Once Writ Petition Is Held Not Maintainable In Contractual Dispute, High Court annot Rule On Jurisdiction Under MSMED Act: Supreme Court

"We are also of the opinion that having held the writ to be not maintainable, the Division Bench of the High Court could not proceeded with and made the observations that it made in paragraph 21 to 29 thereof." Supreme Court bench of Justice K.V. Viswanathan and Justice Arun Palli on October 12, 2026, ruled that once a High Court holds that a writ petition under Article 226 of the Constitution of India is not maintainable due to disputed contractual facts, it cannot proceed to adjudicate on the merits or render conclusive findings regarding the statutory jurisdiction and applicability of the Micro, Small and Medium Enterprises Facilitation Council under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act).

The dispute originated when the respondent sub-contractor, Girin Deka, approached the Gauhati High Court via a writ petition seeking a writ of mandamus for the release of contractual dues amounting to Rs. 11,06,85,770/- from the National Highways and Infrastructure Development Corporation Ltd. (NHIDCL). A Single Judge bench had allowed the petition on June 12, 2023, directing NHIDCL to release the payment. On an intra-court appeal, the Division Bench reversed the Single Judge’s decision on the ground that writ jurisdiction was inappropriate for resolving disputed contractual questions, but concurrently delivered extensive findings establishing a buyer-supplier relationship under the MSMED Act and granted liberty to invoke Section 18 of the Act.

Whether the High Court, after arriving at a definitive finding that a writ petition under Article 226 of the Constitution is not maintainable in a contractual dispute involving disputed questions of fact, is legally justified in examining statutory definitions and returning findings on the maintainability of claims under Section 18 of the MSMED Act, 2006?

Whether the Division Bench of the High Court erred in preemptively deciding the jurisdiction of the MSMED Facilitation Council instead of leaving questions of maintainability and jurisdiction open for the statutory authority to decide independently?

Examining the Division Bench judgment, the Supreme Court concurred with the view that the writ petition was non-maintainable given the contractual nature of the claims. The bench noted that invoking Article 226 was impermissible where disputed questions of fact arose between parties under commercial arrangements.

High Court cannot venture into merits after dismissing writ as non-maintainable

The bench emphasized that having arrived at the finding that the extraordinary writ jurisdiction was unavailable, the High Court transgressed its limits by proceeding further to analyse the statutory provisions of the MSMED Act, 2006. The apex court took strong exception to the extensive observations entered in paragraphs 21 to 29 of the impugned judgment.

The Court held that the Division Bench exceeded its remit by adjudicating on the buyer-supplier dynamic and determining the applicability of statutory recovery mechanisms.

Conclusive findings on statutory jurisdiction vacated

Speaking for the bench, the Court observed:

"We are of the opinion that the Division Bench of the High Court was right in reversing the order(s) of the learned Single Judge and holding that writ was not maintainable on the facts of the case. We are also of the opinion that having held the writ to be not maintainable, the Division Bench of the High Court could not proceeded with and made the observations that it made in paragraph 21 to 29 thereof. We, therefore, set aside the observations of the Division Bench in paragraph 21 and 29 thereof."

The bench also vacated paragraph 32 of the impugned order, wherein the Division Bench had recorded conclusive findings on the jurisdiction of the Facilitation Council under the MSMED Act.

Statutory forums must independently determine maintainability and jurisdiction

The apex court clarified that the legal avenues available to a claimant must be tested before the designated forum on their own merits, rather than being pre-judged by a writ court that lacked jurisdiction over the controversy.

The Court expressly ruled:

"As and when that remedies are resorted to before any Fora/Body/Authority, the said Fora/Body/Authority will decide the maintainability of the said proceedings and wherever necessary the merits of the claim."

Addressing the submission that proceedings were already initiated before the MSMED Facilitation Council pursuant to the High Court’s liberty, the Supreme Court permitted the respondent to pursue them, while reserving all jurisdictional objections for the petitioner.

Facilitation Council directed to decide without being influenced by judicial observations

The apex court safeguarded the rights of NHIDCL by maintaining that all objections, including the core jurisdiction of the MSMED Facilitation Council, remain open for adjudication.

The Court directed:

"Needless to observe that the Facilitation Council will decide those objections uninfluenced by any of the observations made in the impugned order(s) as well as in the present order."

The Supreme Court partly allowed the petitions by upholding the Division Bench's dismissal of the writ petition as non-maintainable, while setting aside and expunging paragraphs 21 to 29 and the conclusive jurisdictional findings in paragraph 32. Considering that the underlying dispute pertained to 2017-2018, the bench directed the MSMED Facilitation Council to dispose of the pending proceedings within six months from the date of the order.

Date of Decision: October 12, 2026

SUPREME COURT OF INDIA - NON-REPORTABLE

Bench: Justice K.V. Viswanathan and Justice Arun Palli