" Page 1 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.31365 of 2025 (In the matters of a petition under Articles 226 and 227 of the Constitution of India, 1950). M/s. Bridge and Roof Company (India) Ltd., Kolkata …. Petitioner(s) -versus- State of Orissa & Ors. …. Opposite Party(s) Advocates appeared in the case through Hybrid Mode: For Petitioner (s) : Mr. H. Gupta, Adv. -versus- For Opp. Party(s) : Mr. Rajdeep Pradhan, ASC Mr. Gouri Mohan Rath, Adv. On behalf of Mr. Sidharth Shankar Padhy, Adv. CORAM: DR. JUSTICE SANJEEB K PANIGRAHI DATES OF HEARING:- 16.12.2025 DATE OF JUDGMENT:- 09.01.2026 Dr. Sanjeeb K Panigrahi, J. 1. The present Writ Petition has been preferred seeking setting aside of order dated 30.8.2025, passed by the Directorate of Industries, Cuttack in MSEFC Case No. 68 of 2021. I. FACTUAL MATRIX OF THE CASE: 2. The brief facts of the case are as follows: (i) The Petitioner has filed the present Petition to correct a jurisdictional error committed by the MSEF Council, vide its order Printed from counselvise.com 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 dated 30.8.2025 and has challenged the impugned order on the ground of lack of inherent jurisdiction by the Council. (ii) The petitioner, M/s Bridge and Roof Company (India) Limited, is a Government of India undertaking incorporated under the Indian Companies Act, 1913, having its registered office at Kolkata. The petitioner was engaged as the principal contractor for execution of works relating to a power plant project of M/s Bhushan Energy Limited at Dhenkanal, Odisha. In furtherance of the said project, the petitioner issued a work order dated 11.6.2010 in favour of M/s Adarsh Corporation Private Limited, the predecessor-in-interest of Opposite Party No. 3, for execution of structural steel works at the project site. (iii) The work order dated 11.6.2010 pertained to “Fabrication, Erection and Painting of Structural Steel Work” in connection with the power plant area. The contract is allegedly composite in nature, involving labour, material, design coordination, erection, and site execution. The contract value at the inception stood at approximately Rs. 14.14 crores, subject to revisions. The terms of the work order incorporated the Notice Inviting Tender and Record Notes of Discussion as integral parts of the contractual framework. (iv) Subsequently, on 19.9.2012, a formal amendment to the work order was issued, recording the change in the name of the contractor from M/s Adarsh Corporation Private Limited to M/s Adarsh Noble Corporation Limited. This amendment did not alter the Printed from counselvise.com 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 scope of work but merely acknowledged the corporate name change at the request of the contractor. (v) A second amendment followed on 29.6.2013, whereby the rates were revised for quantities executed or to be executed after 30.9.2012. Notably, the scope of work remained unchanged, and the contractual obligations continued to be governed by the original terms. Over time, the cumulative value of the contract increased to approximately Rs. 24.50 crores. (vi) On 28.10.2014, the petitioner addressed correspondence to Opposite Party No. 3 requesting deputation of an authorised representative to discuss the progress and execution of the balance work at site. Records of discussions held thereafter reflected assurances by Opposite Party No. 3 to continue execution and complete pending works within stipulated timelines. (vii) A third and final amendment to the work order was issued on 25.6.2015, whereby Opposite Party No. 3 undertook to complete the entire scope of work on or before 31.5.2016. This amendment did not enhance rates or expand scope but sought to bring finality to execution timelines. (viii) In the interregnum, Opposite Party No. 3 applied for Udyog Aadhaar registration on 18.12.2015 under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006. The registration was subsequent to the issuance of the work order and its amendments but prior to certain later events forming part of the dispute. Printed from counselvise.com 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 (ix) On 10.5.2018, the petitioner issued a Mechanical Completion Certificate in favour of Opposite Party No. 3. The petitioner asserts that this certificate was issued solely for the limited purpose of enabling surrender of the labour licence and did not signify full and final completion of contractual obligations. (x) According to the petitioner, despite payments being released against running bills, Opposite Party No. 3 failed to complete the contracted work and eventually abandoned the site, leaving portions of the work incomplete. The petitioner claims to have incurred substantial losses on account of non-completion, rectification, and statutory non-compliances attributable to Opposite Party No. 3. (xi) On 19.8.2021, the petitioner received a notice indicating that Opposite Party No. 3 had approached the Micro & Small Enterprises Facilitation Council (MSEFC), Cuttack under Section 18 of the MSMED Act, 2006, initiating conciliation proceedings in MSEFC Case No. 68 of 2021. (xii) Subsequent