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2026 Supreme(Online)(Tel) 8735

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Nagesh Bheemapaka, J
NTPC Limited – Appellant
Versus
Union of India – Respondent
WRIT PETITION No. 19857 OF 2025



Advocates:
For the Appellants/Petitioners: V. Ravinder Rao, K. Sai Ram Murthy
For the Respondents: Sricharan Telaprolu, Jai Kishan Solanki, Mohan Karoor

A writ court under Article 226 will not intervene in ongoing arbitral proceedings to determine whether a contract is a 'works contract' or a 'service contract', as the arbitral tribunal possesses the authority to decide its own jurisdiction and assess evidence regarding the nature of the dispute.

Headnote:(A) Micro, Small and Medium Enterprises Development Act, 2006 - Sections 15, 16, 17 and 18 - Arbitration and Conciliation Act, 1996 - Sections 4 and 16 - Jurisdiction of Facilitation Council - Determining nature of contract - Writ jurisdiction under Article 226 of the Constitution - When disputed questions of fact regarding whether a contract is a 'works contract' or 'service contract' arise, writ courts ordinarily do not intervene if an arbitral tribunal is already seized of the matter. (Paras 6, 10, 11, 14)

(B) Arbitral Proceedings - Principle of Kompetenz-Kompetenz - An arbitral tribunal is competent to rule on its own jurisdiction, including objections regarding the nature of the contract and the applicability of a specific statute. Participation in ongoing arbitral proceedings without immediate jurisdictional objection may result in waiver of rights under the arbitral framework. (Paras 12, 13)

Facts of the case:
The petitioner entered into a long-term maintenance contract for industrial infrastructure, termed as a 'Service Purchase Order'. The respondent filed a claim before a statutory facilitation council for unpaid dues. The petitioner challenged the jurisdiction, arguing the agreement was a 'works contract' and not within the scope of the Act, which only governs supply of goods or services. The petitioner approached the High Court seeking to quash the referral of the dispute to arbitration, while admitting it had already participated in the arbitral proceedings.

Findings of Court:
The court held that the determination of whether a contract is a works contract requires detailed examination of evidence which is not suitable for a writ court. The arbitral tribunal is the appropriate authority to decide such jurisdictional facts, and as proceedings are already underway, intervention at this stage is premature and would conflict with the principle of minimal judicial interference.

Issues: The main issues were the maintainability of a writ petition when arbitral proceedings have commenced and whether the court should determine the nature of the contract (works vs. service) to decide if the statutory facilitation council had initial jurisdiction.

Ratio Decidendi: Given that the tribunal is competent to adjudicate its own jurisdiction and that the court should not engage in parallel adjudication of disputed facts, the petition is dismissed. The legal remedy lies within the arbitral process where all jurisdictional and contractual defenses remain open to the parties.

Result: Writ Petition dismissed.

Table of Content
1. petitioner disputes the applicability of the msmed act to a works contract. (Para 1)
2. respondents defend the council's referral and raise the doctrine of kompetenz-kompetenz. (Para 2 , 3 , 4)
3. writ court declines to interfere with ongoing arbitral proceedings. (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19)

O R D E R:

Petitioner states that it is a Government of India Company incorporated under the provisions of the Companies Act, 1956; its Western Region-II Headquarters is situated at Raipur, Chhattisgarh, and its Super Thermal Power Station is located at Lara, Raigarh District, Chhattisgarh, known as NTPC Lara Super Thermal Power Station. Petitioner Company is India's largest energy conglomerate, with its origins dating back to 1975, established with the object of accelerating power development in the country. Over the decades, they established themselves as a dominant public sector undertaking in the power sector, with an integrated presence across the entire value chain of power generation. While its initial focus was on fossil fuel-based power generation, Petitioner has since diversified into hydro, nuclear and renewable energy sources.

1.1. Petitioner further states that the Ministry of Micro, Small and Medium Enterprises, Government of India, is the apex executive authority responsible for formulation and administration of policies, rules, regulations and laws relating to micro, small and medium enterprises in India. With the object of facilitating promotion, development and enhancement of competitiveness of micro, small and medium enterprises, and for matters connected therewith or incidental thereto, the Union of India enacted the Micro, Small and Medium Enterprises Development Act, 2006, also referred to as Act 27 of 2006 or the MSMED Act, 2006. Under the scheme of the said Act, any person intending to establish a micro, small or medium enterprise engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951, or engaged in providing or rendering services, is required to file a memorandum in such form and before such authority as may be specified by the Central Government under sub-section (3) or by the State Government under sub-section (4) of Section 8 of the Act. The Act also extends an option to already established industries, subject to fulfillment of the statutory conditions, to file the prescribed memorandum within the stipulated period.

1.2. Petitioner states that the authority competent to receive such memorandum, the form thereof and the procedure for filing the memorandum in the case of medium enterprises is to be notified by the Central Government, while small enterprises may file the memorandum in the manner prescribed. Only upon filing such memorandum in accordance with Act 27 of 2006 does an enterprise come within the purview of the MSMED Act. Under the scheme of Sections 15, 16 and 17 of the Act, disputes relating to amounts due for goods supplied or services rendered by a "supplier", as defined under the Act, may be referred to the Micro and Small Enterprises Facilitation Council. Section 18 of Act 27 of 2006 prescribes a special and self-contained procedure for resolution of such disputes, beginning with conciliation and, upon failure thereof, arbitration.

1.3. In the present case, Petitioner Company invited tenders for a Long-Term Contract for maintenance of equipment of the Coal Handling Plant at NTPC Lara Super Thermal Power Station, Stage-I. Pursuant to the said tender process, the 4th respondent was awarded the long-term contract and, upon acceptance of the terms and conditions, entered into an agreement with the Petitioner Company. After completion of all formalities, Petitioner issued Service Purchase Order dated 27.04.2018, followed by an amended Service Purchase Order dated 29.04.2021. Though the contract is termed as a "Service Purchase Order

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