Jharkhand High Court
M/S Sagar Mining And Metal Industries ... vs M/S. Shiva Minerals on 10 December, 2025
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
2025:JHHC:38115-DB
IN THE HIGH COURT OF JHARKHAND AT RANCHI
L.P.A. No. 62 of 2025
----
M/s Sagar Mining and Metal Industries Private Limited,
through its Director Munna Behera, aged about 55 years,
son of Late Kritan Behera, having its Office at-State Bank
Road, Near St. Teresa School, P.O. & P.S. Joda, District
Keonjhar-State-Odisha.
... ... Appellant/Respondent No.1
Versus
1. M/s. Shiva Minerals, having its office at D-19, Danish
Apartment, Dhatkidih, Jamshedpur, P.O. and P.S.
Jamshedpur, District-East Singhbhum, State-Jharkhand,
through its proprietor, namely, Ujjwal Kumar Singh, aged
about 40 years, son of Late V.N. Singh, resident of at D-19,
Danish Apartment, Dhatkidih, Jamshedpur, P.O. and P.S.
Jamshedpur, District East Singhbhum, State- Jharkhand.
... ... .... Respondents/Petitioner
2. Office of the Director of Industries, Odisha, through its
Director-cum-Chairman, Micro and Small Enterprises
Facilitation Council, Odisha, having its office at Killa
Maidan, Buxi Bazar, Cuttack, P.O. & P.S. Cuttack, District
Cuttack-753001 (Odisha).
...Respondents/Respondent No. 2
-------
CORAM: HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
HON'BLE MR. JUSTICE ARUN KUMAR RAI
------
For the Appellant : Mr. Shresth Gautam, Advocate
Mr. Kaustav Roy, Advocate
For the Respondents : Mr. Ashish Kumar Singh, Advocate
--------
Order No. 06/Dated: 10th December, 2025
Per Sujit Narayan Prasad, J.
-1-
2025:JHHC:38115-DB Prayer:
1. The instant intra-court appeal, under Clause 10 of the Letters Patent, has been directed against order/judgment dated 18.12.2024 passed by learned Single Judge in W.P.(C) No. 5099 of 2023 by which the writ petition filed by the respondent no. 1/petitioner has been allowed by quashing and setting aside the order/award dated 09.08.2023 passed by respondent no. 2 in MSMEFC Case No. 60 of 2022, granting liberty to the appellant to take alternative measures for redressal of his grievance before the appropriate forum.
Factual Aspect:
2. Brief facts of the case, as per the pleading made in the writ petition, reads as under:
3. The appellant- Sagar Mining and Metal Industries Pvt.
Ltd. filed a reference under Section 18 of 'The Micro, Small and Medium Enterprises Development Act, 2006' (hereinafter referred to as 'MSME Act' for short) before the Micro and Small Enterprises Facilitation Council, Odisha (hereinafter referred to as 'MSME Council' and/or 'Facilitation Council') which was registered as M.S.M.E.F.C. Case No. 60 of 2022.
4. The appellant claims itself to be a small-scale enterprises and a 'supplier' within the meaning of Section -2- 2025:JHHC:38115-DB 2(n) of the MSME Act and claimed that it is registered under the said Act w.e.f. 19.06.2019. It is contended that the appellant is having technical expertise and capability to handle execution of contracts of mining and quarrying and a work order dated 07.11.2015 was issued to it by the respondent no. 1-writ petitioner for installation of fully automated crushing plant and screening unit in the plant premises of Petitioner located at Barabhumri in the State of Jharkhand.
5. It has been further stated by the appellant that an agreement was executed with the respondent no. 1 [writ petitioner] on 1st July, 2016 for transfer of right to use the machinery of the concerned respondent and, in furtherance to the said agreement, concerned respondent gave on rent the aforesaid machinery for a period of 4 years at a consideration of Rs. 12,50,000/- per month.
6. It was further contended that a tripartite Memorandum of Understanding (for short 'MoU') was entered on 10.02.2016 between the Claimant-Sagar Mining, the appellant and Metal Industries Pvt. Ltd., the respondent- 1-M/s Shiva Minerals [writ petitioner] and one M/s Steel Rerollers.
7. It was stated that under the aforesaid MoU, Claimant- appellant was responsible for creating infrastructure for -3- 2025:JHHC:38115-DB mining in the leasehold area allotted by the Government of Jharkhand and the respondent no. 1 was responsible for setting up of the processing plant and the third-party M/s Steel Re-rollers was responsible for infusing funds for the venture; however, it was pleaded that the said third party M/s Steel Re-rollers voluntarily withdrew from the memorandum of understanding.
