Date:February 17, 2023
MSEFC reference can be challenged in writ jurisdiction – Gujrat High Court
Can a reference under section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 be challenged under writ jurisdiction? or
Whether reference of the dispute to the arbitrator by MSFC is amenable to writ jurisdiction?
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The above question came before the Gujarat High Court in the case titled as “Easun Reyrolle Limited vs. Nik San Engineering” [Special Civil Application No. 6265 of 2018 in Civil Application No. 1 of 2018]
In this case Petitioners filed writ petition under Article 226 of the Constitution of India to:
(1) Quash and set aside reference made under section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 and further under section 18(3) and all subsequent proceedings including Arbitration proceedings.
(2) Restrain the Arbitrator from passing any orders in the Arbitration case, and declare the reference under section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 and all the subsequent proceedings including the orders passed so far in Arbitration proceeding as without jurisdiction and a nullity.
The respondent challenged the petition, among others, on the ground that there is an alternative efficacious remedy available to the petitioners and the arbitrator by virtue of Section 16 of the Arbitration Act, 1996 can decide these issues the Hon’ble Court may not exercise jurisdiction under Article 226 of the Constitution of India.
Court held :
It is always open for the petitioner to invoke extraordinary jurisdiction of this Court.
The petition is maintainable.
it is a settled position of law that challenge to the reference itself is amenable to the writ jurisdiction if it is without the authority of law made by the concerned authority.
Court further held that :
Here is the case in which the authority has made an attempt to allow respondent No.1 to invoke such jurisdiction by respondent Nos. 2 and 3 to raise such a huge claim though not entitled to seek benefit of the provisions of the Act in question.
The contentions raised by the learned counsel for the petitioner have got its own impact and the Court is therefore, inclined to accept the petition by granting relief as prayed for.
Thus, a reference under section 18 of Micro, Small and Medium Enterprises Development Act, 2006 can be challenged under writ jurisdiction.
It is always open for the petitioner to invoke extraordinary jurisdiction of the High Court.
This Article is written by Managing Partner Naveen Bhardwaj with assistance and research from the NB Associates team.
The content(s) of this Article cannot be copied or reproduced without the express written consent of NB Associates.
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