MSEFC Order Quashed For Section 16 Enquiry Lapse | HC

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MSEFC Section 16 Jurisdictional Enquiry

Case Details: Chennai Petroleum Corporation Ltd. vs. Micro and Small Enterprises Facilitation Council, Chennai Region - [2025] 181 taxmann.com 976 (HC - Madras)

Judiciary and Counsel Details

  • V. Lakshminarayanan, J.
  • Om Prakash, Senior Counsel & Raghavendra Ross Divakar for the Petitioner.
  • K. Krishnan for the Respondent.

Facts of the Case

In the instant case, the petitioner had entered into a works contract with the second respondent. The second respondent initiated proceedings before the Micro and Small Enterprises Facilitation Council (MSEFC), alleging default in payment.

The petitioner objected that, being a works contract, the claim was not covered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED), and filed a writ petition before the High Court seeking to quash the proceedings.

The High Court, in writ petition, directed the MSEFC, before passing any final order, to immediately examine the petitioner’s application under Section 16 of the Arbitration and Conciliation Act regarding MSEFC’s jurisdiction, to call for any additional details if required, to conduct an enquiry with the opportunity of personal hearing, and to pass a reasoned order dealing with each contention and communicate decision.

Subsequently, the MSEFC disposed of the Section 16 petition vide the impugned order. Thereafter, an appeal was made before the High Court.

High Court Held

The High Court held that since MSEFC had not performed the exercise required to determine its jurisdiction in terms of Section 16 of the Act, the impugned order was to be set aside, and the matter was to be remanded back to MSEFC to redo the exercise directed by the High Court in the earlier writ petition.

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied