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        2025 (1) TMI 622 - SC - Indian Laws

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        MSME Facilitation Council reference cannot be denied merely for absence of pre-contract memorandum registration. Section 18 of the MSME Act is an open-ended dispute-resolution remedy available to 'any party to a dispute' and is not confined to enterprises that had ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                        Provisions expressly mentioned in the judgment/order text.

                          MSME Facilitation Council reference cannot be denied merely for absence of pre-contract memorandum registration.

                          Section 18 of the MSME Act is an open-ended dispute-resolution remedy available to "any party to a dispute" and is not confined to enterprises that had filed a memorandum under Section 8 before executing the contract. The statutory scheme shows that MSME status depends on classification under Section 7, while Section 8 filing is not a mandatory precondition that narrows access to the Facilitation Council. A contrary reading would unduly restrict the remedy and impair access to justice. The reference under Section 18 therefore cannot be rejected solely because prior memorandum registration was not obtained before the contract.




                          Issues: Whether an MSME that filed its memorandum under Section 8 of the Micro, Small and Medium Enterprises Development Act, 2006 after execution of the contract can be denied reference to the Facilitation Council under Section 18 of the Act on the ground that registration had not been obtained before the contract was executed.

                          Analysis: Section 18 uses the expression "any party to a dispute" and is framed as a dispute-resolution remedy. Its text does not confine the reference only to a registered supplier. The reference to Section 17 supplies the context of the amount in dispute, but it does not cut down the width of the remedy. Section 8, on its terms, makes filing of a memorandum discretionary for micro and small enterprises and for medium enterprises engaged in services, while the definition of "supplier" and the statutory scheme show that the existence of MSME status is based on classification under Section 7 and not on prior registration alone. The reasoning in the earlier decisions dealing with limitation, counterclaims, retrospective benefit, and overriding effect of Chapter V did not decide this precise question. A construction that restricts Section 18 to pre-registered enterprises would unduly narrow an open-ended statutory remedy and impair access to justice.

                          Conclusion: The reference under Section 18 cannot be rejected merely because the enterprise had not filed its memorandum under Section 8 before execution of the contract; the objection that prior registration is a mandatory precondition is rejected.


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