The Tamil Nadu Medical Services Corporation Limite vs Uttar Pradesh State Micro and Small Enterprises Fa

2026:MHC:4346
W.A.No.2187 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 26.10.2026
DELIVERED ON : 29.10.2026
CORAM :
THE HONOURABLE MR. SUSHRUT ARVIND DHARMADHIKARI,
CHIEF JUSTICE
AND
THE HONOURABLE MR.JUSTICE G.ARUL MURUGAN
W.A. No. 2187 of 2025

CNR:{ HCMA011519922025 }
and C.M.P.Nos.16737 of 2025


and 14192 of 2026
The Tamil Nadu Medical Services
Corporation Limited
417, Pantheon Road, Egmore,
Chennai, Rep by its Managing Director.
Appellant(s)
Vs
1. Uttar Pradesh State Micro and
Small Enterprises Facilitaion Council
Sarvodaya Nagar, G.T. Road, Kanpur,
Uttar Pradesh - 205005,
Rep by its Chairman.
2. Atul Generators Pvt Ltd
Rep by its Director,
Nunhai, Agra - 282 006.
Respondent(s)
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2026:MHC:4346
W.A.No.2187 of 2025
PRAYER : Appeal filed under Clause 15 of the Letters Patent to set aside
the order dated 18.10.2024 passed by the learned Single Judge in
W.P.No.10688 of 2024.
For Appellant(s): Mr.P.V.Balasubramaniam
Additional Advocate General
asst by Mr.Edwin Prabakar
For Respondent(s):Mr.Sathish Parasaran,
Senior Counsel
for Mr.T.Sundaranathan
for R2
R1 - Service awaited
JUDGMENT
THE CHIEF JUSTICE
This intra-court appeal arises from the judgment and order
dated 18.10.2024, passed by the learned Single Judge in
W.P.No.10688 of 2024, whereby the learned Single Judge dismissed
the writ petition filed by the appellant herein challenging an arbitral
award dated 28.11.2016 passed by the Uttar Pradesh State Micro
and Small Enterprises Facilitation Council (first respondent) under
Section 18 of the Micro, Small and Medium Enterprises
Development Act, 2006 [for brevity, “ the MSMED Act ”].
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W.A.No.2187 of 2025
2.1. The facts in a nutshell are that, on 20.05.2009, the
appellant/corporation issued a purchase order in favour of the
second respondent for the procurement, supply and installation of
130 Diesel Generator sets across various Primary Health Centres in
the State of Tamil Nadu, followed by a repeat order for 4 additional
Diesel Generator sets on 22.10.2009.
2.2. It is stated that, upon completion of supplies, the second
respondent raised bills for the full value. However, the appellant
deducted an amount of Rs.19,71,049/- by way of liquidated
damages, citing delayed delivery schedules.
2.3. It is averred that aggrieved by the unilateral deduction,
the second respondent invoked Section 18 of the MSMED Act by
filing Claim Petition No.26 of 2012 before the first respondent/
Council. Upon failure of conciliation, the Council entered upon the
reference as an arbitral tribunal and rendered an award on
28.11.2016, directing the refund of the withheld principal along with
statutory compound interest under Section 16 of the MSMED Act.
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2026:MHC:4346
W.A.No.2187 of 2025
2.4. The appellant challenged the award under Section 34 of
the Arbitration and Conciliation Act, 1996 [for brevity, “ the 1996
Act ”] read with Section 19 of the MSMED Act before the Commercial
Court at Kanpur Nagar, Uttar Pradesh, in Arbitration Miscellaneous
Case No.274 of 2023. The said challenge was dismissed on merits
on 30.10.2023.
2.5. Pursuant thereto, the appellant approached the writ court
under Article 226 of the Constitution of India seeking quashment of
the award dated 28.11.2016 passed in Claim Petition No.26 of
2012. The learned Single Judge dismissed the writ petition on
18.10.2024, leading to the filing of the present writ appeal.
2.6. It is a matter of record that, on 16.07.2025, a Division
Bench of this court stayed further proceedings on the award and
that stay was extended on 24.09.2025 until further orders.
3.1. Learned Additional Advocate General appearing on behalf
of the appellant contended that the proceedings before the first
respondent/Council suffered from jurisdictional flaws and procedural
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2026:MHC:4346
W.A.No.2187 of 2025
infirmities and, therefore, a writ petition under Article 226 of the
Constitution of India was maintainable to correct fundamental
jurisdictional errors, regardless of the remedy under statutory
arbitration law.
3.2. It is further submitted that the petition under Section 34
of the Act was dismissed solely on the grounds of delay and not on
merits. Moreover, in Tamil Nadu Cements Corporation Ltd. v. Micro
and Small Enterprises Facilitation Council (SLP (C) Diary No.3776 of
2023, order dated 22.01.2025) , the Supreme Court referred to a
Larger Bench the key issues specifically concerning the
maintainability of writ petitions against Council orders and whether
a Council that conducts conciliation can subsequently act as an
arbitrator and, therefore, it is pleaded that the award be kept in
abeyance.
4.1. Learned Senior Counsel appearing on behalf of the
second respondent submitted that that an arbitral award under
Section 18(3) of the MSMED Act carries the status of an award
under the 1996 Act. Once an award is passed and an application
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2026:MHC:4346
W.A.No.2187 of 2025
under Section 34 of the 1996 Act has been filed and decided, the
statutory remedy prescribed by law is an appeal under Section 37
