*Dismisses petition challenging arbitral award
Excelsior Correspondent
JAMMU, July 22: The High Court of Jammu & Kashmir and Ladakh has emphatically observed that the writ jurisdiction is intended to reinforce, and not override, the remedies provided by statute, and cannot be employed as a convenient recourse to circumvent conditions.
These observations were made by Justice Wasim Sadiq Nargal while dismissing the petition filed by the Union Territory through Vice-Chairman J&K Lakes Conservation and Management Authority, Srinagar challenging the arbitral award dated 16.01.2023 passed by the Micro and Small Enterprises Facilitation Council (MSEFC), Kashmir Division under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006.
The award was passed in favor of M/s JK Technos directing the petitioners to pay Rs 58,56,823 along with compound interest at 19.50% per annum from 18.06.2019 until payment. The petitioners prayed for setting aside the award while M/s JK Technos raised preliminary objections regarding the maintainability of the writ petition.
After hearing Government Advocate Ilyas Nazir Laway for the petitioners and Advocates Arif Sikander Mir and Mehraj-ud-Din Bhat for the respondents, Justice Wasim Sadiq Nargal framed several pivotal legal questions and answered them decisively, reinforcing the binding nature of the statutory dispute resolution framework laid down under the MSMED Act, 2006, and the Arbitration and Conciliation Act, 1996.
About the maintainability of the writ petition under Article 226, the High Court held: “A writ petition is not maintainable when a complete and efficacious statutory remedy is available under Section 34 of the Arbitration and Conciliation Act”, adding “the petitioners failed to demonstrate any exceptional circumstances such as lack of jurisdiction or violation of natural justice to justify invoking writ jurisdiction”. Additionally, Section 19 of the MSMED Act mandates a pre-deposit of 75% of the awarded amount as a precondition to the maintainability of such a challenge.
Regarding the limitation prescribed for challenging an arbitral award under Section 34(3) of the Arbitration and Conciliation Act, 1996, the High Court observed, “the writ petition, filed 18 months after the award, was ruled as barred by limitation. The challenges to arbitral awards must be made within 90 days (extendable to 120 days), and the delay in the present case was inexcusable”.
“The writ petition under Article 226 cannot be entertained beyond the statutory limitation period for challenging an order as it would defeat the legislative intent behind the prescribed remedy and would render the legislative scheme and intention behind the stated provision superfluous”, the High Court said, adding “moreover, the petitioners have not demonstrated any exceptional circumstances, such as a violation of fundamental rights, principles of natural justice, or lack of jurisdiction, to justify bypassing the statutory remedy”.
About the avoidance of mandatory pre-deposit under Section 19, the High Court said, “the petitioners’ failure to deposit 75% of the award amount as mandated under Section 19 of the MSMED Act was deemed a deliberate attempt to bypass statutory safeguards” and declared such conduct “impermissible” and a valid ground to reject the writ”.
Justice Nargal also rejected the claim that no conciliation was conducted and noticed that MSEFC had convened multiple meetings and issued notices, but the petitioners failed to participate. Hence, conciliation was held to have been duly attempted, as per Section 18(2) of the MSMED Act.
“Since the petitioners had earlier deposited Rs 1.09 crore and explicitly permitted partial release of funds to the supplier, the court held them to be estopped from now challenging the award. Their actions amounted to acceptance and waiver of objection”, Justice Nargal said.
He further said, “the petitioners, despite being fully cognizant of statutory scheme, have consciously abstained from availing themselves of the prescribed statutory remedy, and have instead chosen to invoke the extraordinary jurisdiction of this court under Article 226 of the Constitution of India”.
“The law is well settled that the writ jurisdiction is intended to reinforce, and not override, the remedies provided by statute, and cannot be employed as a convenient recourse to circumvent conditions such as statutory limitation periods and pre-deposit requirements mandated by Parliament”, the High Court said and dismissed the petition.
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