thereto, on 26.9.2021, the petitioner had invoked the arbitration clause contained in the General Conditions of Contract and proposed appointment of an arbitrator, suggesting three names in accordance with Clause 41 of the contract. The arbitration clause stipulated Kolkata as the exclusive seat of arbitration. (xiii) Opposite Party No. 3, by its reply dated 8.10.2021, declined to participate in contractual arbitration and asserted that it had already invoked the jurisdiction of the MSEFC. Printed from counselvise.com 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 (xiv) The petitioner thereafter filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the Calcutta High Court, being A.P. No. 538 of 2021, seeking appointment of an arbitrator in terms of the contract. (xv) Meanwhile, the MSEFC conducted conciliation proceedings, which ultimately failed. On 20.1.2022, the Council recorded failure of conciliation and proceeded to initiate arbitration under Section 18(3) of the MSMED Act. (xvi) Aggrieved by the assumption of jurisdiction by the Council, the petitioner approached the Orissa High Court by filing W.P.(C) No. 5935 of 2022. By order dated 22.4.2022, the learned Single Judge set aside the proceedings before the Council. However, in writ appeal bearing W.A. No. 1124 of 2022, the Division Bench, by judgment dated 18.06.2024, set aside the Single Judge’s order and remanded the matter to the MSEFC for fresh consideration. (xvii) Pursuant to remand, the MSEFC resumed proceedings and issued fresh notices. In the meantime, the Government of Odisha notified the Odisha Procurement Preference Policy for Micro & Small Manufacturing Enterprises on 24.1.2024, and subsequently, on 5.3.2025, withdrew exemptions earlier extended to MSMEs in works contracts. (xviii) On 12.8.2025, the MSEFC issued notice fixing the matter for further hearing. In response, the petitioner filed an application dated 26.8.2025 under Section 16 of the Arbitration and Conciliation Act, 1996, specifically challenging the jurisdiction of Printed from counselvise.com 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 the Council on the ground that the underlying contract was a works contract and therefore outside the ambit of the MSMED Act. (xix) By order dated 30.8.2025, the MSEFC rejected the petitioner’s Section 16 application without addressing the substance of the jurisdictional objections raised therein and directed the petitioner to file its statement of defence in the arbitration proceedings. (xx) It is in these circumstances that the petitioner has approached this Court by filing the present writ petition, seeking quashing of the order dated 30.8.2025 passedin MSEFC Case No. 68 of 2021 and the consequential proceedings pending before the Micro & Small Enterprises Facilitation Council, Cuttack. (xxi) Now that the facts leading up to the instant Petition has been laid down, this Court shall endeavour to summarise the contentions of the Parties and the broad grounds that have been raised. II. SUBMISSIONS ON BEHALF OF THE PETITIONER: 3. Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: (i) The petitioner assails the proceedings initiated and continued by the Micro & Small Enterprises Facilitation Council, Cuttack, on the ground that the Council has acted wholly without inherent jurisdiction. It is contended that the impugned proceedings arise out of a pure works contract, which does not fall within the scope of the Micro, Small and Medium Enterprises Development Act, Printed from counselvise.com 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 2006, and therefore the assumption of jurisdiction under Section 18 of the Act is fundamentally flawed. (ii) It is submitted that the work order dated 11.6.2010, together with its subsequent amendments, constitutes a composite and indivisible works contract involving fabrication, erection, painting, deployment of labour, use of heavy machinery, and on-site execution. The petitioner argues that such a contract cannot be artificially bifurcated into components of “supply of goods” or “rendering of services” so as to attract the provisions of the MSMED Act. (iii) According to the petitioner, the MSMED Act was enacted primarily to address the issue of delayed payments for supply of goods and rendering of services by micro and small enterprises. It is contended that Parliament did not intend the Act to cover large- scale infrastructure or construction contracts executed on a lump- sum or item-rate basis, which are governed by distinct contractual and statutory regimes. (iv) The petitioner further submits that the Facilitation Council failed to examine the nature of the contract as a threshold jurisdictional issue. Instead of determining whether the dispute fell within the statutory ambit of the Act, the Council proceeded mechanically to assume jurisdiction, thereby committing a jurisdictional error apparent on the face of the record. (v) It is also contended that the Opposite Party’s registration under the MSMED Act was obtained on 18.12.2015, long after the Printed from counselvise.com 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 issuance of the original work order dated 11.06.2010 