Bar Council of India Notice

Disclaimer & Confirmation

As per the rules of the Bar Council of India, an advocate is not permitted to solicit work or advertise. By clicking “I Agree” below, you acknowledge and confirm that:

you are seeking information about Advocate Manish Jha of your own accord and for your own information and use; there has been no advertisement, personal communication, solicitation, invitation or inducement of any kind whatsoever from Advocate Manish Jha or the chamber to solicit any work through this website; the information made available here is provided only on your specific request; and no information on this website is to be construed as legal advice, nor does its use create any advocate-client relationship.

⚖  E-397, 4th Floor, Tagore Garden Extension, New Delhi – 110027 Mon–Sat  ·  +91 98738 50301  ·  legal@advocatemanishjha.com
Advocate Manish Jha Criminal · Civil · Family Law — New Delhi ☎  Consult the Chamber
Home › Commercial Law — MSME
Practice Explainer · MSMED Act, 2006 & Article 226

The Side Door That Usually Stays Shut: Writ Petitions Against Facilitation Council Orders

Buyers facing MSEFC awards are tempted by the writ route because the statutory challenge demands a 75% deposit. Courts police that temptation strictly — while keeping Article 226 open for genuine jurisdictional failures and Council inaction.

Every award of a Micro and Small Enterprises Facilitation Council carries a built-in deterrent to challenge: Section 19 of the MSMED Act bars any application to set aside the award or decree unless the challenger deposits seventy-five per cent of the awarded amount. The predictable response of award-debtors has been to try Article 226 instead — a writ petition carrying no deposit requirement. The equally predictable judicial response has been to treat such petitions as attempts to circumvent the statute. This explainer maps where the writ door is closed, and the narrower situations in which it remains open.

The statutory architecture the writ must respect

Section 18 award. The Council\'s arbitral award (or the award of the institution to which it refers the dispute) follows the failed conciliation.
Section 34 challenge. The award is an arbitral award under the 1996 Act; the challenge lies before the competent court, on Section 34 grounds, within its limitation.
Section 19 gate. No application for setting aside is entertained without deposit of 75% of the award. The court may order that a portion of the deposit be paid out to the supplier during the challenge.
Execution. Absent a stay within this framework, the award is enforced as a decree.

The scheme is deliberately supplier-protective: Parliament decided that an MSME which has won before the Council should not be starved through years of challenge. Any writ petition that would deliver the challenger from the deposit therefore begins under a cloud — it asks the constitutional court to undo a legislative balance.

Closed door, open windows

Closed: merits by another name

Petitions attacking the award\'s findings — on supply, on acceptance, on interest — dressed as jurisdictional error. These are Section 34 grounds and are relegated to Section 34, deposit and all.

Closed: deposit hardship alone

Financial difficulty in raising 75% is addressed within Section 19 (phasing, in genuine cases), not by abandoning the route.

Open: true jurisdictional nullity

The Council acting where the Act simply does not reach — no supplier registration at any relevant time, subject matter outside Chapter V, or proceedings conducted in defiance of the statute\'s allocation of functions.

Open: inaction

A Council that does not take up a reference, or stalls indefinitely, leaves the supplier with no statutory remedy; mandamus is the classical answer. The 90-day decisional aspiration in Section 18(5) supplies the benchmark against which delay is measured.

Natural justice occupies the middle ground. A hearing denied altogether — an award passed without notice, or by a body differently composed than the one that heard the parties — can found a writ. A hearing merely conducted unsatisfactorily cannot: the Section 34 court examines procedural fairness as part of its ordinary remit, with the deposit in place.

For each side, practically

Award-debtors: budget for the deposit from the day the reference is served, and build the record before the Council — jurisdictional objections, registration-timing objections, counterclaim positions — because Section 34 review happens on that record. A writ filed to buy time usually ends with costs and a shortened Section 34 runway.

Suppliers: when a buyer files a writ, raise the alternative-remedy bar at the threshold and seek that any interim protection be conditioned on deposit or security referable to Section 19\'s discipline, so the writ cannot become a free stay.

Both: remember that the supervisory jurisdiction under Article 227 over the Council\'s proceedings is as restrained as Article 226 — supervision corrects jurisdictional excess, it does not re-hear delayed-payment disputes.

GrievanceProper route
Award wrong on merits, interest, quantumSection 34, with Section 19 deposit
Deposit hardshipWithin Section 19 — phased deposit in genuine cases
Council lacked jurisdiction at the rootArticle 226, sparingly; often still relegated if the point can be raised under Section 34
Council inaction or refusal to entertain a referenceArticle 226 — mandamus
Procedural directions mid-referenceBefore the Council; thereafter Section 34

Frequently Asked Questions

Why are writs against MSEFC awards generally refused?

Because the MSMED Act provides a complete alternative remedy: an award under Section 18 is treated as an arbitral award, challengeable under Section 34 of the Arbitration and Conciliation Act, 1996, subject to the Section 19 deposit. Article 226 is discretionary, and the settled self-restraint against exercising it where an efficacious statutory remedy exists applies with special force where entertaining the writ would nullify a deliberate legislative condition — the 75% deposit protecting MSME cash flow.

Are there situations where a writ petition is maintainable?

The recognised openings are narrow: where the Council acts wholly without jurisdiction (for example, proceedings against an entity over a dispute the Act cannot reach), where there is a violation of natural justice so fundamental that the remedy of appeal is no answer, where the vires of a provision is challenged, or where the Council refuses to act or sits on a reference — inaction having no statutory remedy at all. Even then, the High Court examines whether the grievance can await the Section 34 stage.

Can a writ court waive or reduce the 75% deposit?

The deposit is a legislative command attached to the statutory challenge, and the consistent judicial approach is that it cannot be diluted by routing the challenge through Article 226. Courts have, within the Section 19 framework itself, allowed the deposited amount to be managed — including phased deposit in genuine hardship and release of portions to the supplier pending challenge — but the obligation itself is not negotiable.

What about orders at the conciliation stage or procedural directions?

Interlocutory grievances — objections to jurisdiction kept open, procedural directions, the transition from conciliation to arbitration — are ordinarily left to be raised before the Council and then under Section 34. Rushing to the writ court with every intermediate order fragments the statutory process, and such petitions are routinely relegated to the statutory remedy.

Note: This article is general information about the law and is not legal advice. It does not create an advocate-client relationship. The position stated is as at 10 October 2026 and may have changed since. Readers should verify any provision or decision referred to against the official text and seek advice on their own circumstances.