TaxTMI 
TaxTMI 
2018 (7) TMI 1910
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....n RIL and GCIL had failed. 2. RIL has assailed the decision of the Council to make the impugned reference, essentially, on two grounds. First, it claims that the disputes between RIL and GCIL, which have been referred to arbitration, had arisen in respect of transactions that were entered into in the year 2010. At the material time, GCIL was not registered under the Act and, as a consequence, was not a 'supplier' as defined under Section 2(n) of the Act, and, therefore, the Council has no jurisdiction to refer the subject disputes or parties to arbitration. Second, RIL contends that the impugned reference was made without affording RIL sufficient opportunity to present its case and, therefore, the impugned reference is arbitrary. These contentions are disputed by the respondents. 3. Briefly stated, the relevant facts necessary to address the controversy involved in the present petition are as under:- 3.1 RIL is a company incorporated under the Companies Act, 1956 and is an integrated construction, infrastructure development and management company. It is stated that RIL has executed a number of projects in various sectors such as water and waste water management, transporta....
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....1996 before the Arbitral Tribunal. However, this Court is informed that the same has also been dismissed. Submissions 4. Mr Moni Cinmoy, the learned counsel appearing for RIL advanced submissions, essentially, on two fronts. First, he submitted that the Council has no jurisdiction to entertain the reference under Section 18 of the Act or make a reference under Section 18(3) of the Act since the disputes in question related to the works that were completed in 2010 and at the material time, GCIL had not filed the Memorandum as contemplated under Section 8(1) of the Act. He submitted that the Memorandum submitted by GCIL was registered on 04.07.2015 and, therefore, prior to the said date, GCIL could not be considered as a 'supplier' within the meaning of Section 2(n) of the Act. Second, he submitted that the decision of the Council to make the impugned reference was in violation of the principles of natural justice, as RIL was not afforded adequate opportunity to respond to the claims made by GCIL. 5. The learned counsel appearing for the Council countered the aforesaid submissions. Mr Garg, the learned counsel appearing for GCIL also countered the submission made on behalf o....
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....was given an opportunity to file a reply. However, RIL failed to do so. It is claimed on behalf of RIL that it did not have a copy of the documents submitted by GCIL and, therefore, was unable to file a response. This contention is not persuasive. In the event, RIL did not have the necessary documents, it was always open for RIL to demand the same. However, no communication has been produced on record whereby RIL had made any such demand on GCIL or respondent no.1. Representatives of RIL also attended the meeting held on 10.03.2016, which was adjourned at the request of RIL. RIL was once again directed to file a reply within a period of ten days. Thus, RIL can have no grievance of not being afforded sufficient opportunity to put forth its case. Representatives of RIL also attended the next conciliation meeting, which was held on 05.04.2016. On the said occasion, RIL sought further time to settle the disputes amicably. However, no further progress was made and, therefore, on 17.10.2016, the Council decided to terminate the conciliation proceedings and refer the disputes to DIAC. 7. In view of the above, RIL's contention that the impugned reference was made in violation of the pri....
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....ly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank. 17. Recovery of amount due. − For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under section 16. 18. Reference to Micro and Small Enterprises Facilitation Council.− (1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council. (2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of sections 65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if the conciliation was init....
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.... to the disputes arising out of amounts due for goods supplied or services rendered by a supplier at the material time. 14. The contention that if a party to the dispute falls within the definition of "supplier" at the time of making the reference, the Council would have jurisdiction to resolve the disputes or refer the same to arbitration, is unmerited. Section 18(1) of the Act does not refer to a reference being made by a supplier; it enables "any party" to a dispute to make a reference to the Council. However, the dispute must be one which is in regard to "any amount due under Section 17 of the Act". 15. As noticed above, the provisions of Section 17 of the Act have to be read in conjunction with Section 15 and 16 of the Act. Thus, the obligation contemplated under Section 17 of the Act relates to the liability of a buyer and is only with respect of goods supplied or services rendered by a 'supplier'. 16. The term 'supplier' is defined under Section 2(n) of the Act, which reads as under: - "2(n). "supplier" means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of section 8, and includes. - (i)....
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....(h) "micro enterprise" means an enterprise classified as such under sub-clause (i) of clause (a) or sub-clause (i) of clause (b) of sub-section (1) of section 7; * * * * * m)"small enterprise" means an enterprise classified as such under sub-clause (ii) of clause (a) or sub-clause (ii) of clause (b) of sub-section (1) of section 7." 22. In terms of Section 7(1)(a) of the Act, an enterpr....
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....in both the limbs must be satisfied. However, it is obvious that the same is not the apposite way to read Section 2(n) of the Act. This is so because, admittedly, neither the National Small Industries Corporation - which is a Government of India Enterprise - nor the Small Industries Development Corporation of a State or a Union territory is required to file a memorandum as referred to under Section 8(1) of the Act. Thus, the two limbs of Section 2(n) of the Act are required to be read to exhaust all categories. The second limb, which specifies three categories to fall within the definition of the term 'supplier', is in addition to the category of small and medium enterprises that have filed the Memorandum under Section 8(1) of the Act. Thus, the term 'supplier' as defined under Section 2(n) of the Act must be read to comprise of four categories: (i) micro or small enterprises that have filed the Memorandum under Section 8(1) of the Act; (ii) National Small Industries Corporation; (iii) Small Industries Development Corporation of a State or a Union territory; and (iv) a company co-operative society, trust or a body engaged in selling goods produced by micro or small enterprises o....
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....tablished by or under the Constitution, (2) an authority or body or institution of selfgovernment established or constituted by any other law made by the Parliament, (3) an authority or body or institution of self-government established or constituted by any other law made by the State legislature, and (4) an authority or body or institution of self-government established or constituted by notification issued or order made by the appropriate government. 32.The Societies, with which we are concerned, admittedly, do not fall in the abovementioned categories, because none of them is either a body or institution of self-government, established or constituted under the Constitution, by law made by the Parliament, by law made by the State Legislature or by way of a notification issued or made by the appropriate government. Let us now examine whether they fall in the latter part of Section 2(h) of the Act, which embraces within its fold: (5) a body owned, controlled or substantially financed, directly or indirectly by funds provided by the appropriate government, (6) non-governmental organizations substantially financed directly or ind....