and after substantial execution of the contract. The petitioner argues that rights and obligations under a contract crystallise on the date of its execution, and a subsequent registration cannot retrospectively confer jurisdiction upon the Facilitation Council. (vi) The petitioner submits that permitting such retrospective invocation would result in serious commercial uncertainty, enabling contractors to unilaterally alter the dispute resolution framework midstream, contrary to settled principles of contract law and party autonomy. Emphasis is placed on the existence of a contractual arbitration clause, which expressly provides for resolution of disputes through arbitration with Kolkata as the seat. The petitioner contends that the Facilitation Council could not have overridden the agreed dispute resolution mechanism, particularly when the dispute does not fall within the scope of the MSMED Act. (vii) The petitioner challenges the rejection of its application under Section 16 of the Arbitration and Conciliation Act, 1996, filed before the Facilitation Council on 26.8.2025. It is contended that the Council failed to discharge its statutory obligation to decide the question of jurisdiction as a preliminary issue and instead rejected the application without meaningful reasoning. According to the petitioner, the order dated 30.8.2025, rejecting the Section 16 application, compels the petitioner to participate in proceedings which are ex facie without jurisdiction. Such Printed from counselvise.com 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 compulsion, it is argued, results in irreparable prejudice and defeats the principle that jurisdictional objections must be decided at the earliest possible stage. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES: 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 and submit that the present challenge is not maintainable in law, as the petitioner has an effective and efficacious statutory remedy available under the Arbitration and Conciliation Act, 1996. It is contended that once the Facilitation Council has proceeded to arbitration under Section 18(3) of the MSMED Act, the arbitral process is governed by the 1996 Act, and all objections—whether jurisdictional or otherwise— ought to be addressed within that statutory framework. (ii) The respondents contend that the petitioner is impermissibly invoking the writ jurisdiction to stall or derail the arbitral proceedings at an interlocutory stage. According to them, the rejection of an application under Section 16 of the Arbitration and Conciliation Act is not a final determination of rights and does not warrant interference under Article 226 of the Constitution. (iii) It is further submitted that the MSMED Act is a beneficial legislation enacted to protect micro and small enterprises from delayed payments and unequal bargaining power. The provisions of the Act, particularly Section 18, are required to be interpreted Printed from counselvise.com 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 purposively so as to advance the legislative intent rather than defeat it through technical objections. (iv) On the issue of jurisdiction, the respondents dispute the petitioner’s assertion that the contract in question is wholly outside the ambit of the MSMED Act. They submit that the dispute arises out of execution of contractual obligations by Opposite Party No. 3, who is a registered micro or small enterprise, and that claims relating to non-payment for work executed fall within the scope of disputes contemplated under the Act. The respondents contend that the mere fact that a contract involves execution of work at site or includes elements of labour and material does not automatically exclude it from the purview of the MSMED Act. According to them, the Act does not carve out a blanket exclusion for contracts described as “works contracts,” and each case must be examined on its own facts. (v) It is further argued that the Facilitation Council, having been vested with statutory authority under Section 18, is competent to determine its own jurisdiction, including objections raised under Section 16 of the Arbitration and Conciliation Act. The respondents submit that the Council has considered the petitioner’s application and has taken a view that the proceedings are maintainable, which ought not to be interfered with at this stage. (vi) The respondents also submit that the petitioner participated in the proceedings before the Facilitation Council and raised its objections belatedly. According to them, the petitioner cannot Printed from counselvise.com 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 simultaneously participate in the proceedings and, upon facing an adverse order, seek to invoke the writ jurisdiction to avoid adjudication on merits. (vii) With respect to the timing of MSME registration, the respondents contend that the relevant consideration is not merely the date of execution of the original contract but whether supplies were made or services were rendered after the enterprise obtained registration. They submit that Opposite Party No. 3 continued to execute work and raise claims during the period