Court affirms execution of award under MSMED Act, 2006, dismissing objections post withdrawal of Section 34 arbitration objections.
In a significant ruling, the Punjab and Haryana High Court dismissed a revision petition filed by M/s Pahwa Impex Pvt. Ltd., challenging the execution of an arbitral award passed under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The award was originally passed by a Sole Arbitrator appointed under the MSMED Act, and the execution of this award was contested by the petitioner after withdrawing initial objections under Section 34 of the Arbitration and Conciliation Act, 1996, citing technical defects.
The petitioner sought to invoke the supervisory jurisdiction of the High Court under Article 227 of the Constitution of India, challenging the order dated July 28, 2025, which dismissed their objections to the execution petition. The petitioner argued that the award was passed by an incompetent authority and was thus inexecutable.
The court, presided over by Mr. Jasgurpreet Singh Puri, J., clarified that the petitioner’s withdrawal of objections under Section 34 precluded them from re-agitating the same issues through Article 227. The court emphasized that abandoning the statutory remedy under Section 34 estops the petitioner from invoking the supervisory jurisdiction of the High Court.
Further, the court highlighted that the petitioner's failure to deposit 75% of the awarded amount under Section 19 of the MSMED Act at the time of filing objections significantly undermined their position. The court reiterated the principle that once a specific statutory remedy is abandoned, the aggrieved party cannot seek relief through alternate judicial avenues, in this case, Article 227.
Additionally, the court addressed the petitioner's reliance on precedents, particularly the Indian Oil Corporation Limited v. Haryana Micro and Small Enterprise Facilitation Council case, noting that this precedent was subject to review by a larger bench of the Supreme Court in the pending case of M/s Tamil Nadu Cements Corporation Limited. The ongoing deliberation on the matter by the Supreme Court further solidified the court’s decision to dismiss the petition.
The ruling underscores the importance of adhering to statutory procedures and reinforces the limitations of judicial review under Article 227, particularly in the context of arbitration awards under the MSMED Act.
Bottom line:-
Arbitration - Award passed by Sole Arbitrator under MSMED Act, 2006 - Revision petition challenging execution proceedings not maintainable under Article 227 of the Constitution after withdrawal of objections under Section 34 of Arbitration Act, 1996.
Statutory provision(s): Article 227 of the Constitution of India, Section 34 of the Arbitration and Conciliation Act, 1996, Section 36 of the Arbitration and Conciliation Act, 1996, Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006, Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006.
