Jammu & Kashmir High Court – Srinagar Bench
Union Territory Of J&K Through vs M/S Jtl Infra Limited on 21 April, 2025
Author: Moksha Khajuria Kazmi
Bench: Moksha Khajuria Kazmi
IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
Reserved on: 15.04.2025
Pronounced on: 21.04.2025
WP(C) 2673/2024, CM 583/2025
CM 7273/2024
Union Territory of J&K through ...Petitioner(s)/Appellant(s)
Executive Engineer, PHE M&P Division,
Having its registered office at
1 HMT Zanikote Srinagar J&K - 190012
Through: Mr. Abdul Rashid Malik, Sr. AAG &
Mr. Mohammad Younis, Assisting Counsel
Vs
1. M/S JTL Infra Limited ...Respondent(s)
Through its Managing Director
Sh. Rakesh Garg having its registered address at
Gholu Majra Derbasi Ambala Highway
Derabassi Mohali Punjab
2. Micro & Small Enterprises Facilitation
Council (MSEFC) SAS Nagar Mohali
Punjab through its Chairman
Through: Mr. Jahangir Iqbal Ganai, Sr. Advocate with
Ms. Mehnaz Rather, Advocate
CORAM:
HON'BLE MS JUSTICE MOKSHA KHAJURIA KAZMI, JUDGE
JUDGMENT
1. Petitioner – Union Territory of J&K through Executive Engineer, PHE
M&P Division, has assailed the award/order dated 01.06.2023, passed by
Chairman, Micro and Small Enterprises Facilitation Council [hereinafter
be referred as “MSEFC”], SAS Nagar Punjab, in terms of which
respondent No. 1 has been held entitled to the payment of
Rs. 2,75,65, 355.00/- as principal amount along with interest as delayed
amount up to 31.05.2023.
Factual Matrix
2. The Jal Shakti Department invited tenders for bidding for supply of ISI
marked GMS tubes of assorted sizes, ranging from 15 MM to 100 MM,
2
125MM and 150 MM from registered/GeM approved manufacturers vide
e-NIT No. PHE/M&P/01 of 2018-19/e-tender dated 06-04-2018. Out of
six bidders, the firm M/S JTL Infra Limited, Chandigarh was declared
lowest for all the items of the advertised diameters in both light and
medium class categories as such three supply orders were issued in
favour of the claimant firm. The material from the firm i.e., respondent
No.1 was received as and when supplied as per the supply orders and
payments were made to the firm from time to time as per the payment
clauses of the terms and conditions of the E-NIT.
3. It is stated that the delay of finalization/closure of the contract for supply
of GMS Tubes from respondent No. 1 to the Department of Jal Shakti
had occurred, owing the delay in supplies from the Firm itself, which
consequently impeded the settlement of delay.
4. It is stated that once the settlement of delay was confirmed, firm and final
rates were established and after imposition of penalty clause net amount
payable to the firm and the payment was made as per the terms and
conditions laid in E-NIT. Respondent No. 1 filed a claim
petition/reference under Section 18 of the Micro Small and Medium
Enterprises Development Act, 2006 for recovery of Rs. 19,38,92,339/-,
which includes Rs. 16,89,79,714.26/- as principal amount and
Rs. 2,49,12,624.74/- as interest upto 31.12.2019, before the Punjab Micro
and Small Enterprises Facilitation Council at S.A.S Nagar Mohali.
5. The Chairman Micro and Small Enterprises Facilitation Council, SAS
Nagar passed award dated 01.06.2023, the operative portion of which is
reproduced as under:
“Therefore in view of the findings above, the claimant is
held entitled to the payment of Rs. 2,75,65.355.00/- as
principal alongwith interest as delayed payment upto
31.05.2023. The reference of the claimant is accepted not
only for the pending principal amount as stated above, but
also with interest there upon as per provisions of Section
16 of MSMED Act, 2006 and an award of pending
principal amount of Rs. 2,75,65,355.00/- alongwith
interest of Rs. 8,77,32,279.00/- upto 20.04.2023 (TotalWP(C) No. 2673/2024
3amounting to Rs. 11,52,97,635.00/-) as per Calculation
Sheet attached as Annexure A-1 is hereby passed in favour
of the claimant and against the respondent, who is liable
to pay the same to claimant. The respondent shall be
further liable to pay future interest on delayed payments as
per provision of the MSMED Act to the claimant on
Awarded amount from 01.06.2023 till its realization”.