8. It has further been contended that before MSME Council, Odisha, before completion of the contract period of 5 years the work ceased to continue and respondent no. 1 neither returned the installed machinery nor rent was paid by the appellant.
9. Accordingly, claim was made towards unpaid rent of machinery for the period from July, 2016 till August, 2018 of an amount of Rs. 5,75,25,000/-. It was further pleaded by the appellant that as per the work order, appellant was entitled to further charge a sum of Rs.100 per metric tonne for processing 30,000 metric tonne stone chips but since as per the environmental clearance certificate only 18,000 metric tonne stone chips were allowed to be processed, the Claimant-appellant carried out the aforesaid work under the work order for the period July, 2016 till August, 2018 and raised bills for an -4- 2025:JHHC:38115-DB amount of Rs. 5,52,24,000/- which was unpaid by the respondent no. 1.
10. Under the aforesaid circumstances, Claimant, the appellant herein, preferred the application under Section 18 of the MSME Act for realization of a total sum of Rs. 11,27,49,000/- along with interest thereupon from the Petitioner-respondent no. 1 and, accordingly, filed reference before MSME Council, Odisha which was registered as MSMEFC Case No. 60 of 2022.
11. A notice contained in memo No. 8320 dated 14.10.2022 was issued to the Writ Petitioner, respondent no. 1 herein, directing the Petitioner-respondent no. 1 herein to file his written statement/counter in respect of the aforesaid case. Thereafter, the first proceeding of MSME Council was held on 29.03.2023 being its 100th sitting but the Petitioner-respondent no. 1 herein did not appear on the said date of hearing and MSME Council directed for initiation of conciliation process as contemplated under Section 18(2) of the MSME Act and adjourned the proceedings to be held on 2nd May, 2023.
12. On 2nd May, 2023, the Petitioner-respondent no. 1 appeared before MSME Council and sought time for filing reply affidavit which was granted to it, but on the said date itself it was recorded by MSME Council that -5- 2025:JHHC:38115-DB conciliation process failed and, accordingly, MSME Council proceeded to invoke arbitration proceedings under Section 18(3) of the Act and fixed the next date of hearing on 05th June, 2023.
13. On 05th June, 2023, the MSME Council recorded that both the parties were present for hearing and the matter was heard at length and judgment was reserved, thereafter, vide impugned order dated 09.08.2023 order was passed by the MSME Council allowing the entire claim of Claimant of Rs. 11,27,49,000/- and further interest claim of Rs. 9,46,00,574/- was allowed up to 31.12.2021 and further compound interest with monthly rest was further directed to be paid @ 3 times of bank rate as notified by Reserve Bank of India 4 payable till realization of dues.
14. The aforesaid order was challenged by filing the writ petition being W.P.(C) No. 5099 of 2023 before this Court [High Court of Jharkhand], which was allowed and the Order/Award dated 09.08.2023 passed by Respondent No.2 in M.S.E.F.C. Case No. 60 of 2022 has been quashed and set aside, however, the Respondent No.1-appellant was granted liberty to take alternative measures for redressal of his grievance before appropriate forum, which is the subject matter of instant appeal. -6-
2025:JHHC:38115-DB
15. It is evident from the factual aspect that a dispute was raised on behalf of the appellant herein by filing application under Section 18(3) of the MSME Act, 2006 for which the jurisdiction of the MSME Council at Cuttack in the State of Orissa has been invoked. The parties appeared and contested the case. The MSME Council has passed an award in MSMEFC Case No. 60 of 2022 vide award dated 09.08.2023. The said award has been challenged by the writ petitioner, the respondent no. 1 herein challenging the said award on the ground of jurisdiction having with the MSME Council by entertaining the writ petition filed on behalf of respondent no. 1 by exercising the jurisdiction taking aid that if any issue remains unresolved in course of legal remedy shall be taken by the aggrieved party and the Courts at Jamshedpur shall have jurisdiction in the matter.
16. The learned Single Judge, after hearing both the parties, quashed and set aside the Order/Award dated 09.08.2023 passed by Respondent No.2 in M.S.E.F.C. Case No. 60 of 2022, by taking into consideration the reason that since the claim pertains to be of July, 2016 to August, 2018, and registration was obtained by respondent no. 1 only w.e.f. 19.06.2019, it was not -7- 2025:JHHC:38115-DB entitled to claim any benefit under the provision of MSME Act.
