MSME reference jurisdiction upheld where supplier falls within statutory definition and fair hearing was afforded

A reference under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 lies only for amounts due under Sections 15 to 17 arising from goods supplied or services rendered by a statutorily defined supplier. The analysis states that the Council was not vitiated by breach of natural justice because notices were issued, hearings were held, replies were sought, and further opportunity was given. It also states that prior memorandum registration was not a jurisdictional prerequisite where the enterprise fell within the broader statutory definition of "supplier". On that basis, the challenge failed and the reference was upheld.

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Issues: (i) Whether the reference made by the Micro and Small Enterprises Facilitation Council was vitiated for breach of natural justice. (ii) Whether the Council had jurisdiction to make the reference where the underlying transactions pre-dated the supplier's memorandum registration.

Issue (i): Whether the reference made by the Micro and Small Enterprises Facilitation Council was vitiated for breach of natural justice.

Analysis: Notices were issued to the petitioner and multiple meetings were held before the Council. The petitioner's representatives attended several hearings, was asked to file a reply, sought adjournment, and was given further opportunity to respond. No material was shown to establish denial of a fair hearing.

Conclusion: The challenge based on violation of natural justice failed and is rejected.

Issue (ii): Whether the Council had jurisdiction to make the reference where the underlying transactions pre-dated the supplier's memorandum registration.

Analysis: A reference under Section 18 lies only in respect of amounts due under Sections 15, 16 and 17 of the Micro, Small and Medium Enterprises Development Act, 2006, that is, disputes arising from goods supplied or services rendered by a supplier. The definition of "supplier" in Section 2(n) is exhaustive. It includes micro or small enterprises that have filed the memorandum, and also includes entities falling within the other specified categories in Section 2(n)(i) to (iii). On the facts, the enterprise supplying services was covered by the statutory definition, and filing of the memorandum before the contract date was not a jurisdictional prerequisite for the reference.

Conclusion: The Council had jurisdiction to entertain the dispute and refer it for arbitration.

Final Conclusion: The petition failed on both grounds and the impugned reference was upheld.

Ratio Decidendi: For a reference under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006, the dispute must relate to amounts due for supplies or services rendered by a statutorily defined supplier, but prior memorandum registration is not required where the entity falls within the other categories included in Section 2(n).

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