AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 1910
X X X X Extracts X X X X
X X X X Extracts X X X X
....sailed 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, transportation, irrigation, industrial construction, powe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....med 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 of RIL. He contended that six hearings were held before the Council, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 principles of natural justice is wholly unmerited. 8. The next question to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 initiated under Part III of that Act. (3) Where the conciliation initiated under sub-section (2) is not successful and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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) the National Small Industries Corporation, being a company, registered under the Companies Act, 1956 (1 of 1956); (ii) the Small Industries Development Cor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; * * * * 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 enterprise, which is engaged in the manufacturing and production of goods pertaining to any industries specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 is categorized as a mic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n - 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 or rendering services provided by such enterprises. 25. The aforesaid view is also fortified by the decision of the Supreme Court in the case of Thalappalam Service Cooperative Bank Limited and Others (supra). In t....