Allahabad High Court Refuses Writ Against MSME Council Award, Directs Recourse Under Section 34

The Allahabad High Court on 30 April reiterated that a writ petition challenging an ex-parte award passed by the Micro, Small and Medium Enterprises Facilitation Council under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 is not maintainable when the statute provides an alternative remedy under Section 34 of the Arbitration and Conciliation Act, 1996.

A Division Bench of Justices Saral Srivastava and Garima Prashad dismissed the writ petition filed by Shri Krishna Nutrition India Pvt. Ltd. against an ex-parte award passed by the Micro, Small and Medium Enterprises Facilitation Council, Kanpur directing the company to pay Rs. 24 lakhs. The judges observed:

“Proceedings under Section 18 of the 2006 Act culminate in an arbitral award and the statute itself provides a remedy under Section 34 of the Arbitration and Conciliation Act, 1996.”

Shri Krishna Nutrition India Pvt. Ltd. challenged the award dated 15 July 2021 passed by the Facilitation Council under Section 18 of the 2006 Act on the ground that it had been passed ex-parte without service of notice upon the company.

The company contended that it became aware of the award only in April 2025. It further submitted that it had filed a recall application against the order directing continuation of execution proceedings ex-parte, but the Executing Court continued the proceedings despite the pendency of its application and objections.

The High Court observed that the questions relating to service of notice and limitation involved mixed questions of fact and law requiring appreciation of evidence. It observed:

“It is well settled that not every plea styled as one of 'jurisdiction' can be entertained in writ jurisdiction. Where adjudication requires appreciation of evidence and determination of disputed questions of fact, such issues are required to be examined by the forum competent under the statute.”

The Court cautioned that permitting writ scrutiny of arbitral awards on allegations of procedural irregularities would undermine the statutory remedy under Section 34 of the Arbitration and Conciliation Act and effectively convert writ jurisdiction into a parallel appellate mechanism.

Holding that an award passed under Section 18 of the MSMED Act must be challenged under Section 34 of the Arbitration and Conciliation Act, the Bench found no manifest perversity warranting interference under Article 226 of the Constitution. It emphasised:

“In the present case, the petitioner has already approached the Executing Court and has filed applications raising the very issues now sought to be urged before this Court. The petitioner also has a statutory remedy available in law to challenge the award. No exceptional circumstance has been made out so as to warrant interference under Article 226 of the Constitution of India.”

Accordingly, the High Court dismissed the writ petition.