IN THE HIGH COURT OF JUDICATURE AT MADRAS
ABDUL QUDDHOSE
Kinetic Industries (P) Ltd. – Appellant
Versus
Micro Small Enterprises Facilitation Council, Rep. by its Chairperson, Industries Commissioner and Director of Industries and Commerce – Respondent
ORDER :
Abdul Quddhose, J.
This writ petition has been filed challenging the impugned order dated 15.07.2025 passed by the Micro and Small Enterprises Facilitation Council, Chennai Region, (MSEFC) (in short “Council”) under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (in short “MSMED Act”).
2. The impugned order came to be passed on a claim made by the second respondent under the MSMED Act against the petitioner for the non-payment of the value of the goods supplied by the second respondent to the petitioner. The first respondent Council through the impugned order allowed the said claim and directed the petitioner to pay the principal amount of Rs.5,58,400/- along with compound interest with monthly rests.
3. According to the petitioner, the statutory procedure contemplated under Section 18(2) of the MSMED Act, namely, the conciliation proceedings was not adhered to by the first respondent Council before passing the impugned order. According to the petitioner, no conciliation took place as per the provisions of Section 18(2) of the MSMED Act before the first respondent Council, and therefore, the impugned order is arbitrary and illegal.
4. The learned cou
India Glycols Limited and another Vs. Micro and Small Enterprises Facilitation Council, Medchal
Tamil Nadu Cements Corporation Ltd. Vs. Micro and Small Enterprises Facilitation Council and others
Writ petition not maintainable against MSMED Council orders; must challenge via Section 34 A&C Act with 75% pre-deposit.
The conciliation proceedings contemplated under Section 18(2) of MSMED Act is mandatory in nature, and failure to comply with the mandatory procedure vitiates the impugned order.
Proper procedural compliance with the provisions of the MSMED Act, particularly Sections 18(2) and 18(3), is essential for the validity of orders and awards.
The main legal point established is that arbitration proceedings under the MSMED Act must adhere to the procedural requirements of the Act and the Arbitration and Conciliation Act, 1996.
Wrong order can never be a good precedent.
The absence of proper arbitration proceedings by the MSEF Council renders its decision invalid, allowing for judicial review of the matter under writ jurisdiction.
The court ruled that a party to a dispute cannot waive the mandatory conciliation requirement under Section 18(2) of the MSMED Act, validating subsequent arbitration proceedings.
The absence of mandated conciliation proceedings renders an award invalid, allowing for judicial review under writ jurisdiction.
The MSMED Act, 2006 provides a statutory framework that allows the Facilitation Council to act as an arbitrator after conciliation, overriding the restrictions of the Arbitration Act, 1996.
The mandatory pre-deposit requirement under Section 19 of the MSMED Act, 2006 for challenging an award and the overriding effect of the MSMED Act, 2006 over the Arbitration Act, 1996 in specific disp....
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