Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Sep-2025 16:24:47 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.30966 of 2024 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). Indian Oil Corporation Ltd. General Manager (Project), Paradip Refinery & Anr. …. Petitioner (s) -versus- M/s. Adarsh Nobel Corporation Ltd. …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner (s) For Opp. Party (s) : : Mr. Sunil J. Mathews, Adv. Mr. Sidharth Shankar Padhy, Adv. CORAM: DR. JUSTICE SANJEEB K PANIGRAHI DATE OF HEARING:-17.07.2025 DATE OF JUDGMENT:-20.09.2025 Dr. Sanjeeb K Panigrahi, J. 1. The present Writ Petition has been preferred seeking setting aside of the award dated 10.07.2023, passed by the Facilitation Council, Cuttack in MSEFC Case No. 56 of 2022. I. FACTUAL MATRIX OF THE CASE: 2. The brief facts of the case are as follows: (i) The Petitioner has filed the present Petition to correct a jurisdictional error committed by the MSEF Council, vide its Award dated 10.7.2023 Page 1 of 27 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Sep-2025 16:24:47 and has challenged the impugned order on the ground of lack of inherent jurisdiction by the Council. (j) The Petitioner awarded the work of "Provision of Additional VR Tank at Paradip Refinery” to the Opposite Party vide Letter of Award(LOA) dated 29.11.2017 for a contract value of Rs.20,86,26,058.50/-, which was to be completed within a period of 18 months from the date of the LOA. (k) However, on 11.6.2018, the Opposite Party stopped work on the site. Despite multiple correspondence dated 29.6.2018, 23.7.2018 and 11.8.2018, work did not resume and thereafter it is alleged that the present Petitioner terminated the contract with the Opposite Party on 13.12.2018. (l) A word order was issued to another contractor on 9.4.2019 for completion of the balance work. (m) As the matter remained thus, the present Opposite Party obtained it’s registration as an MSME on 28.1.2021. The following year, on 12.8.2022, the Opposite Party filed MSEFC Case No. 56 of 2022 under Section 18 of the MSMED Act, 2006 seeking Rs. 6,65,97,975/- towards principal amount and interest calculated up to 18.5.2022 for alleged illegal termination of the contract. (n) On 18.11.2022, the present Petitioner issued an email to block payments towards the Opposite Party on account of risk and cost recovery from the Opposite Party. The Opposite Party filed an interim application for staying the operation of the email dated 18.11.2022 before the MSEFC. Page 2 of 27 Signature Not Verified
Legal Reasoning
Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Sep-2025 16:24:47 (o) While the I.A. was pending, the new contractor completed the work and a letter regarding the recovery amount was issued by the Petitioner to the Opposite Party on 22.3.2023. (p) The operation of the email dated 18.11.2022 was stayed by the MSEFC on 2.5.2023. On 10.7.2023, MSEF Council passed the impugned final order directing the Petitioner - IOCL to pay a sum of Rs.2,43,14,318.00/- to the Opposite Party -ANCL along with future interest (compounded interest with monthly rests payable at the rate of 3 times of the bank rate as notified by the Reserve Bank of India from time to time). IOCL was further directed to release the bank guarantee and not to block vendor’s account code and vendor purchase code. (q) On 20.12.2023, the Opposite Party filed Enforcement Petition being EXP. No. 585 of 2023 before the Senior Civil Judge, Commercial Court, Bhubaneshwar seeking enforcement of the impugned final order. (r) The Senior Civil Judge, Commercial Court, Bhubaneswar issued ex- parte ad-interim direction on 22.3.2024 to the Petitioner not to lake any coercive action in respect of Vendor Payment Status Report till the next date. The said interim order continues till date. (s) On 28.3.2024, the Petitioner filed an application under Section 34 of the Arbitration & Conciliation Act, 1996 challenging the award and final order dated 10.7.2023. However, the same was withdrawn on 21.10.2024. Thereafter, the present Petition was filed by the Petitioner. Page 3 of 27 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Sep-2025 16:24:47 (t) Now that the facts leading up to the instant Appeal has been laid
Legal Reasoning
down, this Court shall endeavour to summarise the contentions of the Parties and the broad grounds that have been raised. II. PETITIONERS’ SUBMISSIONS: 3. The Ld. Counsel for the Petitioner submits that the Purported Award is unenforceable in law being a nullity and is void ab initio on account of lack of inherent jurisdiction in MSMEFC to adjudicate any disputes arising from the work contract dated 29.11.2017 and it could not have made reference to arbitration as the subject contract dated 29.11.2017 is a work contract. Since the scope of work was indivisible and composite in nature i.e. construction of one number of VR tank on lump sum basis including design, engineering, construction including civil, electrical, instruments, dyke wall all jobs within the dyke wall, works contract forms a completely different and distinct genre than a contract for supply of goods or for that matter a contract for providing services and does not fall within the ambit of the MSMED Act. 4. It was further strenuously contended that in the present case MSMEFC, Cuttack could not have seisin of the case because the subject matter was wholly foreign to its jurisdiction. The MSMEFC lacked inherent jurisdiction over the subject matter of the dispute i.e. work contract and also lacked the jurisdiction over the parties as the registration of the Award holder/Petitioner under the MSMED Act, 2006 is subsequent to the date of the contract and even beyond the date of termination of the contract. Page 4 of 27 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Sep-2025 16:24:47 III. OPPOSITE PARTY’S SUBMISSIONS: 5. Per contra, the Ld. Counsel for the Respondent submits that the Opposite Party was registered as an SSE in 2015 and as the contract was entered into and the supplies were made by it after that date, the MSEFC rightly entertained its claim. It is submitted that therefore, there is no lack of inherent jurisdiction and the present matter may be dismissed. 