Statutory composition of MSME Councils determines jurisdiction, making awards by overconstituted Councils void and open to writ challenge.

An MSME Facilitation Council must comprise at least three and no more than five members under the MSMED Act. A Council constituted with eight members acts contrary to the statutory limit; its award is therefore without inherent jurisdiction and void from inception. Although awards under the arbitration mechanism ordinarily may be challenged through a setting-aside application under the Arbitration and Conciliation Act, that alternative remedy does not bar writ jurisdiction where the challenge concerns the Council's statutory competence and invalid composition. The invalid award and consequential review order require fresh adjudication by a lawfully constituted MSME Council.

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Issues: (i) Whether an MSME Council award made by a Council comprising eight members, contrary to the statutory maximum of five members, is void ab initio; (ii) Whether the writ petitions challenging such an award are maintainable despite the remedy of setting aside under the Arbitration and Conciliation Act, 1996.

Issue (i): Whether an MSME Council award made by a Council comprising eight members, contrary to the statutory maximum of five members, is void ab initio.

Analysis: Section 21 of the Micro, Small and Medium Enterprises Development Act, 2006 mandates a Council of not fewer than three and not more than five members. Rule 4 of the Jharkhand Micro, Small & Medium Enterprises Facilitation Council Rules, 2007, which permitted a larger composition, was contrary to the parent statute and had already been treated as invalid. The Council that issued the award comprised eight members, rendering its constitution contrary to the statutory mandate. A decision by a forum lacking inherent jurisdiction is a nullity and may be challenged at any stage.

Conclusion: The award issued by the eight-member Council was without jurisdiction and void ab initio, in favour of the petitioners.

Issue (ii): Whether the writ petitions challenging such an award are maintainable despite the remedy of setting aside under the Arbitration and Conciliation Act, 1996.

Analysis: Although an award under Section 18(3) ordinarily attracts the remedy under Section 34 of the Arbitration and Conciliation Act, 1996, the alternative-remedy rule is self-imposed and does not bar constitutional jurisdiction where the impugned action is wholly without jurisdiction. The challenge concerned the statutory competence and composition of the adjudicating Council, rather than a mixed factual and legal objection capable of ordinary arbitral review. The Section 34 remedy was therefore not an effective bar to writ jurisdiction.

Conclusion: The writ petitions were maintainable under Article 226 of the Constitution of India, in favour of the petitioners.

Final Conclusion: The invalid award and consequential review order cannot stand; the dispute requires fresh adjudication by a lawfully constituted MSME Council.

Ratio Decidendi: An award of a Micro and Small Enterprises Facilitation Council constituted beyond the member-limit mandated by Section 21 of the Micro, Small and Medium Enterprises Development Act, 2006 is a jurisdictional nullity, for which the alternative remedy under Section 34 of the Arbitration and Conciliation Act, 1996 does not preclude writ jurisdiction.

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