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2024 (11) TMI 980
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....o challenge the order dated 16.06.2016 passed by respondent no.1, i.e., Micro and Small Enterprises Facilitation Council [hereafter referred to as the "Council"] where by, disputes obtaining between MRPL and respondent no.2, i.e., Driplex Water Engineering Ltd. [hereafter referred to as "Driplex"] were referred to an arbitral tribunal which would operate under the aegis of the Delhi International Arbitration Centre [DIAC]. 1.2 The learned Single Judge, for reasons given in the impugned judgment, dismissed the writ action preferred by MRPL. Being aggrieved, MRPL has filed the instant appeal. 2. In the course of hearing of the appeal, the following two issues were raised on behalf of MRPL: 2.1 First, the Council lacked the jurisdiction to refer the purported disputes obtaining between MRPL and Driplex for adjudication via arbitration since Driplex had obtained registration under Section 8 of the Micro and Small Enterprises and Development Act, 2006 [hereafter referred to as the "2006 Act"] after the disputants, i.e., MRPL and Driplex had entered into a contract. 2.2 In other words, according to MRPL, the provisions of the 2006 Act could not operate retrospectively. In sup....
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....OnLine SC 11] Prefatory Facts: 4. Before we proceed, we must outline the broad contours of the case to gain a better perspective of the issues at hand. 5. Driplex registered itself as a small-scale industrial unit, albeit with the Department of Industries, Haryana, as far back as on 08.05.1981. 5.1 With the advent of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 [hereafter referred to as the "1993 Act"], on 07.12.2000, Driplex registered itself as a small-scale enterprise with the District Industries Centre, Gautam Budh Nagar (UP). 5.2 On 08.07.2009, MRPL invited bids for supply and services, which comprised, amongst other things, design, engineering, supply, civil works, erection, testing, etcetera, of DM water and CPU plant package for its Phase-III Refinery Project. Since the bid submitted by Driplex was the lowest, MRPL accepted it. Accordingly, on 01.12.2009, a Letter of Acceptance [hereafter referred to as "LoA"] was issued in favour of Driplex by MRPL. As per the LoA, the contract was priced at Rs. 51 crores. Driplex submitted its acceptance of the offer made by MRPL. 5.3 The LoA accorded eighteen (18) month....
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.... arbitration was without jurisdiction. (ii) Because Driplex had issued an NOC, obligations, if any, of MRPL stood discharged due to accord and satisfaction. (iii) Driplex was not a small-scale enterprise as contemplated under Section 7 or 8 of the 2006 Act. 7. As noted right at the outset, except for the aspect concerning Driplex's issuance of NOC, the other two issues, which had been raised before the learned Single Judge, were not pressed before us on behalf of MRPL. The two issues that were pressed before us, including the aspect concerning NOC, were noted right at the beginning of our discussion. 8. Suffice it to say, the learned Single Judge rejected the contention advanced on behalf of MRPL vis-à-vis all three issues raised before him. Submissions by counsel: 9. It is against this backdrop that Mr Gopal Jain, Senior Advocate, advanced the arguments on behalf of MRPL, while submissions on behalf of the Council were made by Mr Santosh K. Tripathi, Advocate. Insofar as Driplex was concerned, arguments were advanced by Mr Ritin Rai, Senior Advocate. 10. Mr Gopal Jain's submissions can broadly be paraphrased as follows: (i) To a....
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....ection 8 (1) of the 2006 Act. The expression "unless the context otherwise requires" denotes that the definition of 'supplier' contained in clause (n) of Section 2 has to be contextualised. The definition could not be applied to the provisions of Sections 16 to 18 of the 2006 Act without regard to its scheme and the purpose for which the Legislature enacted it. 12.2 In this context, it was pointed out that while the definition of 'supplier' provided in Section 2(n) was confined to a micro or small enterprise, Section 8 was concerned with micro, small and medium enterprises [hereafter referred to as "MSMEs"]. 12.3 Furthermore, while discretion had been given to micro and small enterprises to register themselves with the designated authority, no such discretion was available to medium enterprises, who were engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951, under Section 8(1)(c) of the 2006 Act. 12.4 Besides this, sub-clause (b) of clause 1 of Section 8 also gave the discretion to register to those medium enterprises engaged not in manufacture or....
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....tration under Section 8 of the 2006 Act is two-fold: (i) To effectively work out measures provided in Chapter IV of the 2006 Act, as embedded in Sections 9 to 14, by the Central Government/ the concerned State Government, as well as for effective discharge of functions by the National Board for MSMEs [hereafter referred to as "National Board"] and the Advisory Committee constituted by the Central Government as per Sections 5 and 7 of the said Act. (ii) To protect and safeguard the interest of the buyer in relation to the provisions of Sections 22 and 23 of the 2006 Act. The obligation and the disincentive provided in Sections 22 and 23 of the 2006 Act would apply to only those buyers who purchased goods or received services from a 'supplier' as defined in Section 2(n) of the 2006 Act. The definition of 'supplier' as contained in Section 2(n) is relatable to the provisions of Sections 22 and 23 and not to the remaining provisions, i.e., Sections 15 to 18, which also fall in Chapter V of the 2006 Act. 17. The registration under Section 8 of the 2006 Act with the District Industries Centre is to enable the concerned authority to take measures for t....
