Page 1 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.34448 of 2025 (In the matters of petitions under Articles 226 and 227 of the Constitution of India, 1950). M/s. Aryan Ispat & Power Private Limited, Sambalpur …. Petitioner(s) -versus- General Manager, O/o. The District Industries Centre, Rourkela & Anr. …. Opposite Party(s) Advocates appeared in the case through Hybrid Mode: For Petitioner (s) : Mr. Biyotkesh Mohanty, Adv. -versus- For Opp. Party(s) : Mr. Pabitra Kumar Nayak, Adv. CORAM: DR. JUSTICE SANJEEB K PANIGRAHI DATES OF HEARING:- 08.12.2025 DATE OF JUDGMENT:- 09.01.2026 Dr. Sanjeeb K Panigrahi, J. 1. The present Writ Petition has been filed under Articles 226 and 227 of the Constitution of India assailing the order dated 4.11.2025 passed by the Senior Civil Judge-cum-Commercial Court, Rourkela, in Arbitration Petition No. 10 of 2024. By the impugned order, the Commercial Court revisited and recalled the earlier order dated 21.4.2025, whereby the petitioner’s application under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the award of the Micro & Small Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 2 Enterprises Facilitation Council, Rourkela, had been admitted and further directed the deposit of 75% of the award amount. I. FACTUAL MATRIX OF THE CASE: 2. The brief facts of the case are as follows: (i) The petitioner, M/s. Aryan Ispat & Power Private Limited, is engaged in industrial operations and was involved in commercial dealings with Opposite Party No. 2, who claims to have supplied iron ore to the petitioner over a period spanning 2019 to 2021. (ii) According to Opposite Party No. 2, disputes arose in relation to unpaid dues allegedly arising out of these transactions. On 29.10.2021, Opposite Party No. 2 invoked the jurisdiction of the Micro & Small Enterprises Facilitation Council (MSEFC), Rourkela, by filing a claim for recovery of an aggregate amount of Rs.3,94,35,891/-, comprising Rs.3,19,67,533/- towards principal and Rs.74,68,358/- towards interest. (iii) This claim was registered as MSEFC Case No. 87 of 2021 and was taken up by the Council on various dates. (iv) While the reference before the MSEFC was pending, Opposite Party No. 2 initiated parallel proceedings on the same underlying claim before the National Company Law Tribunal (NCLT), New Delhi. On 24.2.2022, Opposite Party No. 2, through its proprietor, filed an application under the Insolvency and Bankruptcy Code, 2016, which was registered as I.B. No. 193 (ND) / 2022, alleging default by the petitioner in payment of operational debt. The insolvency application came up for consideration on 6.1.2023, on Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 3 which date the proceedings were disposed of in view of the submission that the petitioner had paid the claimed amount. Consequent thereto, the application was withdrawn by Opposite Party No. 2. (v) After disposal of the insolvency proceedings, the reference before the MSEFC continued. During the pendency of the MSEFC proceedings, it emerged from the record that the proprietor of Opposite Party No. 2 was also a member of the MSEFC, Rourkela, during a substantial part of the period when the reference was being heard. The proceedings before the Council continued over multiple sittings. It is reflected in the order sheet that the said proprietor formally recused himself from participation in the Council only on 28.6.2023, shortly before the culmination of the proceedings and passing of the award. (vi) Subsequently, the MSEFC passed an award dated 28.6.2024 against the petitioner in MSEFC Case No. 87 of 2021. Aggrieved by the said award, the petitioner invoked the statutory remedy under Section 34 of the Arbitration and Conciliation Act, 1996, by filing an application before the competent District Court seeking setting aside of the award. (vii) The application was admitted by the District Judge by order dated 21.4.2025, and thereafter the matter was transferred to the Court of the Senior Civil Judge-cum-Commercial Court, Rourkela, for adjudication in accordance with law. Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 4 (viii) After the admission of the Section 34 application, Opposite Party No. 2 filed an application dated 18.9.2025 seeking recall of the order of admission dated 21.4.2025 for giving direction to the petitioner to make deposit of 75% of the awarded amount as per the provisions of Section 19 of the MSMED Act. (ix) Upon consideration of the said application, the Senior Civil Judge- cum-Commercial Court passed an order dated 4.11.2025 in Arbitration Petition No. 10 of 2024, whereby the Court revisited the issue of admission of the Section 34 application and held that the appeal could be heard after the present Petitioner deposited 75% of the award amount in compliance with Section 19 of the MSMED Act. Accordingly, one month time was given to the Petitioner to deposit the same. (x) Thereafter, the petitioner has filed the present writ petition on various ground challenging the order dated 4.11.2025 primarily on the ground that the Section 34 application having been already admitted, the Ld. District Judge ought not to have imposed a fresh onerous condition of mandatory deposit. (xi) Now that the broad facts leading up to the instant Petition have been laid down, this Court shall endeavour to fully summarise the contentions of the Parties and the broad grounds that have been urged to seeking the exercise of this Court’s plenary powers of review. Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 5 II. PETITIONER’S SUBMISSIONS: 3. Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: (i) The petitioner contends that the entire proceedings before the Micro & Small Enterprises Facilitation Council, Rourkela, culminating in the impugned award, are fundamentally vitiated and unsustainable in law. At the forefront of the petitioners’ challenge is the allegation of institutional bias. It is contended that Opposite Party No. 2, whose claim was adjudicated by the MSEFC, was himself a member of the same Council during a substantial portion of the proceedings. The petitioners submit that this placed Opposite Party No. 2 in a position where he was effectively part of the adjudicatory body deciding his own dispute. Although Opposite Party No. 2 recused himself from the Council on 28.3.2024, the petitioners argue that such recusal occurred only at the final stage, i.e. one date prior to the date on which the award was pronounced and does not cure the prejudice caused by his continuous participation in the proceedings. The petitioners assert that the principle that no person shall be a judge in his own cause stands violated, and that such violation renders the award a nullity. (ii) In addition to the allegation of bias, the petitioners challenge the very jurisdiction of the MSEFC to entertain the reference. It is contended that Opposite Party No. 2 does not fall within the statutory definition of a “supplier” under the Micro, Small and Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 6 Medium Enterprises Development Act, 2006. The petitioners assert that Opposite Party No. 2 is, in substance, a trader who procures iron ore from mine owners and resells it to buyers, including the petitioner, and does not itself manufacture or produce goods. In this regard, reliance is placed on the Office Memorandum dated 1.9.2021 issued by the Ministry of Micro, Small and Medium Enterprises, which clarifies that traders are not entitled to claim benefits under the MSMED Act for delayed payments. (iii) Another significant contention raised by the petitioners relates to the parallel proceedings before the NCLT. It is submitted that Opposite Party No. 2 had earlier pursued insolvency proceedings on the same cause of action, which were disposed of on 6.1.2023 upon payment by the petitioner. Despite such settlement, Opposite Party No. 2 continued with the MSEFC proceedings, which, according to the petitioners, amounts to an abuse of process. The petitioners argue that the continuation of the reference after settlement before the NCLT further taints the proceedings and calls into question the bona fides of Opposite Party No. 2. (iv) The petitioners also assail the procedural impropriety committed by the Ld. Commercial Court. It is contended that once the Section 34 application was admitted by the Ld. District Judge by order dated 21.4.2025, the subordinate Ld. Commercial Court lacked authority to reopen or revisit the issue of admission. The filing of a recall application by Opposite Party No. 2 on 18.9.2025, nearly five Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 7 months after the admission order, is characterised as a deliberate attempt to circumvent limitation and delay adjudication. The petitioners submit that the impugned order dated 4.11.2025, whereby the Ld. Commercial Court entertained such a recall and reconsidered admission, violates settled principles of judicial discipline and hierarchy. III. OPPOSITE PARTYS’ SUBMISSIONS: 4. Per contra, Learned Counsel for the Opposite Parties earnestly made the following submissions in support of his contentions: (i) The Opposite Parties oppose the writ petition in its entirety and contend that it is not maintainable either in law or on facts. At the threshold, they submit that the petitioner is seeking to invoke the extraordinary writ jurisdiction of the High Court to circumvent a complete and efficacious statutory mechanism provided under the Micro, Small and Medium Enterprises Development Act, 2006, read with the Arbitration and Conciliation Act, 1996. According to the respondents, the impugned award passed by the Facilitation Council is amenable to challenge only under Section 34 of the Arbitration and Conciliation Act, subject to the