6. Petitioner has challenged the impugned award on the ground that the
same has been passed in a very mechanical way, and in a slip shod
manner without providing any opportunity of being heard to the
petitioner. The MSE Facilitation Council has exceeded jurisdiction by
taking cognizance of the reference made by respondent company on
account of interest on delayed payment of goods by the petitioner as the
said agreement executed between the parties does not have any clause
pertaining to the payment of interest on delayed payment and above all
there is no delay on part of the petitioner department.
7. The object and scope of Micro, Small and Medium Enterprises
Development Act of 2006 is facilitating promotion and development of
Micro and Small Enterprises and Section 18 of the Act also provides for
conciliation and the dispute resolution between the parties with regard to
any amount due under Section 17 of the Act by making a reference to the
Micro and Small Enterprises Facilitation Council. The jurisdiction
assumed and exercised by the Council over the matter and subsequent
passing of an ex-parte award in favour of the respondent No.1 is non est
in the eyes of law.
8. Learned senior AAG Mr. Abdul Rashid Malik in support of his
submissions has relied upon judgments passed by the Supreme Court in
case titled “Gammon Engineers and Contractors Private Limited vs.
Rohit Sood” reported as 2024 SCC Online Bom 3304; “Tamil Nadu
Cements Corporation Limited vs. Micro and Small Enterprises
Facilitation Council and Another” reported as 2025 SCC Online SC 127;
“Union Territory of J&K and Anr vs. Aibak Electric Industries Barzulla“
in petition bearing CM(M) No. 293/2023 decided on 14.12.2023.
WP(C) No. 2673/2024
4
9. Per contra, in reply filed by respondent no.1, it is stated that respondent
being entitled in law made a reference under section 18(1) of the Act for
recovery of amount due to him. The Facilitation Council duly conducted
conciliation proceedings as per Section 18(2) of the MSMED Act, and
upon failure of conciliation, arbitration proceedings were initiated, during
which adequate opportunity was provided to the petitioner to present its
defense. The council itself had an authority as per statue to adjudicate
upon the arbitration. The matter was considered by the council in its
entirety and upon consideration, the claim of the petitioner was admitted
for pending principal amount along with interest as delayed payment.
Since the dispute has been decided by the Council, as per the mandate of
section 18(3) of the Act and in law, the award can only be challenged by
taking recourse to Section 34 of the Arbitration and Conciliation Act,
1996. The application can only be entertained by the Court if the
appellant has deposited with it 75% of the amount in terms of the award.
10. It is stated that the petitioner instead of taking recourse to the remedy
provided in law as per mandate of Act of 2006, has directly approached
this court through the medium of the writ petition, that too, without there
being any application for depositing 75% of the awarded amount, as
provided under Section 19 of MSME Act, 2006. It is stated that it is a
settled proposition of law that this Court cannot entertain a petition under
Article 226/227 of the Constitution of India, if an alternate remedy is
provided and the statue under which the action complained of has been
taken, itself contains a mechanism for redressal of grievances. It is also
stated that this Court lacks territorial jurisdiction over the subject matter
on account of the fact that the proceedings have been conducted at the
supplier location i.e., SAS Nagar Punjab in compliance with the
provisions of MSME Act.