17. The learned Single Judge has further opined that the matter is not fit to be remanded back to the MSME Council, Cuttack at Orissa for fresh determination. However, the respondent no. 1 has been granted liberty to take alternative measures for redressal of his grievance before the appropriate forum.
18. The order passed by learned Single Judge is subject matter of present appeal.
Submission on behalf of appellant/respondent no.1:
19. Mr. Shresth Gautam, learned counsel for the appellant has assailed the impugned order mainly on the grounds that this Court [High Court of Jharkhand] has no territorial jurisdiction to entertain the writ petition.
20. Learned counsel for the appellant, by relying upon the provisions of Section 18(4) of the MSME Act, has submitted that the said provision contains a non- obstante clause and provides, inter alia, that MSME Council, where the supplier is located, shall have jurisdiction to act as an Arbitrator or Conciliator under the Act. It has been submitted that since the supplier i.e. Respondent-Claimant, the appellant herein was located within the territorial jurisdiction of the State of Odisha, -8- 2025:JHHC:38115-DB as such, MSME Council, Odisha has rightly exercised its jurisdiction while adjudicating the dispute between writ Petitioner and Respondent-Claimant(appellant herein).
21. It has been submitted that cause of action arose in the State of Odisha as the order was passed by MSME Council, Odisha, and as such, only the courts in Odisha will have territorial jurisdiction to adjudicate upon any dispute between Writ Petitioner [respondent no. 1 herein] and appellant-Claimant.
22. Learned counsel for the appellant has also laid emphasis upon Section 24 of the Act and submission has been made that the MSME Act has an overriding effect over any law which is in existence.
23. By referring the judgment rendered by Hon'ble Supreme Court in the case of Union of India v. Alapan Bandyopadhyay reported in (2022) Live Law SC 12, it has been submitted that the power vested in High Court to exercise judicial superintendence over the decisions of all Courts and Tribunals within the respective jurisdictions, is a part of the basic structure of the Constitution and the decisions of Tribunals would be subjected to the High Court's writ jurisdiction within whose territorial jurisdiction the particular tribunal is located.
-9-
2025:JHHC:38115-DB
24. Further reliance has been placed upon the decision of the Delhi High Court, wherein an order was passed by a Tribunal at Mumbai was challenged before the Delhi High Court in the case of Army Welfare Housing Organisation v. Halko Infra Projects and Another (2024) SCC OnLine Del 3378. The Delhi High Court held that it has no territorial jurisdiction to entertain the challenge to the order passed by MSME Council, Mumbai, wherein a reference under Section 18 was challenged before the Delhi High Court and the same was dismissed on the ground of territorial jurisdiction.
25. Learned counsel for the appellant has also relied upon the decision of the Kerela High Court in the case of M/s Shreyas Marketing v. MSME Bangalore and Ors., being W.P.C. No. 3327 of 2021, wherein the Kerela High Court dismissed the writ petition even though a part of cause of action arose within its territorial jurisdiction based on the doctrine of forum convenience. The Kerela High Court held that since the Facilitation Council and the supplier are both located in the State of Karnataka, any award passed by the Facilitation Council can only be challenged in Karnataka Principal Civil Court and, thus, the majority of cause of action took place in
- 10 -
2025:JHHC:38115-DB the State of Karnataka and, on the said ground, writ petition was not entertained.
26. Learned counsel for the appellant in support of his argument, has also relied upon the judgment rendered by Hon'ble Supreme Court in the case of Ambika Industries v. Commissioner of Central Excise reported in (2007) 6 SCC 767 on the principle of forum convenience.
27. Relying upon the judgment rendered by this Court in the case of Central Bank of India v. Their Workman Dinanath Tiwary reported in (2018) SCC OnLine Jhar 1703, submission has been made that this Court also declined to interfere and exercise its jurisdiction based on the principle of forum convenience.
28. Learned counsel for the appellant has further submitted that there is availability of alternative remedy of filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the award of the MSME Council dated 09.08.2023 which the writ petitioner can avail. In this regard, reliance has been placed to the decision rendered by Division Bench of this Court in the case of M/s MECON Ltd. v. Jharkhand MSME Facilitation Council, Ranchi and Another being L.P.A. No. 400 of 2022.
- 11 -
2025:JHHC:38115-DB
29. It has further been submitted that the learned Single Judge has failed to take into consideration Section 19 of the MSMED Act, 2006 which specifically provides that no application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy-five per cent. of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court, in order to substantiate the aforesaid argument the learned counsel has relied upon the judgment rendered by the Hon'ble Apex Court in the case of India Glycols Limited and Another v. MSMEFC, Medchal and Ors. (2023) SCC OnLine SC 1852.
