Jammu & Kashmir High Court Stays ₹11.52 Crore Arbitral Award Against UT In MSME Dispute

The order was passed by Justice Wasim Sadiq Nargal while hearing a writ petition filed by the Public Health Engineering (PHE) Department of the Union Territory.

After hearing the submission made by Sr AAG A. R Malik the court ordered,

“Prima facie a case for indulgence and interim relief is made out at this stage… subject to objections from other side and till next date of hearing before the Bench, impugned award dated 1st June, 2023 passed by Chairperson, District Level Micro & Small Enterprises Facilitation Council (MSEFC) SAS Nagar Punjab in case titled “M/S JTL Infra Limited v/s Executive Engineer, PHE M &PDivision, Srinagar, Jammu and Kashmir, shall remain stayed”

The impugned award, dated 1st June 2023 directed the PHE Department to pay ₹2.75 crore as the principal amount along with ₹8.77 crore as interest under the provisions of Section 16 of the Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED Act).

Assailing the award Sr AAG Malik argued that the council failed to ascertain the respondent's compliance with the statutory requirements under Sections 7 and 8 of the MSMED Act. Malik emphasized that the respondent's turnover and investment significantly exceeded the thresholds defined for MSMEs, thereby rendering the council's jurisdiction invalid.

It was further submitted that the council proceeded ex-parte, neglecting to consider the petitioner's objections and written submissions, thereby violating principles of natural justice. The petitioner also contended that no due diligence was undertaken to verify the respondent's registration under the MSMED Act, which is a prerequisite for claiming benefits under the statute.

Upon examining the submissions, Justice Nargal observed that a prima facie case for interim relief had been established. Consequently, the court issued notice and stayed the execution of the award.

The matter will be heard again on February 17, 2025.

Case Title: UT Of J&K Vs MM/S JTL INFRA LIMITED AND ANOTHER

Click Here To Read/Download Order