SC Judgments Referred To Larger Bench Remain Binding Unless Reference Court Directs Otherwise: J&K High Court

The Jammu and Kashmir High Court held that reference of the judgment to larger bench does not unsettle the declared law and once any judgment of the supreme court holds the field, the High Court cannot be prevented from relying on the ratio of that judgment unless the reference court has directed otherwise.

The petitioner had argued that the supreme court in India Glycols Ltd, which prevented the writ courts from hearing challenges against award passed under MSMED Act was referred to larger bench and thus was not applicable in the instant case

A bench of Justice Moksha Khajuria Kazmi observed that Supreme Court's decision in India Glycols Ltd. vs. MSEFC, clearly held that writ jurisdiction cannot be used to bypass the statutory requirement of pre-deposit under Section 19 MSMED Act.

The section 19 of the Act required the party challenging the award to pre-deposit 75 percent of the amount at the time of challenging the award and Supreme Court had held that this liability cannot be avoided by filing the petition under article 227 of the constitution.

The High Court said that the law declared by a larger bench is binding, and the mere reference to a larger bench in another case (Tamil Nadu Cements Ltd.) does not unsettle existing law.

The court said it is clearly stated in the judgment above that that till the reference made by Supreme Court in case titled M/s Tamil Nadu Cements Corporation Limited vs Micro and Small Enterprises Facilitation Council and Another is considered and decided by the larger bench, Judgment passed in M/s India Glycols Limited shall be binding on this court and would hold law.

The court said that that the arguments by the petitioner was without any substance and same cannot be accepted by this court.

The court therefore dismissed the petition as not maintainable but granted was granted to the petitioner to take appropriate legal recourse under the MSMED Act and Arbitration and Conciliation Act.

BACKGROUND:

The Jal Shakti Department (Petitioner) awarded supply contracts for ISI-marked GMS tubes to M/S JTL Infra Ltd. (Respondent No. 1) through a tender issued in 2018. While the firm supplied materials and partial payments were made, a dispute arose over delayed payments.

The supplier claimed Rs. 19.38 crore, including interest, before the Micro & Small Enterprises Facilitation Council (MSEFC), Punjab, under the MSMED Act, 2006.

The Council passed an award on 01.06.2023 granting Rs. 2.75 crore as principal, Rs. 8.77 crore as interest under Section 16 of the MSMED Act, with future interest until realization.

The UT of J&K filed a writ petition under Article 226/227 of the Constitution challenging the award.

APPEARANCE

Abdul Rashid Malik, Sr. AAG & Mohammad Younis, Assisting Counsel , Advocate For Petitioner

Jahangir Iqbal Ganai, Sr. Advocate with Mehnaz Rather, Advocate For Respondents

Case-Title: Union Territory of J&K & Ors vs M/S JTL Infra Limited, 2025

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