when it was a registered MSME, thereby attracting the protection of the Act. (viii) The respondents further submit that the existence of a contractual arbitration clause does not oust the jurisdiction of the Facilitation Council once the conditions under Section 18 of the MSMED Act are satisfied. It is contended that the MSMED Act contains an overriding mechanism for dispute resolution, and parties cannot contract out of a statutory remedy provided under a special enactment. (ix) The respondents also emphasise that the order dated 30.08.2025, rejecting the petitioner’s application under Section 16, does not finally conclude the arbitral proceedings. They submit that the petitioner will have full opportunity to raise all permissible grounds at the stage of challenge to the final award, and therefore no irreparable prejudice is caused by continuation of the proceedings. Printed from counselvise.com 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 IV. ISSUE FOR CONSIDERATION 5. Having heard the parties and perused the materials available on record, this court here has identified the following issues to be determined: A. Whether the present contract is a works contract and if so, could the MSEFC have entertained a claim arising out of a works contract? B. Whether a writ petition under Article 226 of the Constitution of India is maintainable against an order passed by the Micro and Small Enterprises Facilitation Council under Section 18 of the MSMED Act, 2006, when such order is alleged to have been made without inherent jurisdiction? V. ISSUE A: WHETHER THE PRESENT CONTRACT IS A WORKS CONTRACT AND IF SO, COULD THE MSEFC HAVE ENTERTAINED A CLAIM ARISING OUT OF A WORKS CONTRACT? 6. Arbitration is often projected as a cost-efficient mechanism for resolving commercial disputes, but in practice, it can be prohibitively expensive for smaller entities. Arbitrator fees, advocate fees, and related administrative expenses make the process burdensome. Micro, small, and medium enterprises (MSMEs), which typically function with constrained budgets, find themselves disadvantaged against large corporations with vast resources. To mitigate this inequity, the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”) introduced statutory arbitration under Section 18. This provision empowers MSMEs to approach state Facilitation Councils, which in turn initiate arbitration or conciliation proceedings. A distinctive feature of this framework is the lower fee structure, prescribed by state councils, Printed from counselvise.com 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 ensuring affordability for MSMEs. However, an important question arises: can all disputes involving MSMEs be submitted to this special arbitration regime, particularly disputes arising from “works contracts”? The answer, as previous judicial pronouncements reveal, is far from straightforward. 7. A central point of debate is the precise legal nature of “works contracts.” The term is frequently misinterpreted as being synonymous with construction contracts. However, statutory definitions reveal a broader scope. Under Section 2(119) of the Central Goods and Services Tax Act, 2017, a works contract encompasses agreements for building, fabrication, installation, repair, improvement, or commissioning of movable and immovable property. The definition extends well beyond traditional construction arrangements. Courts have elaborated on this scope in several decisions. In K. Raheja Development Corporation v. State of Karnataka1, the Supreme Court examined the Karnataka Sales Tax Act, which contained a parallel definition. The Court clarified that the ambit of works contracts is “very wide” and cannot be restricted to conventional understanding. This interpretation was later reaffirmed in Larsen & Toubro Ltd. v. State of Karnataka2, cementing the composite nature of such contracts. 8. The Supreme Court, in Kone Elevator India Pvt. Ltd. v. State of Tamil Nadu3, delivered a landmark judgment on the legal character of works contracts. A Constitution Bench rejected the earlier “dominant nature 1(2005) 5 SCC 162 2(2014) 1 SCC 708 3(2014) 7 SCC 1 Printed from counselvise.com 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 test,” which had previously been applied to classify contracts based on their predominant purpose. Instead, the Court held that a works contract, once it satisfies statutory characteristics, retains its dual nature irrespective of additional obligations incorporated. Importantly, such contracts are indivisible in reality but deemed divisible by legal fiction into components of goods and services. This reasoning underscores that works contracts are sui generis and cannot be conflated with ordinary contracts for sale or service. The Court also emphasized examining the “substance over form” of agreements, highlighting that the true object of the contract is determinative. Thus, works contracts occupy a unique position, distinct from ordinary procurement arrangements. 