30. Therefore, submission has been made that since the respondent no. 1 has chosen a wrong forum for adjudication and as such the impugned order passed by learned Single Judge requires interference. Submission behalf of respondents-:
- 12 -
2025:JHHC:38115-DB
31. Per contra, learned counsel appearing for the respondent has taken the following grounds in defending the order passed by the learned Single Judge.
32. Learned counsel appearing for the writ petitioner- respondent no.1 has submitted that the learned Single Judge has considered all aspects of the matter and only thereafter has quashed the order passed by the Council since the Order/Award passed by the MSME Council is non est, patently illegal, and there exists no arbitral award in the eyes of law, which requires no interference.
33. Submission has been made that the order passed by the Council has been passed in utter violation of the provisions of Section 18(2) of the MSME Act, without carrying out any conciliation as prescribed under the provisions of Section 65 to 81 of the Arbitration and Conciliation Act, 1996. It has been submitted that notice in reference case was issued to Petitioner-respondent no. 1 on 14.10.2022, and first proceeding of MSME Council was held on 21.03.2023, wherein the Petitioner- respondent no. 1 could not appear, but in absence of the Petitioner-respondent no. 1, MSME Council directed for initiation of conciliation process and adjourned the proceedings to be held on 2nd May, 2023. On 2nd May, 2023, the respondent no. 1 appeared before MSME
- 13 -
2025:JHHC:38115-DB Council and sought time to file reply which was accorded and next date in the matter was fixed on 05th June, 2023, but interestingly, on the said date itself it was recorded that conciliation proceedings undertaken by MSME Council failed, and consequently, arbitration proceedings under Section 18(3) of the MSME Act were invoked.
34. In support of his submission reliance has been placed upon the judgment rendered by Hon'ble Supreme Court in the case of Jharkhand Urja Vikas Nigam Limited V. State of Rajasthan & Ors. reported in (2021) SCC Online SC 1257, wherein the Hon'ble Apex Court held that writ petition would be maintainable challenging the Award of MSME Council as the said award would be a nullity in view of the fact that mandatory provisions of conciliation under the MSME has not been followed by the Council.
35. Learned counsel has also placed upon the judgment rendered by Hon'ble Supreme Court in the case of Vijeta Construction v. Indus Smelters Ltd. and Another reported in (2021) SCC OnLine SC 3436, wherein the Hon'ble Apex Court, again under similar circumstances, held that provisions of MSME Act are required to be followed and in absence of any conciliation
- 14 -
2025:JHHC:38115-DB proceedings being undertaken by the Council, the Award rendered by the Council would be a nullity and can even be set aside in exercise of writ jurisdiction by the High Court and availability of alternative remedy of challenging the award under Section 34 of the Arbitration and Conciliation Act, 1996 would not be a bar for entertaining such writ petition.
36. Referring to the proceedings of the MSME Council recorded in the impugned order, submission has been made that from the impugned order, it would be evident that final hearing before the MSME Council was held on 05th June, 2023 and it was recorded on the said date that the matter had been heard at length and thereafter, final order was passed on 09th August, 2023. While referring to an e-mail dated 25th May, 2023, it has been submitted that prior to the date fixed by MSME Council i.e. 05th June, 2023, an application for adjournment was submitted by the counsel of the Petitioner seeking adjournment due to ensuing holidays and fixing further date of hearing for filing reply affidavit before MSME Council.
37. On the strength of above submission, it has been contended that entire proceedings conducted by MSME Council was in violation of the principles of natural
- 15 -
2025:JHHC:38115-DB justice, which has been taken care by learned Single Judge and the same requires no interference.
38. It has been further argued that from a bare perusal of the claim petition, it would be evident that the Claimant claimed the amount towards unpaid rent of machinery from July, 2016 till August, 2018 and has further claimed an amount towards conversion charges from July, 2016 to August, 2018. Reference was made to the pleadings made by Respondent-Claimant itself to demonstrate that Respondent-Claimant was registered under the provisions of the MSME on 19th June, 2019 and by placing reliance upon the decision of the Hon'ble Apex Court in the case of Silpi Industries Etc. v. Kerela State Road Transport Corporation and Another, reported in (2021) SCC OnLine SC 439, and as well as the decision in the case of Gujarat State Civil Supplies Corporation Limited v. Mahakali Foods Private Limited and Anr. reported in (2023) 6 SCC 401, it was submitted that Hon'ble Supreme Court clearly held that a party who is not the 'Supplier' as per the definition contained in Section 2(n) of the MSME Act on the date of entering into the contract cannot seek any benefit as 'Supplier' under the said Act.
