Overview
In this case, the Punjab and Haryana High Court came before a civil revision petition under Article 227 of the Constitution of India. An order passed by the Additional District Judge, Karnal, during the execution proceedings was challenged by the petitioner which arose from an arbitral award passed under the MSMED Act, 2006.
The dispute between the parties was as to the enforceability of an arbitral award. It was argued by the petitioner that the award was passed without any appropriate jurisdiction and was therefore unenforceable. The High Court had to examine whether a party which had withdrawn its objections earlier under Section 34 of the Arbitration and Conciliation Act 1996, could challenge the award again through supervisory jurisdiction under Article 227.
Facts of the Case
The dispute originally arose before the Haryana Micro and Small Enterprises Facilitation Council under Section 18 of the MSMED Act. Arbitration proceedings were initiated and the matter was referred to a sole arbitrator.
The petitioner, Pahwa Impex Pvt. Ltd., participated in the proceedings after which an award was passed on 9 January 2020 in favour of the respondent, Kanuj Home Textiles Exim, for approximately ?84.21 lakhs along with interest.
The petitioner challenged the award in 2021 by making certain objections under Section 34 of the Act. At the same time, execution proceedings were initiated under Section 36 for enforcement of the award by the respondent.
As per Section 19 of the MSMED Act, when an award is challenged by a party, then that party must deposit 75% of the awarded amount. Since the petitioner did not fulfil this requirement, Section 34 proceedings continued for several years without any progress.
On 25 July 2025, the Section 34 objections were withdrawn by the petitioner on the ground of technical defects. Following the same, the executing court dismissed the objections by the petitioner in the execution proceedings and held that it could not go above and beyond the arbitral award.
The petitioner then approached the High Court under Article 227 while alleging that the award was unenforceable as the sole arbitrator could only submit a report to the Facilitation Council and had no jurisdiction to pass a final award.
Legal Issues
Decision
The revision petition was dismissed by the Punjab and Haryana High Court and the award passed by the executing court was upheld.
It was observed that the petitioner already took advantage of the statutory remedy under Section 34, but abandoned it later. It held that Article 227 cannot be used as an alternative remedy to avoid requirements under law, especially the requirement of depositing 75% of the awarded amount under the MSMED act.
The Court also noted that the issue as to the powers of the Facilitation Council and the sole arbitrator is currently pending before the Supreme Court in the case of M/s Tamil Nadu Cements Corporation Ltd.. Therefore, the executing court was justified in refusing to conclude that the award was unenforceable at this stage.
At last, the High Court held that the petitioner could not approbate and reprobate at the same time and dismissed the petition.
Case reference:- M/s Pahwa Impex Pvt. Ltd. Vs. M/s Kanuj Home Textiles Exim CR-5403-2025 (SJB, Before Jasgurpreet Singh Puri, J.)
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