Authority: High Court of Jammu & Kashmir and Ladakh at Srinagar

Order Date: 31 July 2026

Case Overview

  • Parties: petitioner M/S Mashad Steel Industries (a micro‑enterprise registered under the MSMED Act, 2006) represented by Mr. Azhar Ul Amin and Mr. Shahid Ashraf; respondents – Union Territory of Jammu & Kashmir and others, represented by Mr. Waseem Gul.
  • Nature of Proceeding: writ petition under Article 226 of the Constitution seeking a mandamus directing respondents to pay Rs 5,93,137 plus interest under Sections 15 and 16 of the MSMED Act, 2006.
  • Background: In 2011‑12 the petitioner received work orders from respondent No. 4 (a nodal agency) for construction of Panchayat‑ghars under the 13th Finance Scheme. The petitioner executed works between 2013‑17 at a cost of Rs 20 lacs per Panchayat‑ghar, with steel roof trusses fixed at Rs 7.20 lacs each. Site engineers later directed installation of eaves boards and soffits, increasing the cost.
  • Claim: The petitioner alleges that despite undisputed execution of the works, the amount due of Rs 5,93,137 has not been released, and seeks statutory interest.
  • Procedural Issue: The Court questioned the maintainability of the writ, noting that the MSMED Act provides a specific dispute‑resolution mechanism (Section 18) involving the Micro and Small Enterprises Facilitation Council (MSEFC) and the 2017 Rules, as well as the 2025 Online Dispute Resolution (ODR) scheme.
  • Legal Precedents Cited:
  • CM(M) No. 287/2023 (Union Territory of J&K vs Aibak Electric Industries) – holding that failure to comply with Sections 15‑16 can give rise to a cause of action for a writ.
  • WP(C) 2686/2024 (M/S Northern Engineers vs UT of J&K) – reaffirming that a petitioner must first approach the MSEFC before invoking Article 226.
  • Supreme Court judgment Gujarat State Civil Supplies Corp. Ltd. vs Mahakali Foods (2023 SCC 401) – interpreting Sections 15‑18 as creating strict liability on the buyer and a non‑obstante clause for the council.
  • Gauhati High Court decision (2025 Gauhati LR 44) – emphasizing the overriding effect of Sections 15‑23 and the necessity to use the statutory forum.
  • Statutory Provisions Discussed: Sections 15 (payment deadline, max 45 days), 16 (compound interest at three times the RBI bank rate), 17 (right to recover amount with interest), 18 (reference to MSEFC, conciliation, arbitration, 90‑day decision limit), and the non‑obstante clause in Section 24.
  • Observations: The petitioner did not file a reference before the MSEFC, nor did it attach any document showing admission of liability by respondents. The Court held that allowing the writ would render the statutory mechanism under the MSMED Act redundant and defeat its legislative intent.

Final Outcome

  • The writ petition is dismissed at the threshold as non‑maintainable; no costs are awarded. The matter is not referred to the MSEFC, and the petitioner’s claim for Rs 5,93,137 plus interest is rejected.

Topics: Delayed Payments, MSMED Act, Writ Jurisdiction