The court affirmed that in disputes under the MSMED Act, a writ petition is not maintainable when alternate remedies through arbitration are available, requiring recourse under the Arbitration Act.

JUDGMENT

(Judgement was delivered by S.M.Subramaniam J.)

Under assail is the order dated 05.01.2024 passed in W.P.No.36067 of 2023. The unsuccessful writ petitioner is the appellant before this Court.

2. The writ of certiorari has been instituted to quash the order dated 23.03.2023 passed by the Micro and Small Enterprise Facilitation Council (MSEFC), Chennai Region.

3. The brief facts to be considered in the present Intra-Court Appeal are that the 2^nd respondent had made a claim in Case No.MSEFC/CR/232/2022 before the MSEF Council under Section 18(1) of the Micro, Small and Medium Enterprises Development Act, 2006 [hereinafter referred to as 'MSMED Act'] claiming payment of Rs.15,49,234/- from the writ appellant towards the remaining amount due for services rendered, along with interest calculated in terms of that Act. By an order dated 23.03.2023, the Council held that the appellant was liable to pay the principal amount of Rs.15,49,234/- with compounded interest, with monthly rate at three times of the Bank rate notified by the Reserve Bank of India (RBI), as stipulated in Sections 15 and 16 of the MSMED Act. The interest was payable from the due dates of appointment until payment.

4. Three key issues arise for consideration in the present lis on hand, as under;

(1) Whether a writ petition under Article 226 of the Constitution of India is maintainable, when an efficacious alternate remedy is contemplated under the provisions of the Arbitration and Conciliation Act for setting aside the award passed under the Arbitration Act?

(2) Whether the claim petition filed under Section 18(1) of the MSMED Act was validly taken up for conciliation by the Council, and whether the Council's decision to proceed with the arbitration upon the failure of conciliation proceedings is valid?

(3) When the conciliation proceedings and consequential arbitration proceedings are taken up by the Council as a continuous process, whether certain procedures under the Arbitration Act need to be repeated?

5. Section 18(1) of the MSMED Act pertains to “Reference to Micro and Small Enterprises Facilitation Council”. Sub Section (1) stipulates that “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 17, make a reference to Micro and Small Enterprises Facilitation Council”. Sub Section (2) contemplates “On receipt of a reference under Sub-Section (1), the Council shall either conduct mediation itself or refer the matter to any mediation service provider as provided under the Mediation Act, 2023”. Sub Section (3) contemplates “The conduct of mediation under this section shall be as per the provisions of the Mediation Act, 2023”. Sub Section (4) contemplates “Where the mediation initiated under Sub-Section (3) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing alternative 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”.

6. In the context of Section 18(1), it is admitted that a reference was made to the Council in the present case. The Council conducted conciliation proceedings between the parties, which ultimately ended in failure. Thereafter, the Council initiated further proceedings for arbitration, fixing a date for arbitration. The arbitration proceedings were conducted by adjudication of m