11. Learned senior counsel Mr. Jahangir Iqbal Ganai appearing for
respondent No. 01 has relied upon judgments passed by the Supreme
Court in case titled “Ms. India Glycols Limited vs. Micro and Small
Enterprises Facilitation Council, Medchal Malkajgiri and Others“
reported as AIR 2024 Supreme Court 285; “Union Territory of Ladakh
and Others vs. Jammu and Kashmir National Conference and Others“
WP(C) No. 2673/2024
5
reported as 2023 SCC Online SC 1140; “NBC India Limited vs. The
State of West Bengal” reported as 2025 SCC Online SC 73; Gujarat
State Civil Supplies Corporation Limited v. Mahakali Foods Private
Limited and Another reported as 2023 (6) SCC 401.
12. Heard learned counsels for the parties and perused the material on record.
13. Learned senior counsel representing respondent No. 01 has taken
preliminary objection with respect to the maintainability of the instant
writ petition under Article 226/227 of the Constitution of India, as an
alternate remedy is available against an award passed by Micro, Small
and Medium Enterprises Development Act 2006, read with the
Arbitration and Conciliation Act, 1996 in terms of Section 19 of
MSMED Act. Section 18 & 19 of the MSMED Act is reproduced as
under:
18. Reference to Micro and Small Enterprises Facilitation Council –
(1) Notwithstanding anything contained in any other law for the time
being in force. any party to a dispute may, with regard to any
amount due under section make a reference to the Micro and
Small Enterprises Facilitation Council.
(2) On receipt of a reference under sub-section (1), the Council shall
either itself conduct conciliation in the matter or seek the
assistance of any institution or centre providing alternate dispute
resolution services by making a reference to such an institution or
centre, for conducting conciliation and the provisions of sections
65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996)
shall apply to such a dispute as if the conciliation was initiated
under Part III of that Act.
(3) Where the conciliation initiated under sub-section (2) is not
successful and stands terminated without any settlement between
the parties, the Councill shall either itself take up the dispute for
arbitration or refer to it any institution or centre providing alternate
dispute resolution services for such arbitration and the provisions
of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall
then apply to the dispute as if the arbitration was in pursuance of
an arbitration agreement referred to in sub-section (1) of section 7
of that Act.
(4) Notwithstanding anything contained in any other law for the time
being in force, the Micro and Small Enterprises Facilitation
Council or the centre providing alternate dispute resolution
services shall have jurisdiction to act as an this section in a
dispute between located within its jurisdiction and a buyer located
anywhere in India.
(5) Every reference made under this section shall be decided within a
period of ninety days from the date of making such a reference.
WP(C) No. 2673/2024
6
19. Application for setting aside decree, award or order-
No application for setting aside any decree, award or other order
made either by the Council itself or by any institution or centre
providing alternate dispute resolution services to which a
reference is made by the Council, shall be entertained by any
court unless the appellant (not being a supplier) has deposited
with it seventy-five per cent of the amount in terms of the decree,
award or, as the case may be, the other order in the manner
directed by such court:
Provided that pending disposal of the application to set aside the
decree, award or order, the court shall order that such
percentage of the amount deposited shall be paid to the supplier,
as it considers reasonable under the circumstances of the case
subject to such conditions as it deems necessary to impose.
14. It is specifically stated in Section 19 of MSMED Act that no application
for setting aside any award made by the Council shall be entertained by
any court, unless the appellant has deposited 75% of the awarded amount.
The jurisdiction has also been prescribed in the Act as an Arbitrator or
Conciliator under this section in a dispute between the supplier and
buyer. Section 18 (4) provides the appellant a remedy under section 34 of
the Arbitration and Conciliation Act of 1996, to challenge the award.
