly, the High Court allowed the writ petition and remanded the matter to the Council for fresh consideration.

For Petitioner: Advocates Rahul R. Totala, Siddhant Somani

For Respondent: Senior Advocate P.R. Katneshwarkar, i/b Advocate Khushi Verma