9. In Kone Elevators (supra), the Supreme Court observed that the main object of the transaction, the prevailing circumstances, and the customary practices of trade provide critical guidance. It stressed that works contracts inherently combine both goods and services, and even where goods predominate, the contract does not lose its character as a works contract. This dual nature complicates their treatment under statutes designed with binary classifications of buyers and sellers, such as the MSMED Act. Unlike pure sale transactions, works contracts defy simple categorization, creating friction with the structure of statutory arbitration under the MSMED Act. Consequently, while MSMEs benefit from preferential treatment in procurement policies, whether these benefits extend to disputes arising out of works contracts remains contentious. Printed from counselvise.com 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 10. The MSMED Act aims to facilitate growth of small enterprises through preferential procurement. Several government policies grant MSMEs priority in public tenders. However, a practical dilemma arises when such preferences result in award of works contracts. Can an MSME, after receiving such a contract, invoke the MSMED Act’s dispute resolution framework? The Delhi High Court addressed this in Shree Gee v. Union of India4. In that case, Indian Oil Corporation had granted preference to an MSME bidder, but the Court held that the MSME Procurement Policy, 2012, did not apply to works contracts. The Court quashed the award of the contract, clarifying that MSME preferences cannot override the statutory nature of works contracts. This judgment revealed a judicial hesitation to extend the MSMED Act’s arbitration benefits to disputes involving composite contractual arrangements, setting the stage for further conflicting interpretations. 11. A similar stance was taken by the Allahabad High Court in Rahul Singh v. Union of India5. The Court categorically ruled that works contracts fall outside the ambit of the MSMED Act. The case concerned disputes where MSME suppliers attempted to claim benefits under Section 18 of the Act by categorizing works contracts as simple supply transactions. The Court rejected this approach, holding that the MSMED Act is designed to govern buyer-seller relationships of goods and services, not composite works contracts involving both. The Allahabad High Court’s decision reinforced the principle that statutory arbitration under the 42015 SCC OnLine Del 12822 52017 SCC OnLine All 1714 Printed from counselvise.com 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 MSMED Act is restricted and cannot extend to every form of commercial arrangement involving MSMEs. This judgment aligned with the earlier Delhi High Court ruling, thereby strengthening the judicial view that works contracts are misfits under the MSMED Act’s dispute resolution scheme. 12. The most influential judgment on this question emerged from the Bombay High Court in P.L. Adke v. Wardha Municipal Corporation6. The dispute concerned an MSME contractor who alleged non-payment for work performed under a works contract and sought to invoke arbitration through the MSME Facilitation Council. The High Court, however, dismissed the appeal, relying on Shree Gee (supra) and Rahul Singh (supra). It held that works contracts, being sui generis, cannot be equated to simple supply transactions and thus fall outside the purview of the MSMED Act. The Court relied on Larsen & Toubro (supra) and Kone Elevators (supra) to affirm the legal nature of such contracts. 13. Following P.L. Adke(supra), several High Courts have consistently refused to extend the MSMED Act’s arbitration provisions to works contracts. The lack of a Supreme Court stay has given Adke (supra) authoritative value across jurisdictions. As a result, MSMEs engaged in composite contracts increasingly find themselves excluded from invoking Section 18 arbitration. This trend has narrowed the scope of disputes that Facilitation Councils may adjudicate, relegating MSMEs in works contracts to regular arbitration under the Arbitration and Conciliation Act, 1996. Although the final pronouncement of the Hon’ble 62021 SCC OnLine Bom 5531 Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 17 Supreme Court in the Adke appeal is awaited, judicial consensus currently treats works contracts as incompatible with the MSMED Act. This prevailing interpretation underscores the judiciary’s cautious approach in extending statutory benefits to categories of contracts not explicitly contemplated under the MSMED Act, even if such exclusion disadvantages small enterprises. 14. The Bombay High Court revisited this issue in National Textile Corporation Ltd. v. Elixir Engineering Pvt. Ltd.7. The dispute concerned contracts for design, fabrication, and commissioning of industrial piping systems. The MSME contractor approached the Facilitation Council, which passed an award partly in its favour. On challenge under Section 34 of the Arbitration and Conciliation Act, the Court held that the Facilitation Council lacked jurisdiction since the underlying contracts were works contracts. Citing P.L. Adke(supra), the Court reasoned that arbitration initiated under the MSMED Act in such cases is a “stillborn exercise.” The award was declared void for want of jurisdiction. The Court emphasized that jurisdictional defects strike at the root of arbitral proceedings and cannot be cured, even considering the narrow grounds available for judicial interference post-2015 amendments. Thus, the award was set aside as patently illegal. 