VidhiSangh

Supreme Court of India · 15/12/2021

JHARKHAND URJA VIKAS NIGAM LIMITED versus THE STATE OF RAJASTHAN & ORS.

[2021] 9 S.C.R. 497 · 2021 INSC 898

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Summary

The Court quashed a Facilitation Council’s payment order made solely because the buyer did not appear in conciliation, without initiating arbitration. Conciliation and adjudicatory arbitration were distinct stages under Section 18 of the MSMED Act. The Council could record failed conciliation and commence or refer arbitration, but could not combine the stages and decree the claim by default. The order was a nullity rather than an arbitral award requiring challenge under Section 34. Fresh arbitration remained open, and the underlying monetary claim was left undecided.

Issues

  1. Whether nonappearance in conciliation permitted the Council to issue a payment award without commencing arbitration.
  2. Whether absence of a Section 34 challenge or the buyer’s later payment barred writ relief against such an order.

Provisions considered

Held

Result

Appeal allowed; High Court judgment and Council payment order quashed, with liberty for lawful arbitration; claim merits left open.

Judgment PDF: Supreme Court of India, [2021] 9 S.C.R. 497.