- 16 -
2025:JHHC:38115-DB
39. It has been contended that if any registration is obtained subsequently, the same would have an effect prospectively, and the party would be entitled for the benefit under the MSME Act in respect of supply of goods and services subsequent to the said registration. On the basis of aforesaid two decisions, it has been submitted that, admittedly, as per the pleading of the Respondent- Claimant itself, the claim pertained to the period July, 2016 to August, 2018; whereas Respondent-Claimant got itself registered under the MSME Act on 19th August, 2019 and, hence, its petition itself was not maintainable before MSME Council and, thus, any consequential award passed thereupon is a nullity in the eye of law. On the issue of territorial jurisdiction of this High Court as raised by the Respondents, learned counsel for the Petitioner relied upon the provisions of Section 18(4) of the MSME Act and contended that under Section 18(4) of the MSME Act, the supplier can invoke the jurisdiction of MSME Council at the place where the supplier is located, but the same would only be construed as a 'venue' of arbitration and not the 'seat' of arbitration, if any contrary intention is reflected in the agreement entered between the parties. On this issue he referred the MoU dated 10th February, 2016, entered between the parties,
- 17 -
2025:JHHC:38115-DB wherein it was clearly provided inter alia that the courts at Jamshedpur shall have jurisdiction in the matter.
40. It has been submitted that an order passed by MSME Council being in the nature of an arbitral award, the location of the MSME Council would only be treated as the venue of such arbitration, but in view of the agreement between the parties conferring jurisdiction to the courts at Jamshedpur, the seat of such arbitration proceedings would be deemed to be at Jamshedpur within the State of Jharkhand within the jurisdiction of this High Court, and, thus, writ petition in terms of Article 226 (2) of the Constitution of India would be maintainable before this Court.
41. To fortify his submission, reliance has been placed to the judgment rendered by Bombay High Court in the case of Gammon Engineers and Contractors Pvt. Ltd. v. Sahay Industries reported in (2023) SCC OnLine Bom 750 as well as the decision of the Delhi High Court in the case of Indian Oil Corporation Ltd. v. Fepl Engineering (P) Ltd. and Another reported in (2019) SCC OnLine Del 10265.
42. The Petitioner further relied upon the decision of the Hon'ble Supreme Court in the case of State of Goa v.
- 18 -
2025:JHHC:38115-DB Summit Online Trade Solutions Pvt. Ltd. and Others reported in (2021 SCC OnLine 439).
43. On the issue of maintainability of writ petition on the ground of territorial jurisdiction, submission has been made that admittedly a part of cause of action being alleged execution of the work by Respondent-Claimant has been executed within the territorial jurisdiction of this High Court i.e. State of Jharkhand and thus this High Court even otherwise in terms of the constitutional mandate of Article 226 (2) of the Constitution of India is having territorial jurisdiction to entertain the writ petition.
44. Learned counsel for the respondent on the aforesaid ground has submitted that the order passed by the learned Single Judge requires no interference by this Court.
Analysis
45. This Court has heard the learned counsel for the parties and gone through the rival submissions advanced on behalf of parties as also the pleading available in the memo of appeal.
46. On the pleadings available on record and the submissions advanced by learned counsel for the parties,
- 19 -
2025:JHHC:38115-DB the foremost issue which requires consideration by this Court is as to:
"I. Whether this Court [Jharkhand High Court] has jurisdiction with the same instead of availing the remedy by challenging the said award before the territorial jurisdiction of Orissa High Court?
II. Whether this Court [Jharkhand High Court] is having jurisdiction merely on the ground that terms and conditions has been referred conferring jurisdiction to the Jamshedpur Court as per the contract but the said aspect of the matter even if has not been appreciated in right perspective was it not available for the writ petitioner to raise this issue by filing writ petition before the Orissa High Court instead of said ground of filing writ petition under Article 226 of the Constitution of India?
III.Whether this Court will have jurisdiction to issue writ of certiorari merely on the ground that part of cause of action has occurred ignoring the fact that the question of having concurrent jurisdiction on the basis of fraction of cause of action occurred as referred in clause 2 of the Article 226 of the Constitution of India. The jurisdiction can be invoked under Article 226 of the Constitution of India by entertaining a writ petition by entertaining an order passed by the MSME Council which is situated at Cuttack in the State of Orissa.