15. In National Textile Corporation (supra), the Bombay High Court elaborated that the Facilitation Council’s jurisdiction is statutory and limited. Works contracts, being distinct in nature, do not fall within this statutory jurisdiction. The Court distinguished between errors within 72023 SCC OnLine Bom 653 Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 18 jurisdiction and the absence of jurisdiction, noting that the latter renders proceedings void ab initio. This reasoning drew upon the Supreme Court’s decision in Ssangyong Engineering & Construction Co. Ltd. v. NHAI8. The Court held that lack of jurisdiction constitutes a patent illegality, warranting judicial intervention. This reinforces the judicial consensus that statutory arbitration under the MSMED Act is confined to specific contractual relationships and cannot be extended to works contracts by interpretative expansion. 16. The Delhi High Court in Tata Power Company Ltd. v. Genesis Engineering Company9, was faced with competing claims of arbitration. Tata Power issued a notice invoking arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, while the MSME contractor approached the Facilitation Council under the MSMED Act. The Court examined the underlying work orders, which involved composite works, and applied the precedents set in P.L. Adke (supra) and National Textile Corporation (supra). It concluded that disputes arising out of works contracts cannot be adjudicated by MSME Facilitation Councils. Consequently, the Court upheld the maintainability of a Section 11 petition and appointed a sole arbitrator under the Arbitration Act. This judgment affirmed that works contracts fall squarely outside the MSMED Act’s purview, directing MSMEs to pursue conventional arbitration rather than statutory remedies. 8(2019) 15 SCC 131 92023 SCC OnLine Del 2366 Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 19 17. In Tata Power (supra), the Delhi High Court observed that the legal position on works contracts has been consistently settled by multiple High Courts. The Court stressed that works contracts, regardless of their specific subject matter, are indivisible agreements involving both goods and services. As such, they do not create the seller-buyer relationship contemplated under the MSMED Act. The Court rejected the MSME’s argument that participation in Facilitation Council proceedings by the respondent constituted acquiescence. Jurisdictional limits, the Court emphasized, cannot be conferred by consent or waiver. Ultimately, the Court allowed the Section 11 petition and referred the dispute to arbitration under the general framework. This decision further entrenched the principle that while MSMEs enjoy statutory support under the MSMED Act, those benefits do not extend to works contracts, thereby creating a caveat for small enterprises entering such arrangements. 18. The Micro, Small and Medium Enterprises Development Act, 2006 was introduced with the object of protecting smaller enterprises from delayed payments and to provide a quick forum for resolution through Facilitation Councils. These councils function as quasi-judicial authorities with powers to conciliate or arbitrate disputes between MSMEs and their buyers. The legislative intent was to empower MSMEs by creating a cheaper and faster forum than conventional arbitration. However, when contracts go beyond mere supply of goods or rendering of services and instead involve integrated obligations such as design, construction, installation, and operation, a serious jurisdictional issue Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 20 arises. Such composite agreements, legally categorized as works contracts, do not neatly fit into the scheme of the MSMED Act. Courts have therefore consistently grappled with the question of whether disputes arising out of works contracts can be submitted to the MSEFCs for adjudication or arbitration. 19. A works contract, under Section 2(119) of the CGST Act, 2017, has a specific statutory definition. It covers agreements for building, fabrication, completion, erection, installation, modification, repair, or commissioning of immovable property wherein transfer of property in goods is involved. 20. The jurisprudence emerging from the rulings discussed above demonstrates a consistent thread: works contracts are not amenable to the MSMED Act framework. The reasoning rests on statutory interpretation, commercial realities, and legislative intent. Section 18 presupposes a dispute arising from supply of goods or rendering of services, not from indivisible composite agreements involving engineering, construction, and operation. Facilitation Councils were designed as quick forums for delayed payments, not for supervising intricate, continuous obligations. Therefore, judicial pronouncements stress that applying the MSMED Act to works contracts would stretch the statute beyond its legitimate scope. This principle ensures a balance: MSMEs are protected in straightforward supply transactions but must seek remedies under arbitration clauses or ordinary civil processes when engaging in works contracts. Courts have deliberately drawn this boundary to preserve legislative coherence. Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 21 21. The overall judicial approach reflects a careful balance between protecting MSMEs and respecting the complex nature of works contracts. By excluding such contracts from the MSMED Act, courts prevent misuse of an expedited mechanism meant for simple supply disputes. At the same time, by recognizing the primacy of arbitration clauses, courts ensure that parties to works contracts are not left remediless. The common reasoning is that works contracts involve technical supervision, continuous obligations, and indivisible performance, which cannot be adjudicated summarily by MSEFCs. This reasoning was first strongly articulated in Kone Elevator (supra) and has been consistently applied by High Courts. The result is a stable jurisprudential framework that separates simple MSME supply disputes from complex contracts, thereby safeguarding both legislative intent and commercial certainty. Accordingly, this Court also agrees with this view that works contracts are outside the purview of MSEFC. 22. The scope of work mentioned in the Special Conditions of Contract entered into by the present Parties is reproduced hereinbelow: “SP. 03 Scope of Work - Loading, unloading, transportation from owner’s/clients’ stockyard, shifting the materials(Raw steel, Bought out items, Hand Rail items, SS sheets/plates etc.) at site, stacking of materials, fabrication, erection, alignment, welding, non-destructive testing (NDT) e.g. radiography, UT, DP etc., making scaffolding, painting of the items as mentioned in the SOR, fixing of MS gratings, SS Liner, Hand Rail etc. - Making of workshop/shed, jigs and fixtures/ assembly beds, etc., if necessary. Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 22 - Minor modification or rectification of the structure components if necessary for completion of the job in all respect. - Installation of fasteners. - Loading, unloading, transportation, fabrication, erection, alignment, welding of MS chequered plates. - Chipping and levelling of foundation. - The entire works entrusted to the contractor shall be executed by him strictly in accordance with drawings and specifications, procedures etc. of the Owner as stipulated in the relevant contract between the Company and the Owner, also as per the relevant I.S. Specifications, Standard engineering Code and Practice etc. as applicable to this case. However, in the event of any contradiction between the specifications approved by the Owner and I.S. Specifications, the former shall prevail and govern. - The jig, fixture, assembly bed etc. if required for completion of the job to be made by the contractor free cost. Necessary raw material for the same to be provided by B&R. However, contractor has to arrange raw steel, G.C.I. sheet etc. for workshop/shed (if required).” 23. Applying the tests as indicated in the judgments of the Supreme Court, this Court finds in the present case that the contracts in question were indeed works contracts. The details of the scope of works quoted hereinabove demonstrates beyond a shadow of doubt that the scope of the contract involved both goods and services and therefore, the contracts in question is a works contract. It is thus held that the provisions of the MSMED Act could not have been invoked by the Opposite Party. This resultantly shows that the initiation of the statutory arbitration under the provisions of the MSMED Act on the part of Opposite Party in the context of contracts in question before the Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 23 Facilitation Council, was a stillborn exercise and that the Facilitation Council ought not to have exercised its jurisdiction to conduct the arbitration proceedings. This renders the impugned awards without jurisdiction. VI. ISSUE B: WHETHER A WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA IS MAINTAINABLE AGAINST AN ORDER PASSED BY THE MICRO AND SMALL ENTERPRISES FACILITATION COUNCIL UNDER SECTION 18 OF THE MSMED ACT, 2006, WHEN SUCH ORDER IS ALLEGED TO HAVE BEEN MADE WITHOUT INHERENT JURISDICTION? 24. In Balvant N. Viswamitra. v. Yadav Sadashiv Mule (dead) through Irs.10 the Apex Court held as follows: “14. Suffice it to say that recently a Bench of two Judges of this Court has considered the distinction between null and void decree and illegal decree in Rafique Bibi v. Sayed Waliuddin [(2004) 1 SCC 287]. One of us (R.C. Lahoti, J., as His Lordship then was), quoting with approval the law laid down in Vasudev Dhanjibhai Modi[(1970) 1 SCC 670 : (1971) 1 SCR 66] stated : (SCC pp. 291-92, paras 6-8) “6. What is ‘void’ has to be clearly understood. A decree can be said to be without jurisdiction, and hence a nullity, if the court passing the decree has usurped a jurisdiction which it did not have; a mere wrong exercise of jurisdiction does not result in a nullity. The lack of jurisdiction in the court passing the decree must be patent on its face in order to enable the executing court to take cognisance of such a nullity based on want of jurisdiction, else the normal rule that an executing court cannot go behind the decree must prevail. 