Disputed MSME payment claims are unsuitable for writ adjudication and may proceed under Section 18.

The respondents, engaged by Assam Petrochemicals Ltd. for construction work at Namrup, subcontracted part of the work to the petitioner under a work order dated 18 May 2018.

The petitioner claimed outstanding contractual dues of ₹3,12,42,652, interest at 24% per annum, and other taxable liabilities, asserting that he was an MSME.

The respondents disputed the claim, citing amounts withheld by Assam Petrochemicals Ltd. and alleged discrepancies in bills and work challans.

The petitioner relied on an asserted certification of the amount payable.

The contract contained a dispute-resolution clause providing for mutual discussion and, failing settlement, conciliation or arbitration.

Whether the writ petition should be entertained where the parties raised disputed questions of fact concerning the petitioner’s entitlement to the claimed amount.

Whether the dispute could be referred to the mechanism under Section 18 of the MSMED Act, 2006, notwithstanding the contractual dispute-resolution clause, if the petitioner remained registered as an MSME.

Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 provides a dispute-resolution mechanism for disputes concerning amounts due to an MSME, including conciliation and, if conciliation fails, arbitration; the Court noted that conciliation may proceed in terms of the Mediation Act, 2023.

Clause 29 of the contract provided for mutual discussion and, if unresolved, conciliation or arbitration under the Arbitration and Conciliation Act, 1996, at a venue mutually decided by the parties.

The Court directed recourse to Section 18 only on the condition that the petitioner remained registered as an MSME; otherwise, the parties could use Clause 29.

The Court found that the respondents disputed the petitioner’s entitlement, including on the basis of withheld amounts and alleged irregularities in bills and challans; the petitioner’s reliance on an asserted certification did not remove those factual disputes.

It therefore declined to determine the contractual claim in writ proceedings.

Given the petitioner’s assertion that he was an MSME, the Court considered Section 18 an available dispute-resolution route, subject to confirmation that his MSME registration remained current; if not, the contractual mechanism would apply.

The parties were referred to the Section 18 MSMED Act mechanism if the petitioner remained registered as an MSME; if he was no longer registered, both parties were given liberty to resolve the dispute under Clause 29 of the contract.

No costs were awarded.