It is a common occurrence to challenge the awards rendered by MSEFC as dilatory tactics. Gujarat High court has rendered a remarkable ruling on this menace faced by MSMEs.
Case Title: M/s Ghakun Steels Pvt Ltd v. State of Gujarat, R/Special Civil Application No. 4876 of 2024, LL Citation: 2024 LiveLaw (Guj) 51
Case: 02.04.2024
Facts
👉The MSEF Council (Respondent No. 2) passed an award dated 23.02.2023 under Section 18(3) of the MSMED Act whereby it allowed the claims of the Respondent No.1. The petitioner had filed a post award objection cum reply dated 24.02.2023 before the Council. Thereafter, the award was put to execution.
👉Aggrieved thereby the petitioner approached the High Court in a writ petition.
Contention of the Parties
The petitioner challenged the order on the following grounds:
The award is passed without affording an opportunity of hearing to petitioner.
The reply filed by the petitioner was not taken on record and the award is not passed on the merits of the case.
The respondent objected to the maintainability of the petition on the following grounds:
A writ petition is not maintainable against an award by MSEF Council.
The award can only be challenged through Section 34 of the A&C Act r/w Section 19 of the MSMED Act after making the mandatory pre-deposit.
Analysis by the Court
👉The Court held that an award passed by MSEF Council under Sectio 18 of the MSMED Act cannot be directly challenged in a writ petition and the aggrieved party has to challenge it under Section 34 of the A&C Act.
👉The Court relied upon the judgment of the Supreme Court in India Glycols Ltd., Vs. Micro and Small Enterprises Facilitation Council (SC) 992 wherein the Apex Court held that a writ against an award by MSEF Council is not maintainable and the award can be challenge only through Section 34 of the A&C Act r/w Section 19 of the MSMED Act providing for 75% mandatory pre-deposit of the awarded amount.
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