15. The Supreme Court of India in case titled “M/s India Glycols Limited vs.
Micro and Small Enterprises Facilitation Council, Medchal Malkajgiri
and Others” in paragraphs 14 & 15 has held as under:
14. “Mr Parag P Tripathi, senior counsel appearing on behalf of the
appellant sought to urge that the view of the Facilitation Council
to the effect that the provisions of the Limitation Act 1963 have no
application, which has been affirmed by the Division Bench in the
impugned judgment, suffers from a perversity, and hence a petition
under Article 226 of the Constitution ought to have been
entertained. We cannot accept this submission for the simple
reason that Section 18 of the MSMED Act 2006 provides for
recourse to a statutory remedy for challenging an award under the
Act of 1996. However, recourse to the remedy is subject to the
discipline of complying with the provisions of Section 19. The
entertaining of a petition under Articles 226/227 of the
Constitution, in order to obviate compliance with the requirement
of pre-deposit under Section 19, would defeat the object
and purpose of the special enactment which has been legislated
[
upon by Parliament.
15. For the above reasons, we affirm the decision of the Division
Bench by holding that it was justified in coming to the conclusion
that the petition under Articles 226/227 of the Constitution
instituted by the appellant was not maintainable. Hence, it was
unnecessary for the High Court, having come to the conclusion
that the petition was not maintainable, to enter upon the merits of
the controversy which arose before the Facilitation Council”.
WP(C) No. 2673/2024
7
16. In terms of the judgment supra, it has been held by three judges bench of
Supreme Court that petition under Article 226/227 of the Constitution
instituted by the applicant is not maintainable under MSMED Act. The
appellant therein, was directed to take recourse to the proceedings under
section 34 of the Act of 1996.
17. Learned counsel for the petitioner has relied upon the judgment passed by
Supreme Court in M/s Tamil Nadu Cements Corporation Limited vs
Micro and Small Enterprises Facilitation Council and Another reported as
2025 SCC online SC 127. He has stated that as to whether petition under
Article 226/227 can be entertained by this court or not has already been
referred to the larger bench of five judges as such till the decision is taken
by the larger bench in terms of judgment supra, instant petition deserves
to be entertained and decided by this court. Paragraphs 18 & 19 of the
judgment supra for facility of reference is referred hereinbelow:
18. Recently, in Tecnimont Private Limited (Formerly known as
Tecnimont ICB Private Limited) v. State of Punjab and Others, in
regard to the question relating to alternative remedy where the
disputed amount is required to be deposited to avail the statutory
remedy, this Court observed that there is some divergence of
opinion, albeit several cases like Shyam Kishore (supra) have
attempted to find a solution to provide some support in cases
involving extreme hardship where the writ petition would not be
dismissed on the ground of equally efficacious alternative remedy.
19. In the light of the aforesaid decisions, we deem it 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.
WP(C) No. 2673/2024
8
18. Since the decision has not been taken by the larger bench, in terms of the
judgment passed by Supreme Court in case titled M/s Tamil Nadu
Cements Corporation Limited vs Micro and Small Enterprises
Facilitation Council and Another till date, therefore judgment passed in
case of M/s India Glycols Limited supra, wherein it has been held that the
petition under Article 226/227 of the Constitution of India is not
maintainable in assailing an award under MSMED Act 2006, by a larger
bench of three judges will be binding as against the judgment of two
judges bench in case of Jharkhand Urja Vikas Nigam Limited v. State of
Rajasthan and others.
19. The Judgment referred by Mr. Abdul Rashid Malik, learned Senior AAG
passed in case titled “Union Territory of J&K and Anr vs. Aibak Electric
Industries Barzulla” in petition bearing CM(M) No. 293/2023 decided on
14.12.2023 is not applicable to the case of the petitioner on account of the
fact that Section 19 of MSMED Act and the judgment passed by
Supreme Court supra, which have relevance in the instant case, have not
even been discussed therein.
