When Jurisdiction Fails, Remand Cannot Cure It: Supreme Court Sets Aside Order Sending MSME Award Dispute Back to Functus Officio Facilitation Council

"Issues in both the proceedings are similar arising from the same awards and between the same parties — joint hearing will avoid the possibility of conflicting orders", Supreme Court has set aside an Andhra Pradesh High Court order that remanded an MSME arbitration dispute back to the Haryana Micro and Small Enterprises Facilitation Council after finding violation of natural justice — holding that remanding to a body that may itself lack jurisdiction serves no purpose. The Court instead directed the pending Writ Petitions to be heard together with pending Civil Revision Petitions before the High Court for common adjudication, preferably within four months.

A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe allowed the appeals filed by AP TRANSCO, restoring the Writ Petitions for joint hearing with the Civil Revision Petitions arising from dismissed Execution Petitions.

Background of the Case

AP TRANSCO contracted with Equipment Conductors and Cables Limited in 1998 for supply of conductors. Disputes were referred to arbitration under the MSME Act before the Haryana Facilitation Council, which passed two awards in June 2010. All challenges by AP TRANSCO — under Section 34, Section 37, and up to the Supreme Court — were dismissed, making the awards final by July 2018.

The supplier then moved the Facilitation Council for securing the award amounts. On review, the Council in July 2018 secured interest amounts of Rs. 5,90,86,059 and Rs. 6,08,99,870 and restrained AP TRANSCO from receiving payments from garnishees. AP TRANSCO challenged these orders by filing Writ Petitions before the Andhra Pradesh High Court, arguing the Facilitation Council had become functus officio after passing the original awards and could not entertain review petitions.

Separately, the supplier filed Execution Petitions before the Commercial Court, Vijayawada, which were dismissed in October 2020. Three Civil Revision Petitions challenging that dismissal remained pending before the High Court.

The High Court found natural justice was violated in the Facilitation Council's July 2018 order and remanded the matter back to it — prompting the present appeals by AP TRANSCO.

Court's Observations and Judgment

On Why Remand to the Facilitation Council Was Wrong

The Supreme Court found the remand order fundamentally misconceived. AP TRANSCO's core argument before the High Court was that the Facilitation Council had become functus officio — it had no remaining jurisdiction after passing the original awards. The High Court, having accepted the natural justice violation, simply sent the matter back to the same Council without addressing the jurisdictional question. The Supreme Court held this was not appropriate. Sending parties back to a body whose very authority to act is disputed resolves nothing.

On Consolidation as the Correct Approach

The Court took a practical view of the real dispute — the supplier was ultimately seeking only execution of finalized awards. The question of the exact amounts payable was already the subject of pending Civil Revision Petitions before the High Court arising from the dismissed Execution Petitions. The issues in the Writ Petitions and the Civil Revision Petitions arose from the same awards between the same parties. The Court directed:

"There could be a joint hearing in the civil revisions as well as the Writ Petitions, when issues in both the proceedings are similar arising from the same awards and between the same parties. This process of adjudication will also avoid the possibility of conflicting orders, apart from ensuring expeditious disposal."

All parties were given liberty to raise and contest all issues of law and fact as permissible.

On Arrest of Government Company Officers in Execution

The Commercial Court's observations — forming part of the record now before the High Court — carry significant weight for advocates practising execution law. The Commercial Court held that the mere failure of a Government Company to pay decretal amounts cannot be treated as wilful refusal or negligence by its officers:

"Failure to pay the decretal amount by the Government or a Government Company cannot be regarded as refusal or the negligence on behalf of a public servant holding the post in Government or Government Company... an Execution Petition for arrest and detention of the Chairman and Managing Director or other Directors of the J.Dr is not maintainable, especially when there is no pleading and evidence on record that any particular Chairman and Managing Director or other Directors representing the J.Dr intentionally refused or neglected to pay the decretal amount."

The Court noted that one public servant cannot be arrested for the refusal or negligence of another — and that in execution against a Government Company, the remedy lies against the company's property, not its officers' persons.

The Supreme Court allowed the appeals, set aside the High Court's remand order, and directed Writ Petition Nos. 34399 and 34412 of 2018 to be heard together with CRP Nos. 74, 197 and 220 of 2021 before the Andhra Pradesh High Court. In view of the long pendency of the dispute — the original awards dating from 2010 — the Court requested the High Court to dispose of the consolidated matters preferably within four months from 12 March 2026.

Date of Decision: 12 March 2026