New Delhi, Feb 16 (KNN) The Delhi High Court ruled that challenging arbitration awards under the MSME Act via writ petitions (under Article 226/227) is impermissible without first resorting to the statutory remedy provided in Section 34 of the Arbitration and Conciliation Act (A&C Act).

The bench, led by Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora, stressed that this recourse is subject to the pre-deposit requirement under Section 19 of the MSME Development Act.

The State Trading Corporation of India Ltd. (the “Appellant”) appealed the dismissal of its writ petition by a Single Bench of the High Court against an award issued by the Delhi Arbitration Centre.

The Single Bench maintained that courts should abstain from entertaining petitions solely due to pre-deposit conditions when a dispute resolution mechanism is available under the Arbitration Act.

In addressing challenges to awards resulting from arbitral proceedings under the MSMED Act, the High Court referenced the Supreme Court decision in M/s India Glycols Limited and Another v. Micro and Small Enterprises Facilitation Council, Medchal – Malkajgiri and Others.

The court underscored that petitions filed under Article 226/227 should not be entertained, as Section 18 of the MSMED Act provides for a statutory remedy under Section 34 of the Arbitration Act. It emphasised that bypassing the pre-deposit requirement under Section 19 of the MSMED Act through such petitions would undermine the legislative intent.

The High Court disapproved of the view held by some High Courts that any order by the arbitral tribunal could be corrected under Article 226 or 227.

It advocated for minimal judicial intervention during arbitration, suggesting parties wait until the award is pronounced, except in cases where a right of appeal is available under Section 37 of the Arbitration Act. Consequently, the High Court dismissed the appeal.

(KNN Bureau)