For years, buyers resisting MSME claims have used a tactical escape hatch filing writ petitions under Articles 226 or 227 of the Constitution to delay or invalidate awards passed by the MSME Facilitation Council (MSEFC). But that era is fast closing. Challenging MSME Awards via Writ Petition: Courts Uphold Limited Interference. Courts across India, backed by a landmark Supreme Court ruling in India Glycols Ltd. v. MSEFC, are consistently holding that such writ petitions are not maintainable. The statutory mechanism provided under the MSMED Act and Arbitration Act is complete, and constitutional detours are no longer tolerated.
What Makes an MSEFC Award Legally Binding?
An award passed by the Micro and Small Enterprises Facilitation Council (MSEFC) carries the force of law not because it’s a mere recommendation, but because it is treated as an arbitral award under Section 18(3) of the MSMED Act, read with the Arbitration and Conciliation Act, 1996. This dual statutory framework means the award is not just persuasive—it is executable like a decree of a civil court under Section 36 of the Arbitration Act. The legal consequence? Once an award is passed by MSEFC, it becomes binding and enforceable unless the aggrieved party challenges it through a Section 34 petition. But crucially, even that challenge cannot proceed without a mandatory 75% pre-deposit, as required by Section 19 of the MSMED Act. This makes MSEFC awards not only enforceable but also shielded against frivolous resistance.
The Temptation to File a Writ Petition: A Buyer’s Shortcut
Faced with an adverse award, many buyers—especially large corporations and government departments—look for a shortcut to avoid the burdensome 75% deposit. The go-to strategy? Filing a writ petition under Article 226 or 227 of the Constitution, cleverly repackaging their disagreement with the award as a “jurisdictional error” or “violation of natural justice.” This detour seeks to bypass the statutory remedy altogether, hoping the High Court will intervene without enforcing the mandatory deposit. For years, this was a tactical delay mechanism—until the judiciary stepped in with strong disapproval. The constitutional route, once a buyer’s escape plan, is now being shut down as an abuse of process.
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Why High Courts Are Closing the Door
Indian High Courts have now drawn a firm line: Writ petitions against MSEFC awards are not maintainable when a clear statutory alternative exists. The logic is rooted in established constitutional jurisprudence: when a statute provides a specific remedy—here, a Section 34 challenge with a Section 19 deposit—Article 226/227 cannot be used to bypass it. Entertaining such petitions would render the MSMED Act toothless and flood courts with pre-deposit-avoidance tactics. Courts are not only dismissing these petitions at the threshold but are also warning litigants that using constitutional remedies to evade statutory obligations amounts to forum shopping and legal bad faith.
India Glycols Case: A Landmark on Maintainability
The turning point came in India Glycols Ltd. v. MSEFC (2024 AIR SC 285), where the Supreme Court categorically ruled that writ petitions cannot be a substitute for the statutory mechanism laid out in the MSMED and Arbitration Acts. The Court emphasized that the 75% deposit is not a procedural inconvenience—it’s a legislative filter to ensure only genuine challenges proceed. The ruling was unambiguous: permitting writs to circumvent this would nullify the very purpose of the MSMED Act and violate the integrity of its expedited dispute resolution system. India Glycols is now the benchmark for maintainability challenges nationwide
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UT of J&K v. Gulati Metals: The 2025 Reinforcement
In a 2025 decision that reinforced India Glycols, the Jammu & Kashmir High Court in UT of J&K v. Gulati Metals & Alloys refused to entertain a writ petition filed by a public body against an MSEFC award. The buyer had failed to comply with the 75% deposit requirement but sought to invoke Article 227 on alleged procedural grounds. The Court dismissed the plea outright, stating that “statutory discipline cannot be circumvented through constitutional creativity.” This decision echoed a growing judicial consensus: the writ jurisdiction is not a fallback for statutory non-compliance, and attempting to use it that way constitutes misuse.
Procedural vs Substantive Jurisdiction: What Courts Will and Won’t Entertain
There remains a narrow class of exceptions where writs may still be entertained—for instance, where the MSEFC acts without jurisdiction, such as in disputes involving non-MSMEs or post-contract arbitrations unrelated to delayed payment. Similarly, courts may examine clear violations of natural justice, like denying a party any opportunity to present evidence. But these are the rare exceptions, not the norm. Disputes over interpretation of contract clauses, limitation, quantum of claims, or fairness of process are squarely within arbitral domain—not writ jurisdiction. In short, procedural discomfort is not a constitutional violation.
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Strategic Implications for MSMEs and Buyers
For MSMEs, this legal clarity is a major advantage. It means faster enforcement, reduced litigation costs, and less risk of legal derailment. If a buyer files a writ petition, the MSME can now confidently oppose it on grounds of maintainability. For buyers, the message is simple: pay the 75% or don’t appeal at all. Attempting a constitutional shortcut is no longer a viable strategy and can even result in cost penalties or judicial censure. The age of weaponized writ petitions is ending.
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🔹 FAQs
Q1. Can an MSEFC award be challenged through a writ petition?
Generally no. Courts have ruled such petitions are not maintainable due to available statutory remedies.
Q2. What is the correct way to challenge an MSEFC award?
Through a petition under Section 34 of the Arbitration Act, after depositing 75% of the award amount.
Q3. Are there any exceptions to this rule?
Only in rare cases involving jurisdictional overreach or clear violations of natural justice.
Q4. What happens if the High Court accepts the writ?
Such orders may be appealable or reviewable based on misapplication of legal precedent.
Q5. Should MSMEs respond to writ petitions on merits?
Not initially. The primary objection should always be non-maintainability due to Section 19.
