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Case Title

M/s. Kinetic Industries (P) Ltd. vs The Micro Small Enterprises Facilitation Council & Another

Case Number

WP No. 10937 of 2026

Court

High Court of Judicature at Madras

Judge

Hon’ble Mr. Justice Abdul Quddhose

Date of Order

Reserved on: 10.04.2026
Pronounced on: 17.04.2026

Introduction

This judgment once again tightens the procedural discipline in arbitration-related disputes under the MSMED Act. The Madras High Court clearly ruled that parties cannot bypass statutory remedies by directly invoking writ jurisdiction under Article 226.

Background of the Case

The petitioner, M/s. Kinetic Industries (P) Ltd., challenged an order passed by the Micro and Small Enterprises Facilitation Council (MSEFC), Chennai, dated 15.07.2025. The Council had directed the petitioner to pay Rs.5,58,400/- along with compound interest for non-payment of goods supplied by the second respondent.

The core argument of the petitioner was simple but strategic — the mandatory conciliation procedure under Section 18(2) of the MSMED Act was not followed before passing the award.

Key Legal Issue

Instead of directly addressing whether conciliation was conducted or not, the Court framed the real issue:

Is a writ petition maintainable against an order passed by the MSME Facilitation Council?

Court’s Analysis

The Court did not entertain emotional or procedural arguments first. It went straight to jurisdiction — a correct legal approach.

It analyzed Section 18 of the MSMED Act, which provides a structured dispute resolution mechanism:

1. Mandatory conciliation
2. Arbitration if conciliation fails
3. Binding award
4. Challenge only through statutory route

The Court emphasized that the MSMED Act operates alongside the Arbitration and Conciliation Act, 1996, but overrides it where necessary.

Importantly, the Court noted:

Even if conciliation procedure is violated, the remedy is not a writ petition.

Critical Legal Position

The Court relied heavily on the Supreme Court judgment in India Glycols Limited vs MSEFC (2025), which clearly held:

Writ jurisdiction under Articles 226/227 cannot be used to bypass Section 34 of the Arbitration Act.

This is where most litigants make a mistake — trying to avoid the 75% pre-deposit requirement under Section 19 of MSMED Act.

Why Writ Petition Was Rejected

The reasoning is practical and strict:

- Arbitration is meant for speedy dispute resolution
- Allowing writ petitions will delay proceedings
- It will defeat legislative intent
- It will allow parties to escape mandatory pre-deposit

The Court clearly called out this attempt as an indirect method to “circumvent statutory requirements.”

Final Judgment

The writ petition was dismissed as not maintainable.

However, the Court gave limited relief — it allowed exclusion of time spent in writ proceedings under Section 14 of the Limitation Act, enabling the petitioner to approach the correct forum.

Legal Takeaway (Practical Insight)

If you are handling MSME disputes, understand this clearly:

- Do NOT file writ petitions against MSME awards
- Always go through Section 34 of Arbitration Act
- Be ready for 75% pre-deposit under Section 19 MSMED Act

This judgment is a direct warning — procedural shortcuts will fail.

Conclusion

The Madras High Court has reinforced a strict statutory pathway. The decision strengthens the MSME dispute resolution mechanism and prevents misuse of writ jurisdiction.

For advocates and business entities, this ruling is not just a judgment — it is a procedural checkpoint that must not be ignored.

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MSME Act, Arbitration Law, Section 34, Madras High Court, Business Litigation, Legal Procedure