6. Furthermore, it is argued that this court ought not to interfere in a matter pertaining to the MSMED Act in exercise of its writ jurisdiction. The MSMED Act provides a self-contained statutory mechanism, including arbitration under Section 18 and a remedy of challenge under Section 34 of the A&C Act, subject to Section 19’s pre-deposit requirement. The present writ petition is a device to circumvent the mandatory pre-deposit and defeat the legislative scheme intended to protect small enterprises through expeditious enforcement. Even assuming procedural deficiencies, such issues fall within the scope of Section 34, not Article 226. The High Court’s jurisdiction under Article 226, though wide, should be exercised sparingly, and cannot be invoked to bypass the statutory framework enacted by Parliament. The present Petitioner having withdrawn its Section 34 petition, ought not to be allowed to forum shop. IV. ISSUE FOR CONSIDERATION 7. Having heard the parties and perused the materials available on record, this court here has identified the following solitary to be determined: A. Whether the present Opposite Party’s registration date as a MSME being after the date of the contract would have any bearing on the matter at hand? Page 5 of 27 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Sep-2025 16:24:47 B. Whether the present contract is a works contract and if so, could the MSEFC have entertained a claim arising out of a works contract? C. Whether a writ petition under Article 226 of the Constitution of India is maintainable against an order passed by the Micro and Small Enterprises Facilitation Council under Section 18 of the MSMED Act, 2006, when such order is alleged to have been made without inherent jurisdiction? V. ISSUE A: WHETHER THE PRESENT OPPOSITE PARTY’S REGISTRATION DATE AS A MSME BEING AFTER THE DATE OF THE CONTRACT WOULD HAVE ANY BEARING ON THE MATTER AT HAND? 8. A perusal of the Act of 2006 would go to show that the said Act has been enacted for the purpose of promotion and development and enhancing the competitiveness of micro, small and medium enterprises. Section 2(m)(g) and (h) defines small enterprise, medium enterprise and micro enterprise on the basis of the classification as given in section 7 of the said Act. A perusal of section 7 of the said Act stipulates when an enterprise would be a micro enterprise, small enterprise and medium enterprise depending upon the investments it has made. Section 8 stipulates the manner in which a registration is be done and for doing so it is required that the said person and the enterprise shall file a memorandum with such authority as may be specified by the State Government under sub-section (4) or the Central Government under sub-section (3) of section 8. Sub-section (2) of section 8 stipulates the form of memorandum, the procedure of its filing and other matters incidental thereto as may be notified by the Central Government after Page 6 of 27 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Sep-2025 16:24:47 obtaining the recommendation of the Advisory Committee as appointed under section 7(2) of the said Act. In terms of sub-section (3) of section 8 in the case of medium enterprise the memorandum has to be filed before the authority as notified by the Central Government. In terms of sub-section (4) of section 8 of the said Act micro or small enterprises needs to file their memorandums before the authority as notified by the State Government’. The manner in which the registration is to be carried out is in terms with the procedure notified, by the Central Government. 9. The text of Section 18 is clear and categoric. The words employed herein are “any party to a dispute”. The text, “any party to a dispute”, cannot be read as a “supplier” by adopting a process of interpretation, by first referring to Section 17, then to Sections 15 and 16 and thereafter, in search of the definition of supplier, to Section 2(n) and finally stopping at Section 8 to hold that “any party to a dispute” will only be an Enterprise which is registered under Section 8 of the Act. This meaning- making process to metamorphosis the clear text “any party” to “a supplier” is not the legal method to understand the true meaning of words employed by the legislature. The age-old principle, referred to as the Golden Rule of Interpretation, is that “words of a statute have to be read and understood in their natural, ordinary and popular sense”. [State of A.P. v. Linde (India) Ltd.1; Grid Corpn. of Orissa Ltd. v. Eastern Metals & Ferro Alloys2] The choice of the words “any party to a dispute” in Section 18 of the Act is deliberate. The legislative device of employing