10(2004) 8 SCC 706 Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 24 7. Two things must be clearly borne in mind. Firstly, ‘the court will invalidate an order only if the right remedy is sought by the right person in the right proceedings and circumstances. The order may be “a nullity” and “void” but these terms have no absolute sense : their meaning is relative, depending upon the court's willingness to grant relief in any particular situation. If this principle of illegal relativity is borne in mind, the law can be made to operate justly and reasonably in cases where the doctrine of ultra vires, rigidly applied, would produce unacceptable results.’ (Administrative Law, Wade and Forsyth, 8th Edn., 2000, p. 308.) Secondly, there is a distinction between mere administrative orders and the decrees of courts, especially a superior court. ‘The order of a superior court such as the High Court, must always be obeyed no matter what flaws it may be thought to contain. Thus a party who disobeys a High Court injunction is punishable for contempt of court even though it was granted in proceedings deemed to have been irrevocably abandoned owing to the expiry of a time- limit.’ (ibid., p. 312) 8. A distinction exists between a decree passed by a court having no jurisdiction and consequently being a nullity and not executable and a decree of the court which is merely illegal or not passed in accordance with the procedure laid down by law. A decree suffering from illegality or irregularity of procedure, cannot be termed inexecutable by the executing court; the remedy of a person aggrieved by such a decree is to have it set aside in a duly constituted legal proceedings or by a superior court failing which he must obey the command of the decree. A decree passed by a court of competent jurisdiction cannot be denuded of its efficacy by any collateral attack or in incidental proceedings.” (emphasis is ours) 25. Accordingly there is a difference between inherent lack of jurisdiction and the procedural impropriety. In the present case evidently by virtue Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 25 of section 15, 16, 17 and 18 read with Section 2(b)(1), Explanation (i) and (ii), Facilitation Council clearly did not have jurisdiction in the subject matter in dispute and therefore the present case is a case of inherent lack of jurisdiction. 26. This Court has already held time and again that access to High Courts by way of a writ petition under Article 226 of the Constitution of India, is not just a constitutional right but also a part of the basic structure. It is available to every citizen whenever there is a violation of their constitutional rights or even statutory rights. This is an inalienable right and the rule of availability of alternative remedy is not an omnibus rule of exclusion of the writ jurisdiction, but a principle applied by the High Courts as a form of judicial restraint and refrain in exercising the jurisdiction. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and the same is not limited by any provision of the Constitution and cannot be restricted or circumscribed by a statute. Reference may be made in this regard to Whirlpool Corpn. v. Registrar, Trade Marks11; L. Chandra Kumar v. Union of India12; S.N. Mukherjee v. Union of India13 and Union of India v. Parashotam Dass14. 27. It has been well-settled through a legion of judicial pronouncements of this Court that the writ courts, despite the availability of alternative remedies, may exercise writ jurisdiction at least in three contingencies — 11(1998) 8 SCC 1 12(1997) 3 SCC 261 13(1990) 4 SCC 594 14(2025) 5 SCC 786 Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified Page 26 (i) where there is a violation of principles of natural justice or fundamental rights; (ii) where an order in a proceeding is wholly without jurisdiction; or (iii) where the vires of an Act is challenged. 28. In the present case, the order is passed by the Facilitation Council lacking inherent jurisdiction. Since this Court has specifically found that the provisions of the MSMED Act could not have been invoked in the facts and circumstances of the case, the impugned order is rendered without jurisdiction and hence, liable to be set aside on that ground alone. In such light of the matter, this Court finds it an appropriate matter to exercise its writ jurisdiction. VII. CONCLUSION: 29. In light of the discussion above, the Writ Petition stands allowed. Order dated 30.8.2025, passed by the Director of Industries, Cuttack in MSEFC Case No.68 of 2021 is set aside. The proceedings initiated in MSEFC Case No. 68 of 2021are subsequently quashed. 30. However, the Parties remain at liberty to pursue any remedy available to them in law. 31. No order as to costs. (Dr. Sanjeeb K Panigrahi) Judge Orissa High Court, Cuttack, Dated the 9th Jan., 2026 Printed from counselvise.com Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-Jan-2026 19:31:53 Signature Not Verified "