conditions prescribed therein, and the present writ petition is an impermissible attempt to bypass that statutory framework. (ii) On the issue of alleged bias, the respondents deny that the proceedings before the MSEFC were vitiated in any manner. It is contended that the award was passed by the Council as a collective adjudicatory body and not by any individual member Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 8 acting alone. The respondents emphasize that the proprietor of Opposite Party No. 2 recused himself from the Council prior to the passing of the award on 28.6.2024, and therefore did not participate in the final decision-making process. According to the respondents, once recusal was effected, no allegation of bias can survive, and mere participation in earlier sittings does not automatically vitiate the entire proceedings. (iii) With regard to jurisdiction, the respondents assert that the Facilitation Council rightly entertained the reference under Section 18 of the MSMED Act. They submit that Opposite Party No. 2 was entitled to invoke the jurisdiction of the Council as a micro or small enterprise and that disputes relating to delayed payments fall squarely within the legislative intent of the Act. The respondents dispute the petitioner’s contention that Opposite Party No. 2 is a mere trader and submit that such factual determinations cannot be adjudicated in writ proceedings and ought to be examined, if at all, in arbitral challenge proceedings. (iv) On the issue of parallel proceedings before the NCLT, the respondents submit that the insolvency proceedings were withdrawn after settlement and that such withdrawal does not bar continuation of proceedings under the MSMED Act. According to the respondents, the remedies under the Insolvency and Bankruptcy Code and the MSMED Act operate in different fields and the mere invocation of one remedy does not extinguish the right to pursue another, unless specifically barred by law. Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 9 (v) The respondents further contend that the challenge to the order dated 4.11.2025 is misconceived. It is submitted that courts possess inherent powers to recall orders obtained without proper consideration of jurisdictional objections. The respondents argue that the Commercial Court acted within its authority in examining whether the Section 34 application had been rightly entertained, and that the petitioner cannot claim immunity from scrutiny merely because an admission order was earlier passed. IV. ISSUES FOR CONSIDERATION: 5. The petitioner has advanced several grounds challenging the proceedings before the Micro & Small Enterprises Facilitation Council and the resultant award. However, in the present writ proceedings, it is neither necessary nor appropriate to examine those issues on merits. The limited question that arises for consideration is whether the Learned Court, after having admitted the application under Section 34 of the Arbitration and Conciliation Act, 1996, could thereafter revisit the issue of admission by entertaining a recall application and passing the impugned order. 6. Therefore, this court has identified the following issue that has to be determined which has emerged contentiously during the course of the hearing: a. Whether the Learned Court was legally justified in recalling its earlier order and directing the appellant to comply with the mandatory requirement of depositing 75% of the awarded amount under Section 19 of the Micro, Small and Medium Enterprises Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 10 Development Act, 2006, and whether such recall and consequential direction is sustainable in law? A. WHETHER THE LEARNED COURT WAS LEGALLY JUSTIFIED IN RECALLING ITS EARLIER ORDER AND DIRECTING THE APPELLANT TO COMPLY WITH THE MANDATORY REQUIREMENT OF DEPOSITING 75% OF THE AWARDED AMOUNT UNDER SECTION 19 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006, AND WHETHER SUCH RECALL AND CONSEQUENTIAL DIRECTION IS SUSTAINABLE IN LAW? 7. To answer this question, section 19 of the MSMED Act, which contains the mandate of the 75% deposit, should be set out first. “19. Application for setting aside decree, award or order.- No application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy-five per cent. of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court. Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case, subject to such conditions as it deems necessary to impose.” 8. As would be clear from the mandate in section 19, a Court is statutorily- precluded from entertaining any application for setting aside of an award passed by the Council unless the buyer-applicant has deposited 75% of the amount in terms of the award. Apart from the decisions of Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 11 the Supreme Court, section 19 itself constitutes a bar to such an application crossing the threshold unless the appellant - buyer complies with the requirement of the 75% deposit. 