47. Since all the issues are inter-linked as such, they are taken up together for its consideration.
- 20 -
2025:JHHC:38115-DB
48. This Court, before consideration of the said issues, needs to refer herein the provision of Article 226 of the constitution of India, which reads as under:
Article 226 - Power of High Courts to issue certain writs:
(1) Notwithstanding anything in article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.
(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories.
(3) Where any party against whom an interim order, whether by way of injunction or stay or in any other manner, is made on, or in any proceedings relating to, a petition under clause (1), without-
a. (a) furnishing to such party copies of such petition and all documents in support of the plea for such interim order; and
(b) giving such party an opportunity of being heard, makes an application to the High Court for the vacation of such order and furnishes a copy of such application to the party in whose favour such order has been made or the counsel of such party, the High Court shall dispose of the application within a period of two weeks from the date on which it is received or from the date on which the copy of
- 21 -
2025:JHHC:38115-DB such application is so furnished, whichever is later, or where the High Court is closed on the last day of that period, before the expiry of the next day afterwards on which the High Court is open; and if the application is not so disposed of, the interim order shall, on the expiry of that period, or, as the case may be, the expiry of the said next day, stand vacated.
(4) The power conferred on a High Court by this article shall not be in derogation of the power conferred on the Supreme Court by clause (2) of article 32.
49. The provision of Clause 2 of Article 226 has been considered in catena of decisions by the Hon'ble Apex Court wherein it has been considered that even if the fraction of cause of action is occurred then the High Court of two different High Court where the fraction of cause of action has occurred will have the jurisdiction to entertain the writ petition.
50. It is not in dispute that the writ petition is amenable under Article 226 of the Constitution of India if part of cause of action arises within the territorial jurisdiction of the High Court.
51. The Constitution Bench of the Hon'ble Apex Court in Election Commission, India -vs- Saka Venkata Rao, AIR 1953 SC 210 has held that the writ court would not run beyond the territories subject to its jurisdiction and that the petitioner or the authority affected by the writ must be amenable to court's jurisdiction either by residence or location within those territories.
- 22 -
2025:JHHC:38115-DB
52. In K.S.Rashid and son -vs- Income Tax Investigation Commission and others, AIR 1954 SC 207 the Hon'ble Apex Court took similar view and held that the writ court cannot exercise its power under Article 226 beyond its territorial jurisdiction. It is also held that the exercise of power conferred by Article 226 was subject to two fold limitations, firstly, the power is to be exercised in relation to which it exercises jurisdiction and secondly, the person or authority on whom the High Court is empowered to issue writ must be within those territories.
53. Both the aforesaid judgments rendered by the Apex Court in the case of Election Commission, India - vs- Saka Venkata Rao(supra) and K.S.Rashid and son - vs- Income Tax Investigation Commission and others(supra) fell for consideration before the Larger Bench of Hon'ble Apex Court in Lt. Col.Khajoor Singh - vs- Union of India and another, AIR 1961 SC 532 and the view taken by the Hon'ble Apex Court in the earlier two judgments has been confirmed by the larger Bench of the Apex Court which stated that unless there are clear and compelling reasons, which cannot be denied, writ court cannot exercise jurisdiction under Article 226 of the Constitution beyond its territorial jurisdiction.
- 23 -
2025:JHHC:38115-DB
54. Thereafter, the Hon'ble Apex Court in the case of Oil and Natural Gas Commission - vs- Utpal Kumar Basu and others, [(1994) 4 SCC 711] wherein it has been held that High Court can exercise the power to issue directions, orders or writs for the enforcement of any of the fundamental rights conferred by Part-III of the Constitution or for any other purpose if the cause of action, wholly or in part, had arisen within the territories in relation to which it exercises jurisdiction, notwithstanding that the seat of the Government or authority or the residence of the person against whom the direction, order or writ is issued is not within the said territories. The expression "cause of action" means that bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. Therefore, in determining the objection of lack of territorial jurisdiction the court must take all the facts pleaded in support of the cause of action into consideration albeit without embarking upon an enquiry as to the correctness or otherwise of the said facts. Thus, the question of territorial jurisdiction must be decided on the facts pleaded in the petition, the truth or otherwise of the averments made in the petition being immaterial.
