Writ Jurisdiction Under Article 226 Cannot Interdict Arbitral Proceedings Where Section 16 Remedy Is Availed

The Petitioner sought to quash a reference letter dated 18.06.2025 issued by the Micro and Small Enterprises Facilitation Council (MSEFC) under Section 18(3) of the MSMED Act, 2006.

The Petitioner alleged that Respondent No. 2 (the claimant) was an unregistered entity that fraudulently used the Udyam Registration of a separate sole proprietorship, "M/s ABOUTME360.COM," to invoke MSEFC jurisdiction.

Despite these jurisdictional objections, the Petitioner participated in the resulting arbitral proceedings at the Delhi International Arbitration Centre (DIAC) for nearly a year, filing a Statement of Defence on 09.02.2026.

Only in June 2026, when the arbitration reached the stage of final arguments, did the Petitioner file an application under Section 16 of the Arbitration and Conciliation (A) Act challenging the tribunal's jurisdiction.

1. Whether the High Court should exercise its writ jurisdiction under Article 226 to interdict ongoing arbitral proceedings when a jurisdictional challenge under Section 16 of the A Act is pending.

2. Whether an entity not registered as a "supplier" under Section 2(n) of the MSMED Act can validly invoke the jurisdiction of the MSEFC.

Section 16 of the Arbitration and Conciliation Act, 1996, which codifies the principle of kompetenz-kompetenz, empowering an arbitral tribunal to rule on its own jurisdiction.

Supreme Court precedent in Gujarat State Civil Supplies Corpn. Ltd. v. Mahakali Foods (P) Ltd. (2023), which clarified that jurisdictional issues regarding "supplier" status under the MSMED Act should be decided by the Arbitral Tribunal.

Following Deep Industries Ltd. v. ONGC (2020) and the Delhi High Court Division Bench in Corrtech International (P) Ltd. v. DIAC (2024), the court emphasized that Article 226 interference is extremely limited in arbitration matters, as the Act is a "complete code" providing a remedy via Section 34 after the final award.

The Court reasoned that the Petitioner had already invoked the appropriate statutory remedy by filing an application under Section 16 of the A Act before the Sole Arbitrator.

Since the arbitral tribunal is legally competent to decide its own jurisdiction—including whether Respondent No. 2 qualifies as an "enterprise" or "supplier" under the MSMED Act—parallel interference by the High Court under Article 226 is unwarranted.

The Court noted that the Petitioner had participated in the arbitration for a year and only raised the jurisdictional plea via a Section 16 application at the stage of final arguments.

Given the "extremely limited" scope of judicial intervention in ongoing arbitrations, the Court held that the legal grievances regarding the MSEFC’s reference should be adjudicated by the arbitrator in the first instance.

It held that the Petitioner must pursue its jurisdictional objections before the Sole Arbitrator under Section 16 of the A Act.

The Arbitrator was directed to decide the objections in accordance with law, uninfluenced by the High Court's observations; all pending applications were closed.