9. Section 19 of the MSMED Act, 2006, contains a mandate on a “Buyer” to deposit 75% of the amount of the decree or award or an order or such other percentage as may be directed by a Court, for setting aside any award made by the Facilitation Council. “Buyer” is defined in section 2(d) and the Facilitation Council under section 20 of the Act. There is no scope for any ambiguity in construing the mandate since the words in section 19 are peremptory in nature and pins a buyer down to the mandate if the buyer chooses to apply for setting aside the award made by the Council. 10. The only exception made in the section is for a supplier; there is no other exit route under the section for a buyer to seek setting aside of an award without the pre-deposit. The framing of the section also makes it clear that the 75% deposit is a condition precedent for a buyer for seeking setting aside of the award of the Council. 11. Section 24 of the MSMED Act seals the mandate of Section 19 by declaring that sections 15-23 shall have overriding effect over any other law for the time being in force. 12. Section 19 read with 24 thus leaves little doubt that a buyer cannot seek setting aside of an award made by the Council unless the buyer first deposits 75% of the awarded amount. Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 12 13. Section 19 of MSMED Act categorically uses the word ‘entertain’. The word ‘entertain’ has been explained in Lakshmi Rattan Engg. Works Ltd. v. CST1, which reads as under:— “7. To begin with it must be noticed that the proviso merely requires that the appeal shall not be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due. A question thus arises what is the meaning of the word “entertained” in this context? Does it mean that no appeal shall be received or filed or does it mean that no appeal shall be admitted or heard and disposed of unless satisfactory proof is available? The dictionary meaning of the word “entertain” was brought to our notice by the parties, and both sides agreed that it means either “to deal with or admit to consideration”. We are also of the same opinion. The question, therefore, is at what stage can the appeal be said to be entertained for the purpose of the application of the proviso? Is it “entertained” when it is filed or is it “entertained” when it is admitted and the date is fixed for hearing or is it finally “entertained” when it is heard and disposed of? Numerous cases exist in the law reports in which the word “entertained” or similar cognate expressions have been interpreted by the courts. Some of them from the Allahabad High Court itself have been brought to our notice and we shall deal with them in due course. For the present we must say that if the legislature intended that the word “file” or “receive” was to be used, there was no difficulty in using those words. In some of the statutes which were brought to our notice such expressions have in fact been used. For example, under Order 41 Rule 1 of the Code of Civil Procedure it is stated that a memorandum shall not be filed or presented unless it is accompanied etc.; in Section 17 of the Small Causes Courts Act, the expression is “at the time of presenting 1(1968) 1 SCR 505 Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 13 the application”. In section 6 of the Court Fees Act, the words are “file” or “shall be received”. It would appear from this that the legislature was not at a loss for words if it had wanted to express itself in such forceful manner as is now suggested by counsel for the State. It has used the word “entertain” and it must be accepted that it has used it advisedly. This word has come in for examination in some of the cases of the Allahabad High Court and we shall now refer to them.” 14. In view of the above, the filing and entertaining of a petition are two different aspects. Hence, there is no bar in filing a petition under Section 34 of the Act, 1996 and the same can be filed without pre deposit of 75% of the awarded amount. However, the said petition will not be “entertained” without the deposit of 75 % of the awarded amount. 15. The mandate of Section 19 was reinforced by the Supreme Court in Tirupati Steels v. Shubh Industrial Component2 which held Section 19 of the MSMED Act to be mandatory. The Supreme Court further relied on its previous judgment in Gujarat State Disaster Management Authority v. Aska Equipments3 to allow the pre-deposit to be made in instalments in particular cases of hardship. 16. The above leads to the unerring conclusion that a buyer must first deposit 75% of the awarded amount, as a one-time deposit or in instalments, before inviting a Court to entertain an application for setting aside of the award made by the Facilitation Council. 