- 24 -
2025:JHHC:38115-DB
55. Same view has been taken by the Hon'ble Apex Court while dealing with the matter in the case of Union of India and others -vs- Adani Exports Ltd. and another, [(2002)1 22 2025, it has been held that in order to confer jurisdiction on a High Court to entertain a writ petition it must disclose that the integral facts pleaded in support of the cause of action do constitute a cause so as to empower the court to decide the dispute and the entire or a part of it arose within its jurisdiction.
56. In the judgment rendered by the Hon'ble Apex Court in the case of Kusum Ingots and Alloys Ltd.-vs- Union of India and another, [(2004) 6 SCC 254], it has been held that keeping in view the expression used in Clause (2) of Article 226 of the Constitution of India, indisputably even if a small fraction of cause of action occurs within the jurisdiction of the Court, the Court will have jurisdiction in the matter. However, even if a small part of cause of action arises within territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum convenient,
- 25 -
2025:JHHC:38115-DB that a part of cause of action arise of one or the other forums, it will be for the petitioner to choose its forum.
57. It is, thus, evident from the above referred judicial pronouncements of the Hon'ble Apex Court that the High Court can well exercise the jurisdiction conferred under Article 226 of the Constitution of India if the part of cause of action has accrued within the territorial jurisdiction of that particular High Court conferring the concurrent jurisdiction upon it.
58. The question of occurrence of fraction of cause of action is the determinative factor to entertain the writ petition.
59. The Clause (2) of Article 226 of the Constitution of India is made applicable depending upon the fraction of cause of action, if occurred in the territorial jurisdiction of the High Court.
60. It is made clear that here we are not concerned with the cause of action rather we are concerned with the territorial jurisdiction of a High court under whose jurisdiction the Council has passed the award i.e., Orissa High Court at Cuttack where the Council is situated in the State of Orissa. Even accepting that that the cause of action accrued by virtue of the contract as the ground has been taken but whether it will be proper for the high
- 26 -
2025:JHHC:38115-DB court to exercise the power conferred under Article 226 of the order/award passed in another State for which the writ of certiorari has been sought for.
61. The specific cause of action herein is the award passed by the MSME Council at Cuttack in the State of Orissa, which is the sole cause of action accrued, the writ petitioner preferred writ petition before this Court against the award passed by the Council at Cuttack in Orissa dated 09.08.2023 passed in MSMEFC Case No. 60 of 2022. Therefore, the cause of action accrued to the writ petitioner is solely the award passed by the Council situated at Cuttack at Orissa.
62. This Court in the aforesaid circumstances is to consider that if award has been passed by the Council created under the MSME Act situated in a particular district of the concerned State, can it be questioned by filing writ petition to different high court(s).
63. The answer of this will be in absolute 'Negative' due to the non-availability of territorial jurisdiction of different High Court under whose jurisdiction order/award has not been passed to exercise the said power as conferred under Article 226 of the Constitution of India.
- 27 -
2025:JHHC:38115-DB
64. The cause of action, if is said to be the fraction as accrued in different high courts and the individual who is claiming the infringement of right living in the territorial jurisdiction of different high court then in such circumstances if the cause of action said to be fraction thereto, if accrued in different high court along with the place where the said litigant is residing or any part of decision has been taken by the authority then certainly on the principle of availability of jurisdiction on the ground of concurrent jurisdiction having available to the high court the writ petition can be entertained. But herein it is not a fact of a 'cause of action' or 'fraction thereto' rather the cause of action being accrued thereto i.e., the award dated 09.08.2023 passed in MSMEFC Case No. 60 of 2022 passed by the council situated at Cuttack in the State of Orissa.
65. The ground has been taken on behalf of the respondent no.1-writ petitioner that as per the agreement/contract, the seat of arbitration is in the district of Jamshedpur falling under the State of Jharkhand and as such the cause of action to ventilate the grievance by filing the claim before the council was to be in the territorial jurisdiction of the council falling in Jamshedpur in the State of Jharkhand.
- 28 -
2025:JHHC:38115-DB
66. This Court even accepting the aforesaid fact is of the view that in that situation also that can be a ground to be taken by the litigant concerned, the respondent no.1-writ petitioner, to raise it before the high court having territorial jurisdiction under whose jurisdiction the council has passed award said to be without jurisdiction. But admittedly, the council has passed the award dated 09.08.2023 in Cuttack at Orissa, the same is not fit to be quashed and set aside by this Court i.e. High Court of Jharkhand on the pretext that cause of action has accrued in the territorial jurisdiction of this Court.
