TaxTMI 
TaxTMI 
2017 (2) TMI 1533
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.... concern of which Mr. Vijendra Kumar Verma is the Sole Proprietor. It has its office in Ghaziabad, Uttar Pradesh. The Government of India awarded the work of the installation of the Jhajjhar Power Plant to Aravali Power Company Pvt. Ltd. ('Aravali'), a joint venture of NTPC Ltd., Haryana Power Generation Company Ltd and Indraprastha Power Generation Company Ltd. Aravali by a contract dated 15th January, 2008 awarded Alstom a turnkey project for erection and commissioning of Power Transformer Package for Indira Gandhi Super Thermal Power Project (IGSTPP), Jhajjhar in the Aravalli Super Thermal Power Project. 4. On 6th January, 2009, REPM sent a letter to Alstom along with a brief introduction of the Respondent seeking its enlisting as an approved sub-contractor for the Principal Project. Alstom is stated to have engaged REPM for the receipt, unloading, storage, handling at site, installation, in plant transportation at site, insurance, installation testing and commissioning, including carrying out guarantee tests for the complete power package for IGSTPP ("hereafter referred to as "Works"). 5. REPM submitted a quotation for the Works to Alstom on 2nd June, 2009. In respo....
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....re-1. 9. In the meanwhile, REPM applied for registration as a "Supplier" under the Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act"). The said registration was granted on 4th April, 2012 but the date of commencement of the activity was indicated therein as 1st February, 2009. 10. REPM approached the FC on 19th February, 2015 setting out the entire background of the case and laying a claim against Alstom for the balance amounts due under the First PO for a sum of Rs.5,81,08,100 inclusive of interest up to 31st January, 2015. Proceedings before the FC 11. The FC passed an order on the said claim on 20th February, 2015 registering it as Claim Petition No. 5 of 2015 and issuing notice to Alstom. On 25th March, 2005, Alstom wrote to the FC seeking two weeks" time to file a reply. An order was passed by the FC on 10th April, 2015 directing that Alstom should submit its written statement within two weeks. On 20th April, 2015, Alstom wrote to the FC seeking a further opportunity for appropriate representation before the FC and requesting that the matter should be taken up for conciliation under Section 18 of MSMED Act. 12. In its order dated 11th May, 2015, t....
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.... "19. Application for setting aside decree, award or order.- No application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy-five per cent of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court: Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case subject to such conditions as it deems necessary to impose." 19. It is pointed out that in terms of orders dated 29th June, 2015 and 13th August, 2015, Alstom was required to pay REPM Rs. 4,08,56,470/-. In terms of Section 19 of the MSMED Act, if Alstom sought to challenge the Awards, then such challenge would not be entertained by the courts until Alstom deposited 75% of the awarded amount. It is pointed out....
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.... Reference could be made to the FC under Section 18 only with regard to any amount under Section 17. (ii) The definition of "supplier" under Section 2 (n) is "a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of Section 8..." Under Section 2 (n) (iii), the definition includes any company, cooperative society, trust or body. (iii) Under Section 8 (i), there are two situations under which a person seeks registration as a supplier. Under Section 8 (i), it could be a person who intends to establish a micro or small enterprise who has, prior to establishing such enterprise, filed the memorandum with the authority specified by the Central or State Government. The second situation is contemplated by the proviso to Section 8(i) which applies to a person who has already established a small scale industry prior to the commencement of the MSMED Act. Such a person is required to file the memorandum within 180 days from the date of commencement. (iv) REPM commenced its activities prior to the MSMED Act coming into force and did not file memorandum till much later. Therefore, on the date of performance of the contract of supply, ....
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....e MSMED Act. In any event, both the POs in the present case were issued subsequent to the coming into force of the MSMED Act. 26. Dr. George submitted that the Court did not have discretion to waive the 75% deposit under Section 19 of the MSMED Act. He submitted that in Goodyear India Ltd. v. Norton Intech Rubbers Pvt. Ltd. (2012) 6 SCC 345, the Supreme Court was categorical in this regard. He also placed reliance on the decision of Purbanchal Cables & Conductors Pvt. Ltd. v Assam State Electricity Board & Anr. (2012) 7 SCC 462. Dr. George submitted that under Section 15 of the MSMED Act, the focus was on supply of goods and rendering of services and as long as a person satisfied these two requirements, he was recognized as a "supplier" for the purposes of the MSMED Act. According to Dr. George, it was never in doubt even from that point of view of the Petitioner that the First PO dated 8th September, 2009 which was in the process of being executed did not contain an arbitration clause and the supply pursuant thereto was continued even under the Second PO which made an explicit reference to the First PO. Dr. George also pointed out that as part of Alstom"s representation to the F....
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....ere would be a three-member AT. The second was that the arbitration could be expected to be completed within 90 days. Under Section 18(3) of the MSMED Act, the FC could even suo moto refer the dispute to arbitration and even the Act would have applied to such arbitration. Analysis and Reasons 29. Before commencing the discussion on the above submissions, it is necessary to note the objects and reasons behind the MSMED Act. The Statement of Objects and Reasons highlights two broad objects; one was to have a comprehensive central enactment to provide an appropriate legal framework for facilitating the growth and development of the small scale industries sector ("SSI"). There was also a growing need felt to extend policy support for the small enterprises so that they were enabled to grow medium-level achieving higher productivity. The idea was to provide a single legal framework. 30. The second object is that not only does the MSMED Act deal exclusively with the activities of the SSI units but it also provides for a mechanism for expeditious adjudication of the claims that such units may have. This would even be in relation to a dispute involving a non-MSMED supplier. The relevan....
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....nder this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India. 5. Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference." 31. There is no doubt that the above provisions apply only to the services rendered and goods supplied by a 'supplier as 'defined under Section 2(n) of the Act. The focus under Section 15 of the MSMED Act is on the actual act of providing services and supplying goods. If a small scale industry or micro or small enterprise undertakes the above tasks, then the buyer is bound under Section 15 of the MSMED Act to make payment by the appointed date which cannot exceed 45 days from the date of acceptance or deemed acceptance in terms of the proviso thereof. 32. A unit that is not registered as a supplier does not cease to be one. The registration as a supplier under the MSMED Act makes the availing of the benefit much easier. Section 8(1) of the MSMED Act which requires the filing of a memorandum by such unit reads as under: "8. Memorandum of micro, small and medium enterprises.- 1. Any person who intends to establish....
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....he Act but has not obtained any registration till then. It is registered as a supplier beyond 180 days from the date of the commencement of the Act i.e., after 180 days from 2nd October, 2006. Clearly, such a unit can also seek registration as a supplier. That is precisely what has happened in the present case. The certificate issued to the REPM is dated 4th April, 2012, but importantly, it notifies that the date of commencement of the activities as 1st February, 2009. 36. The question that next arises is whether having been registered on 4th April, 2012, can REPM take advantage of the MSMED Act? For this purpose, it is necessary to refer to Section 18 which requires REPM to be a "supplier" as on the date of making such reference. Clearly, that condition stood satisfied. Secondly, even according to the Petitioner, the supplies made by REPM pursuant to the PO dated 8th September, 2009 continued even under the Section PO dated 27th November, 2012. From the point of view of the Petitioner, it is seeking to rely on the Second PO having been validly issued. The supplies made by REPM to Alstom in terms of the PO dated 8th September, 2009 continued even after REPM's registration as ....
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....ndustries Development Corporation Ltd. (supra) which dealt with the statute of 1993 preceding the MSMED Act equally applies to the MSMED Act: "47. The requirement of pre-deposit of interest is introduced as a disincentive to prevent dilatory tactics employed by the buyers against whom the small-scale industry might have procured an award, just as in cases of a decree or order. Presumably, the legislative intent behind Section 7 was to target buyers, who, only with the end of pushing off the ultimate event of payment to the small-scale industry undertaking, institute challenges against the award/decree/order passed against them. Such buyers cannot be allowed to challenge arbitral awards indiscriminately, especially when the section requires predeposit of 75% interest even when appeal is preferred against an award, as distinguished from an order or decree." 39. Likewise, in Edukanti Kistamma (Dead) through LRs. v. S. Venkatareddy (dead) through LRs (supra), the Supreme Court explained that a special statute would be preferred over a general one where it is beneficial. It was explained that the purport and object of the Act must be given its full effect by applying the principles....