of the 1996 Act. A writ petition under Article 226 of the Constitution
of India cannot be used to bypass the statutory scheme.
4.2. It is further submitted that the appellant took part in
conciliation and in the arbitration. It filed a reply and raised a
jurisdiction objection. Having invoked Section 34 of the 1996 Act
and lost, the appellant cannot now raise a plea that the order
passed by the first respondent/Council is not an award. He
submitted that the appellant cannot approbate and reprobate. He
added that the award passed by the first respondent/Council has
merged into the order passed by the Commercial Court, Kanpur
Nagar. The writ petition and this appeal are an attempt to reopen a
settled dispute and no part of the cause of action arose within the
jurisdiction of this court.
4.3. He further submitted that the reference made by the
Supreme Court in Tamil Nadu Cements (supra) is clearly
distinguishable, as it involved instances where the Council issued a
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decree for payment immediately upon the failure of conciliation,
thereby leaving the aggrieved party with no recourse other than a
writ petition. He added that, in stark contrast, the facts of the
present case are fundamentally different.
5. The core issues falling for determination in this appeal are:
(i) Whether a writ petition under Article 226 of the
Constitution of India is maintainable against an
arbitral award passed under Section 18 of the
MSMED Act, after an unsuccessful challenge under
Section 34 of the 1996 Act?
(ii) Whether a party can bypass the statutory
appellate remedy prescribed under Section 37 of the
1996 Act by invoking the extraordinary writ
jurisdiction of the High Court?
6. Under Section 18(3) of the MSMED Act, upon the failure of
conciliation, the Facilitation Council either takes up the dispute for
arbitration itself or refers it to an institution or centre, whereupon
the provisions of the 1996 Act apply as if there was an arbitration
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2026:MHC:4346
W.A.No.2187 of 2025
agreement. Further, Section 18(4) of the MSMED Act contains an
overriding non-obstante clause vesting the Council with statutory
jurisdiction to act as an arbitral tribunal, and any decision/award
rendered pursuant thereto possesses the identical legal status,
efficacy and binding force as an arbitral award passed under the
1996 Act.
7. The 1996 Act is a self-contained code designed to minimize
judicial intervention in arbitral matters. Section 34 of the 1996 Act
provides a robust judicial review mechanism to set aside an award
on limited grounds, while Section 37 of the 1996 Act provides a
specific statutory appeal against an order granting or refusing to set
aside an arbitral award. In the present case, the appellant
consciously filed a petition under Section 19 of the MSMED Act read
with Section 34 of the 1996 Act before the competent Commercial
Court at Kanpur Nagar against the award passed by the Council.
The appellant also raised a ground qua Section 29A of the Act,
which stipulates the time limit for arbitral award and applies only to
an arbitral award. A party cannot call the order an award for one
purpose and a nullity for another. Having suffered an adverse order
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2026:MHC:4346
W.A.No.2187 of 2025
on 30.10.2023, the appellant's legal recourse was exhaustively
confined to filing an appeal under Section 37 of the 1996 Act.
8. It is a foundational tenet of administrative and
constitutional jurisprudence that where a statute creates a special
right or liability and provides an exhaustive machinery for its
enforcement and redressal, a party cannot bypass that statutory
hierarchy by invoking the extraordinary discretionary writ
jurisdiction under Article 226 of the Constitution of India. Permitting
a writ petition against an award, which eventually merged into the
order passed by the Commercial Court, Kanpur Nagar, particularly
when the statutory remedy is an appeal under Section 37 of the
1996 Act, would subvert the legislative intent of speedy resolution
embedded in both the 1996 Act and the MSMED Act.
9. In light of the foregoing legal principles, this court affirms
the view taken by the learned Single Judge and the issues raised
are, thus, answered against the appellant. The appellant cannot
invoke the extraordinary writ jurisdiction under Article 226 of the
Constitution as a substitute for a statutory appeal under Section 37
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2026:MHC:4346
W.A.No.2187 of 2025
of the 1996 Act.
Accordingly, this appeal is dismissed and the order dated
18.10.2024 passed by the learned Single Judge in W.P.No.10688 of
2024 is hereby confirmed. There shall be no order as to costs.
Consequently, connected miscellaneous petitions are closed and the
interim order granted is vacated.
(SUSHRUT ARVIND DHARMADHIKARI, CJ) (G.ARUL MURUGAN,J)
29.10.2026
Index : Yes
Neutral Citation : Yes
sasi
To:
The Chairman
Uttar Pradesh State Micro and
Small Enterprises Facilitaion Council
Sarvodaya Nagar, G.T. Road, Kanpur,
Uttar Pradesh – 205005.
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2026:MHC:4346
W.A.No.2187 of 2025
THE HON'BLE CHIEF JUSTICE
AND
G.ARUL MURUGAN, J.
(sasi)
W.A.No.2187 of 2025

29.10.2026
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