67. Learned Single Judge has agreed to the said argument advanced on behalf of writ petitioner, which according to our considered view cannot be said to be correct notion by conferring jurisdiction to this Court to interfere with the impugned order.
68. The fact about applicability of Section 18(4) of the MSME Act as the ground has been taken that where the place is there of the seller then the claim is to be agitated in the said place.
69. For ready reference clause 18 of the MSME Act is quoted as under:
18.Reference to Micro and Small EnterprisesFacilitation Council.--(1) Notwithstanding anything contained in any
- 29 -
2025:JHHC:38115-DB other law for the time being in force, any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council.
(2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of sections 65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if the conciliation was initiated under Part III of that Act.
(3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer ittoany institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub- section(1) of section 7 of that Act.
(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India.
(5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference."
70. The said ground has been taken on behalf of appellant by taking the ground to maintain the claim to
- 30 -
2025:JHHC:38115-DB be in the Council situated in the State of Orissa at Cuttack.
71. This Court is only considering the fact that even on the pretext of Section 18(4) of the MSME Act if the award has been entertained which according to respondent no.1-writ petitioner has correctly been appreciated even then the same can be a ground to quash the award by taking aid of Section 18(4) of the Act, 2006 regarding its applicability in order to test it as to whether the seller is residing in the State of Orissa or not but that cannot be a ground to be taken by this Court in interfering with an award passed by the Council situated at Cuttack in the State of Orissa.
72. It is evident from the aforesaid provision that the MSME Council where the supplier is registered shall have jurisdiction to act as an Arbitrator.
73. The MSME award is considered as an arbitral award under the Arbitral and Conciliation act, 1996 and the challenges are to be made under Section 34 of the Arbitration and Conciliation Act. Therefore, the application must be located in the same area MSME Council lies.
74. It further needs to refer herein that every writ petition challenges the MSME award under Article 226 of
- 31 -
2025:JHHC:38115-DB the Constitution of India is not permissible because Section 34 of the Act provides alternate remedy.
75. It has been categorically held by the Hon'ble Apex Court in the case of India Glycols Limited and Another v. MSMEFC, Medchal and Ors. (supra) that in view of the provisions of Section 18(4), the appellant had a remedy under Section 34 of the 1996 Act to challenge the award by depositing the seventy-five per cent of the decretal amount, for ready reference the relevant paragraph is being quoted as under:
"10. However, there is a super added condition which is imposed by Section 19 of the Msmed Act, 2006 to the effect that an application for setting aside an award can be entertained only upon the appellant depositing with the Council seventy-five per cent of the amount in terms of the award. Section 19 has been introduced as a measure of security for enterprises for whom a special provision is made in the Msmed Act by Parliament. In view of the provisions of Section 18(4), the appellant had a remedy under Section 34 of the 1996 Act to challenge the award which it failed to pursue.
12. The appellant failed to avail of the remedy under Section 34. If it were to do so, it would have been required to deposit seventy-five per cent of the decretal amount. This obligation under the statute was sought to be obviated by taking recourse to the jurisdiction under Articles 226/227 of the Constitution. This was clearly impermissible.
13. For the above reasons, we are in agreement with the view [S.R. Technologies Unit II v. Msefc, Telangana, 2023 SCC OnLine TS 4394] of the Division
- 32 -
2025:JHHC:38115-DB Bench of the High Court that the writ petition which was instituted by the appellant was not maintainable.
76. This Court, therefore, is of the view that if the view which has been taken by the learned Single Judge will be upheld then it will amount to exceeding the jurisdiction by this Court and that is not the spirit of our Constitution due to conferment of power to the High Court to exercise the power within the available territorial jurisdiction of a particular High court.
77. As we have already referred hereinabove that the sole cause of action by which the respondent no.1-writ petitioner was aggrieved is the award passed by Council at Cuttack in the State of Orissa. Hence, challenging the said award by filing writ petition before this Court, under Article 226 of the Constitution of India, ought not to have been entertained by learned Single Judge of this Court.
78. Accordingly, and considering the aforesaid fact, the order passed by learned Single Judge stands quashed and set aside.
79. The instant intra-court appeal stands allowed and the writ petition stands dismissed.
80. However, liberty is reserved with the respondent no. 1-writ petitioner to ventilate his grievance before the appropriate forum in accordance with law.
- 33 -
2025:JHHC:38115-DB
81. Pending Interlocutory Application(s), if any, stand disposed of.
(Sujit Narayan Prasad, J.) (Arun Kumar Rai, J.) 10th December, 2025 Alankar/ A.F.R
- 34 -