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Concept Of Alternative Remedy In MSME Facilitation

Micro Small and Medium Enterprises Facilitation Council (MSMEFC) was initiated by the respective state governments. It's generally known as the' MSME Court.' The MSMEFC acts as an Adjudicator for agreement of any dispute regarding the payment between the MSME units.

All realities classified as Micro, Small and Medium enterprises as per the MSME bracket are eligible to apply for MSME enrollment. An existent can not apply for MSME enrollment. A procurement, cooperation establishment, company, trust or society with an investment below Rs. 50 Crore and periodic development below Rs. 250 crore are eligible for MSME enrollment.

The Ministry of MSME issues an e-certificate known as the Udyam registration instrument to MSMEs in India. The Udyam enrollment instrument is known as the MSME enrollment instrument. The entrepreneurs admit the MSME enrollment instrument upon completion of the MSME enrollment process.

Who Can Avail Relief Under MSMEFC?:

Micro, Small And medium enterprises can avail or ask for relief from MSMEFC after generating Udyam number but it is pertinent to note that Only Micro and small enterprises can avail benefit or File claim in MSMEFC, Medium enterprises cannot file claim in MSMEFC through online portal or any other mode.

In case of The Indur District Cooperative versus M/S. Microplex (India), WP No. 35872/2012 Andhra High Court held that the Act of 2006 was enacted for the benefit of micro, small and medium enterprises, but Chapter V thereof relates to delayed payments to micro and small enterprises only. Also, supplier is defined under Section 2( n) in the environment of only micro or small enterprises and not a medium enterprise.

Remedy Against The Award Of MSMEFC:

Award passed by the MSME Council can be challenged under section 19 of MSME Act which says:- No operation for setting aside any decree, award or other order made either by the Council itself or by any institution or centre furnishing alternate disagreement resolution services to which a reference is made by the Council.

Shall be entertained by any court unless the complainant( not being a supplier) has deposited with it seventy- five per cent of the quantum in terms of the decree, award or, as the case may be, the other order in the manner directed by similar court handed that pending disposal of the operation to set aside the decree, award or order, the court shall order that similar chance of the quantum deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case subject to similar conditions as it deems necessary to put.

The Supreme Court in case of M/s Tirupati Steels v. M/s Shubh Industrial Component & Another, (2022) 7 SCC 429) held that The pre-deposit of 75% of the awarded quantum as per Section 19 of the Micro, Small and Medium Enterprise Development Act, 2006 (MSMEFC) is obligatory to challenge an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act).

The division bench of the Punjab and Haryana High Court heavily reckoned on the case of M/s Mahesh Kumar Singla and Another Versus Union of India and Ors, (2017 SCC OnLine P&H 5493) While upholding the virus of Section 19 of the MSMED Act, held that the pre- deposit of 75% of the arbitral award is, in fact, directory and not obligatory.

Therefore, while setting aside the impugned order, the Apex Court also held that the decision of the Division Bench in the case of M/s Mahesh Kumar Singla (supra), isn't good in law and is specifically overruled to the extent that it holds that pre -deposit of 75% of the awarded quantum under Section 19 of the MSMED Act, 2006, is directory and not a obligatory demand.

The decision of the Supreme Court brings by important demanded clarity on the nature of pre-deposit demand set out under Section 19 of the MSMED Act in relation to challenging an arbitral award under Section 34 of the Arbitration Act. The Apex Court has played a fine balance in the instant matter by pressing the obligatory nature of the demand of pre-deposit of 75% of the awarded quantum under MSME Act.

Scope Of Writ Petition Against MSME Award:

The principles of natural justice are made by the courts as being the least protection of the person's rights against the arbitrary policy that judicial, quasi-judicial principles of natural justice in executive law power may borrow while making an order working on those rights.

In case of M/S. Romantic Garments Versus P. Vellaichamy, (2020 SCC OnLine Mad 25463) it was held by Madras High Court that the principles of' natural justice' are meant only to help confinement of justice and go an occasion to the replier. It would not lie in the mouth of the supplicant to say that he can bring Composition 226 of the Constitution of India, on the ground of violation of principles of natural justice. As actually, there's an indispensable remedy available to the supplicant, under Section 19 of the MSME Act, the writ petition isn't justifiable, either on the question of maintainability or on the graces of the case.

In case of Maharashtra Chess Association versus Union of India & Other, (2020) 13 SCC 285) it was held by Supreme court that the actuality of an alternate acceptable remedy is simply a fresh factor to be taken into consideration by the High Court in deciding whether or not to exercise its writ governance."

In case of M/s. Ankit Metal & Power Limited & Anr. Versus West Bengal State Micro Small Enterprise Facilitation Council (WBMSEFC) & Ors. W.P.A. No. 3239 of 2020 Calcutta High Court held that it's noticed that undisputedly against the award passed by the MSME council, the petitioners has remedy under Section 34 of the Arbitration Act.

In terms of Section 5 of the Arbitration Act, the judicial intervention in the arbitral proceedings is needed to be minimum and that once the Arbitration Act provides for remedy to challenge the award on the ground specified under Section 34 of the Act, also unless some exceptional case is made out, no hindrance in exercise of writ governance under Composition 226 of the Constitution is needed.

In Case of M/s. Bajaj Electricals Limited versus Micro Small and Enterprisers Facilitation and another, (2022 SCC OnLine Ori 77) The Orissa High Court held that a writ petition would be justifiable against an award rendered by the MSME Council whereby the displeased party wasn't given a hail on its expostulations. The Court held that an indispensable remedy under Section 34 would not be a bar to the writ petition where a party wasn't part of given the right of hail.

As per the guidelines passed by the high court's and Supreme court, Award Passed by MSME council can be challenged under section 19 of the said act but under section 19 it's obligatory to pre-deposit of 75 quantum and to skip from similar liability, descendant choose to file writ petition other than alternative remedy under section 19 of the said act.

That certain guidelines have been issued by the court under which it was mentioned that other than in exceptional cases writ petition cannot be entertain against the award of MSME Council. In case of M/s. Bajaj Electricals Limited (Supra) description of exceptional cases or violation of principle of natural justice was defined by the court which was that Writ petition is maintainable against the Award of the MSME Council Which Failed to Give a Hearing on Limitation.

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