Chhattisgarh HC Rejects Company’s Challenge To ₹24-Lakh Ex Parte Lubricant Order, Citing Notice Record And Statutory Remedy

In brief

The question

Whether the ex parte MSEFC order should be set aside for want of effective notice and a proper opportunity to be heard

The court held

The Court dismissed the writ petition, finding no sufficient ground to interfere with the MSEFC order on the grounds advanced

It also directed

It clarified that it had not independently adjudicated the underlying commercial claim and that any statutory remedy available to the petitioner remained subject to the conditions and limitations prescribed by law; there was no order as to costs

01Facts

Respondent No. 2, a registered micro enterprise, sought payment for lubricant supplies and obtained an ex parte order from the MSEFC directing the petitioner to pay ₹22,34,117 in principal and ₹1,69,944 in interest

¶ 10–11

The petitioner challenged the order, alleging inadequate notice and non-compliance with the conciliation and arbitration procedure under Section 18 of the MSMED Act

¶ 1, 3–4

The MSEFC’s order recorded that notice had been sent through the Samadhaan portal and WhatsApp, and that the petitioner did not appear or file a reply

¶ 12

The petitioner had earlier challenged the same order in a writ petition, which it withdrew after an interim deposit direction

¶ 20

02Issues

i.Whether the ex parte MSEFC order should be set aside for want of effective notice and a proper opportunity to be heard

¶ 10, 12–15, 21

ii.Whether the petitioner established that the MSEFC failed to follow the procedure under Sections 18(2) and 18(3) of the MSMED Act

¶ 14–15

iii.Whether the petitioner had shown sufficient grounds for invoking writ jurisdiction despite the statutory remedy under the arbitration law and Section 19 of the MSMED Act

¶ 18–20

03Law Applied

Section 18(2) of the MSMED Act requires the Council to attempt conciliation; if conciliation fails, Section 18(3) permits the Council to arbitrate or refer the dispute for arbitration.

¶ 14

Both stages must be followed even where a party is absent

¶ 14

A decision under Section 18 is subject to remedies under the applicable arbitration law, including Section 34 of the Arbitration and Conciliation Act, 1996; Section 19 of the MSMED Act imposes a pre-deposit requirement for an application to set aside a decree, award or other order covered by that provision

¶ 18

The rule requiring exhaustion of alternative remedies is discretionary, not an absolute bar to writ jurisdiction, but writ relief will ordinarily be declined where a statutory remedy exists and no recognised ground for bypassing it is established

¶ 19

Provisions in the judgment · 3 · Linked ones open on LawLens

Micro, Small and Medium Enterprises Development Act, 2006 Section 18 Section 19

Arbitration and Conciliation Act, 1996 Section 34

04Reasoning

The Court found that the MSEFC’s order recorded transmission of notice through the Samadhaan portal and WhatsApp, and the petitioner had not demonstrated that it proceeded without notice or lacked an opportunity to participate

¶ 12–13, 21

Although Sections 18(2) and 18(3) require the prescribed conciliation and arbitration stages, the Court found no sufficient basis on the material relied upon to set aside the order merely because it was ex parte; compliance had to be assessed from the Council’s record, not inferred from the petitioner’s absence alone

¶ 14–15

The petitioner’s objections to the invoices and alleged supplies concerned the underlying commercial dispute, while the available statutory remedy and the history of the earlier withdrawn writ petition weighed against extraordinary intervention

¶ 17–20