20. Learned senior counsel representing respondent No. 1 has stated that any
reference made to the larger bench does not unsettle declared law. He has
relied upon the judgment passed by Supreme Court in Union Territory of
Ladakh and others vs Jammu and Kashmir National Conference and
Another reported as 2023 SCC online SC 1140. It is appropriate to
reproduce paragraphs 32 to 35 of the said judgment as under:
32. ………That apart, it is settled that mere reference to a larger
Bench does not unsettle declared law. In Harbhajan Singh v State of
Punjab, (2009) 13 SCC 608, a 2-Judge Bench said:
“15. Even if what is contended by the learned counsel is
correct, it is not for us to go into the said question at this
stage; herein cross-examination of the witnesses had taken
place. The Court had taken into consideration the
materials available to it for the purpose of arriving at a
satisfaction that a case for exercise of jurisdiction under
Section 319 of the Code was made out. Only because the
correctness of a portion of the judgment in Mohd. Shafi
[(2007) 14 SCC 544 : (2009) 1 SCC (Cri) 889 : (2007) 4
SCR 1023 : (2007) 5 Scale 611] has been doubted by
another Bench, the same would not mean that we should
wait for the decision of the larger Bench, particularly
when the same instead of assisting the appellants runs
counter to their contention.”
WP(C) No. 2673/2024
9
33. In Ashok Sadarangani v Union of India, (2012) 11 SCC 321,
another 2-Judge Bench indicated:
“29. As was indicated in Harbhajan Singh case [Harbhajan
Singh v. State of Punjab, (2009) 13 SCC 608: (2010) 1
SCC (Cri) 1135], the pendency of a reference to a larger
Bench, does not mean that all other proceedings involving
the same issue would remain stayed till a decision was
rendered in the reference. The reference made in Gian
Singh case [(2010) 15 SCC 118] need not, therefore,
detain us. Till such time as the decisions cited at the Bar
are not modified or altered in any way, they continue to
hold the field.”
34. On the other hand, when it was thought proper that other
Benches of this Court, the High Courts and the Courts/Tribunals
below stay their hands, the same was indicated in as many words, as
was the case in State of Haryana v G D Goenka Tourism
Corporation Limited, (2018) 3 SCC 5854:
“9. Taking all this into consideration, we are of the
opinion that it would be appropriate if in the interim and
pending a final decision on making a reference (if at all) to
a larger Bench, the High Courts be requested not to deal
with any cases relating to the interpretation of or
concerning Section 24 of the Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013. The Secretary General will
urgently communicate this order to the Registrar General
of every High Court so that our request is complied with.
35. We are seeing before us judgments and orders by High Courts
not deciding cases on the ground that the leading judgment of this
Court on this subject is either referred to a larger Bench or a review
petition relating thereto is pending. We have also come across
examples of High Courts refusing deference to judgments of this
Court on the score that a later Coordinate Bench has doubted its
correctness. In this regard, we lay down the position in law. We
make it absolutely clear that the High Courts will proceed to decide
matters on the basis of the law as it stands. It is not open, unless
specifically directed by this Court, to await an outcome of a
reference or a review petition, as the case may be. It is also not open
to a High Court to refuse to follow a judgment by stating that it has
been doubted by a later Coordinate Bench. In any case, when faced
with conflicting judgments by Benches of equal strength of this
Court, it is the earlier one which is to be followed by the High
Courts, as held by a 5-Judge Bench in National Insurance Company
Limited v Pranay Sethi, (2017) 16 SCC 6805. The High Courts, of
course, will do so with careful regard to the facts and circumstances
of the case before it.
21. It is clearly stated in the judgment supra that till the reference made by
Supreme Court in case titled M/s Tamil Nadu Cements Corporation
Limited vs Micro and Small Enterprises Facilitation Council and Another
is considered and decided by the larger bench, Judgment passed in M/s
India Glycols Limited shall be binding on this court and would hold law.
WP(C) No. 2673/2024
10
22. From the above, the court has come to the conclusion that petition under
Article 226/227, thereby challenging award passed by Facilitation
Council MSMED Act, is dismissed as not maintainable. However, liberty
is granted to the petitioner to take recourse to appropriate proceedings in
terms of MSMED Act.
(MOKSHA KHAJURIA KAZMI)
JUDGE
SRINAGAR
21.04.2025
AAMIR(PS)
Whether approved for reporting Yes
WP(C) No. 2673/2024
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