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2025 Supreme(Online)(Ori) 3980
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No. 26911 of 2024
(In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950).
M/s. Hindustan Copper Ltd., Kolkata .... Petitioner (s)
-versus-
State of Odisha and Ors. .... Opposite Party (s)
Advocates appeared in the case through Hybrid Mode:
For Petitioner (s) : Mr. Gautam Mukherjee, Sr. Adv. Along with associates.
For Opp. Party (s) : Mr. Saswat Dash, AGA Mr. Gautam Mishra, Sr. Adv. Along with Mr. Ramesh Agarwal, Adv. (for O.P.3)
CORAM:
DR. JUSTICE SANJEEB K PANIGRAHI
DATE OF HEARING:-18.07.2025
DATE OF JUDGMENT:-20.09.2025
A writ petition under Article 226 is maintainable against a purported arbitral award if the process violated natural justice and mandatory procedural safeguards. Such orders, lacking reasoning and due process, are nullities and do not preclude judicial review, as they do not qualify as valid awards under the law.
Headnote:(A) Constitution of India - Arts. 226 and 227 - Statutory Arbitration - Challenge to award passed by facilitation council - Maintainability of writ petition - Where adjudicatory body fails to follow mandatory procedural safeguards, the decision constitutes an administrative nullity rather than a valid award - Writ jurisdiction is maintainable to prevent gross injustice and correct void orders, notwithstanding availability of statutory remedies. (Paras 6, 28, 31, 32, 42)
(B) Arbitration - Procedure - Obligation of adjudicator to transition from conciliation to formal adjudication - Failure to exchange pleadings, conduct oral hearings, or record reasoned findings violates natural justice and foundational procedural principles - Such processes result in orders that are legally non-existent. (Paras 30, 31, 43, 44)
(C) Alternative Remedy - Rule of exclusion of writ jurisdiction - Principle is discretionary - Where order is passed without jurisdiction or in defiance of fairness, aggrieved party is not compelled to pursue statutory mechanism designed for valid awards. (Paras 37, 39)
Facts of the case:
A buyer challenged a payment order issued by a facilitation council. The council had shifted from conciliation to disposal of the dispute without exchanging pleadings, holding oral hearings, or providing reasoned findings. The buyer contended that this short-circuiting rendered the order a nullity, while the respondent argued that the order was an arbitral award requiring a statutory challenge and pre-deposit.
Findings of Court:
The court determined that the council, when acting as an arbitrator, must strictly adhere to adjudicatory norms. An order devoid of reasoning, evidence, and opportunity for hearing is not an award. Therefore, the court ruled that it possesses authority to intervene under its extraordinary jurisdiction to correct a legal nullity.
Issues: Whether a writ petition under Article 226 is maintainable against an order styled as an “arbitral award” passed without following mandatory procedural requirements and principles of natural justice.
Ratio Decidendi: The legal character of an award as an adjudicatory instrument requires it to be a reasoned determination based on evidence. If the foundational procedures of arbitration are ignored, the resulting order is an administrative fiat, not an award; hence, the bar of alternative remedy does not apply.
Result: Petition allowed; order set aside and matter remanded for fresh hearing.
Dr. Sanjeeb K Panigrahi, J.
1. The present Writ Petition has been preferred seeking quashing of the order/ award dated 30.07.2024 passed by the Opposite Party No.2/ Micro Small and Medium Enterprises Facilitation Council, Rourkela in MSEFC Case No.24 of 2010.
I. FACTUAL MATRIX OF THE CASE:
2. The brief facts of the case are as follows:
(ii) That, the Petitioner is a Government of India enterprise engaged in manufacturing activities.
(iii) The Petitioner floated a tender for 700M/Ts of Iron Balls and the present Opposite Party No. 3 was selected as a supplier in accordance with the terms of notice. A purchase order was, accordingly, issued in favour of O.P. No. 3.
(iv) It is alleged that due to non-supply of Iron Balls within the scheduled period, the extraction of ore and subsequent delivery to potential buyers was delayed. The same caused financial losses to the present Petitioner and accordingly, the present Petitioner delayed the release of certain payments to O.P.No. 3.
(v) Aggrieved, O.P.No. 3 approached the MSEFC Council alleging delay in payments, and the matter was registered as MSEFC Case No. 24 of 2010. Accordingly, the present Petitioner received notice on 13.9.2011. The present Petitioner filed a preliminary objection raising the issue of jurisdiction, but the MSEFC proceeded with the matter.
(vi) The present Petitioner had approached this Court in W.P.(C) No. 10041 of 2015 challenging the vires of the MSMED Act, 2006 and additionally sought quashing of proceedings in MSEFC Case No. 24 of 2010. Vide order dated 3.6.2015, this Court in W.P.(C) No. 10041 of 2015 had stayed further proceedings in MSEFC Case No. 24 of 2010.
(vii) However, it appears that despite the stay order, the MSEFC Council had passed final order dated 1.3.2016 in MSEFC Case No. 24 of 2010 directing the Petitioner to pay interest on delayed payment subject to vacation of stay or disposal of W.P.(C) No. 10041 of 2015.
(viii) When this order was brought to the knowledge of this Court, this Court vide order dated 27.7.2023 was pleased to quash the order dated 1.3.2016 in MSEFC Case No. 24 of 2010 and remitted the matter for reconsideration after affording an opportunity of hearing to the Petitioner.
(ix) In the meanwhile, it is also pertinent to note, the present Petitioner had invoked the arbitration clause of the contract between the Parties and approached the Chairman-cum-Managing Director for appointment of Arbitrator to adjudicate upon the dispute existing between the Parties. An Arbitral Tribunal was constituted. O.P. No. 3 approached the Madhya Pradesh High Court at Jabalpur in W.P.(C) No. 13550 of 2014 challenging initiation of arbitration. However, vide order dated 1.4.2016 in W.P.(C) No. 13550 of 2014, the Madhya Pradesh High Court at Jabalpur was pleased to dismiss the Writ Petition. Thereafter, both parties participated in the Arbitration Proceeding. However, vide award dated 4.6.2022, the Ld. Tribunal was pleased to arrive at the conclusion that neither of the parties have any claim alive against each other.
(x) Consequently, the present Petitioner has approached this Court in Review Petition No. 469 of 2023 arising out of W.P.(C) No. 10041 of 2015, to bring to this Court’s notice that an award has been passed by the Ld. Tribunal, which is still pending.
(xi) Qua the MSEFC Council proceeding, it appears that after the matter was remanded for reconsideration by this Court, the MSEFC Council on 4.10.2023, directed O.P. No. 3 to file a copy of the original claim petition along with supporting documents. Thereafter, the matter was transferred from MSEFC, Cuttack to MSEFC, Rourkela and directed to be ‘reheard’.
(xii) On the next date of hearing, i.e. on 30.11.2023, the MSEFC Council advised the parties to go for a mutual settlement.
(xiii) On 28.3.2024, the MSEFC Council records that the present Petitioner is not interest in conciliation and as such arbitration starts under Section 18(3) of the MSMED Act, 2006. The Parties were directed to ad