17. The correct sequence under the Act would therefore be:— Award passed by the Facilitation Council under section 18(3) of the MSMED Act. 2(2022) 7 SCC 429 3(2022) 1 SCC 61 Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 14 ↓ Application filed by the buyer for setting aside of the award under section 19 of the MSMED Act. ↓ The buyer/applicant puts in 75% of the awarded amount under section 19 of the MSMED Act. ↓ The application under section 34 of the 1996 Act becomes entertainable by the Court. 18. As a matter of law, an order admitting a proceeding is not a judgment on jurisdiction, nor does it operate as res judicata on questions of maintainability unless such questions have been consciously examined and decided. Admission orders are ordinarily passed at a preliminary stage, often without a detailed adjudication on statutory bars or jurisdictional preconditions. Consequently, such orders do not confer any vested or indefeasible right upon a litigant to have the matter adjudicated irrespective of statutory compliance. 19. Courts are recognised to possess inherent powers to recall or correct orders that are shown to have been passed in ignorance of a mandatory statutory requirement or a jurisdictional bar. This power flows not from any express provision alone, but from the duty of the court to ensure that it does not exercise jurisdiction where none exists, or continue proceedings that are legally incompetent. An error touching jurisdiction is treated as fundamentally different from an error on merits; it goes to the authority of the court to entertain the proceeding at all. 20. In this context, the requirement under Section 19 of the MSMED Act has been consistently characterised as a condition precedent to the maintainability of a challenge to an award. Non-compliance does not Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 15 constitute a mere procedural irregularity capable of waiver; it strikes at the root of the court’s jurisdiction to entertain the challenge. An admission order passed without noticing such a statutory mandate is therefore vulnerable to correction. 21. The MSME Act is a beneficial legislation enacted to protect small enterprises from payment delays by larger buyers. One of its central features is the imposition of a stringent interest regime to discourage defaults. The legislative intent behind Section 19 is to ensure that challenges to awards are not taken lightly and that MSMEs are not deprived of their dues during prolonged litigation. By mandating a pre- deposit of 75% of the total liability, the law ensures that MSMEs are not subjected to financial strain while awaiting enforcement of arbitral awards. 22. The structure of Section 19 also reflects a broader legislative choice to treat MSME-related disputes as a distinct category. This differentiation is grounded in the recognition that conventional dispute resolution processes often fail to account for disparities in bargaining power and financial resilience. By imposing a higher threshold for challenges, the law recalibrates the procedural balance between suppliers and buyers. The right to challenge an award under the Act is statutory in nature, and the legislature is entitled to attach reasonable conditions to its exercise. The pre-deposit requirement is one such condition, designed to ensure that access to appellate remedies does not undermine the very protections the statute seeks to provide. The measure is therefore best Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 16 understood not as a restriction, but as a recalibration of procedural fairness in light of economic realities. V. CONCLUSION: 23. In the present case, the Ld. Court at the first instance failed to correctly interpret the legal provisions and misapplied them, which led to a decision that was not based on a true understanding of the relevant legal framework. As a result, the admission of the application under Section 34 of the A&C Act was unsustainable. In such circumstances, the impugned order has ensured that fairness is restored to the proceedings. 24. This Court therefore declines to interfere with the impugned order directing deposit of 75% of the awarded amount. However, in the interest of justice, the Petitioner is granted 3 months from the date of this order to deposit the requisite amount in the manner specified by the Ld. Court below. After deposit of the same, the appeal under Section 34 of the A&C Act preferred by the Petitioner shall be heard. All contentions on merits are left open. Nothing contained in the present order shall influence the adjudication of the Section 34 application. The Parties shall cooperate so as to enable early resolution of their dispute. 25. Accordingly, this Writ Petition is disposed of. No order as to costs. 26. Interim order, if any, passed earlier stands vacated. (Dr. Sanjeeb K Panigrahi) Judge Orissa High Court, Cuttack, Dated the 9th Jan., 2026 CUTTACK