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....Construction Private Limited and Ors. v. Tulip Contractors and Anr, 2020:DHC:831; Snehadeep Structures Private Limited v. Maharashtra Small-Scale Industries Development Corporation Limited, (2010) 3 SCC 34; Purbanchal Cables and Conductors Private Limited v. Assam State Electricity Board and Anr. (2012) 7 SCC 462; Modern Industries v. Steel Authority of India, (2010) 5 SCC 44; Indur District Cooperative Marketing Society v. Microplex, 2015 SCC OnLine Hyd 494; Hameed Leather Finishers v. Associated Chemical Industries, 2013 SCC OnLine All 9058; Nitesh Estates Ltd. v. MSEFC Haryana and Ors.; P. Anand Gajapathi Raju & Ors. v. V. PVG Raju & Ors., (2000) 4 SCC 539. 22. Mr Rai, in rebuttal, on behalf of respondent no.2, made the following broad submissions: 22.1 Regarding the first issue, it was submitted, as indicated above, that MRPL ought not to be allowed to raise it before this court as it had failed to do so before the learned Single Judge. The contention raised by MRPL before the Single Judge was that Driplex has failed to meet the criteria of a small enterprise as provided in Section(s) 7/8 of the 2006 Act. [See paragraph 6 of the impugned judgment.] 22.2 This contention....
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.... made by the Council under Section 18 of the 2006 Act was challenged by NLC via WP (C.) 9670/2016. The writ petition was dismissed by the learned Single Judge on 02.09.2019. The appeal, i.e., LPA 688/2019, titled Chief General Manager (Contracts) Neyveli Lignite Corporation Ltd. v. Driplex Water Engineering Ltd. and Anr., 2020 SCC OnLine Delhi 2228 preferred by NLC was dismissed by a coordinate bench of this court via judgment dated 29.01.2020. The Special Leave Petition, i.e. SLP (C) No.9268/2020, preferred against the Division Bench judgement, was dismissed by a three-judge bench via order dated 22.09.2020. 23.1 The issue raised by MRPL is, thus, no longer res integra and, therefore, this appeal ought to be dismissed. 24. Mr Rai further submitted that as regards the issue concerning NOC, the arbitral tribunal has dealt explicitly with it, noting that the appellant failed to make any submission, either oral or written, concerning the same. Since the appellant failed to raise the issue, despite expressly having been allowed the liberty in terms of the impugned order, the appellant should not be allowed to raise the same at the present stage. Analysis and reasons: Issue ....
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....ides this, the National Board is also responsible for making recommendations on aspects referred to above and rendering advice to the Central Government on the use of fund(s) constituted under Section 12 of the 2006 Act. 27.2 Chapter III contains only two (02) provisions, i.e., Sections 7 and 8. Section 7 deals with classification of enterprises and the power of the Central Government to constitute an Advisory Committee and its functions, while Section 8 concerns submission of memorandum with the authority designated by the Central or State Government. As noticed above, while the micro and small enterprises as well as the medium enterprises (engaged in providing or rendering services) have been given discretion regarding submission of the memorandum, i.e., registration under Section 8, the medium enterprises which are engaged in manufacturing are mandatorily required to register themselves. [See Section 8(1) of the 2006 Act.] The existing small-scale industries were required to do so within 180 days of the commencement of the 2006 Act. The memorandum is to be filed as per the format provided in Schedule II appended to the 2006 Act. 27.3 Chapter IV contains six (06) provisions....
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....annual statement of accounts. [See Section 22 of the 2006 Act.] To secure the interest of the supplier, a non-obstante provision is made in Section 23 of the 2006 Act, which states that interest payable or paid by any buyer, under or in accordance with the provisions of the 2006 Act, shall not be allowed as a deduction under the Income Tax Act, 1961. (vii) The overriding effect of the provisions made in Sections 15 to 23 is captured in Section 24 of the 2006 Act. (viii) Section 25 of the 2006 Act authorises the Central Government to notify a scheme to facilitate the closure of MSMEs not registered as companies. 27.5 The last chapter, i.e., Chapter VI, contains miscellaneous provisions regarding officers and other employees that the Central Government or State Government may appoint for administering the Act, penalties for contravention of the provisions of Section 8, Section 22 or Section 26 of the 2006 Act and lastly, provides under Section 28 that no court inferior to that of a Metropolitan Magistrate or Magistrate of First Class would try offences punishable under the 2006 Act. 28. Therefore, what comes through upon perusal of the scheme of the 2006 Act i....
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....12.2011. Concededly, Driplex completed its work and obtained a certificate from MRPL after registration under Section 8 of the 2006 Act i.e., only on 11.03.2013. Since Driplex had been awarded a turnkey contract, the work, quite naturally, would have continued even after it filed a memorandum i.e., obtained registration under the 2006 Act. 31. In this context, it is required to be noticed that the argument advanced on behalf of MRPL that there was no material on record to conclude that execution of work continued post registration under Section 8 of the 2006 Act is untenable given the following finding of fact returned in paragraph 7.11 of the arbitral award dated 27.11.2021. "7.11 It is a matter of record that the Claimant had been registered as a small-scale industry under the earlier Act. The present Act was enacted in the year 2006. No doubt, the Claimant did not apply for registration under this Act immediately, but was registered as such in the year 2011 on the issuance of registration by the Commissioner of Industries, New Delhi on 09.12.2011. More importantly, the disputes relate to the period after the registration. The factum of registration was communicated t....
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....esent claims are tenable in the light of the No-Claim Certificate dated 25.09.2013 issued by the Claimant 7.13 No arguments were advanced by the learned counsel for the parties. Even in the written submissions filed by the Respondent, the Respondent has not raised this issue. Therefore, the Tribunal proceeds on the assumption that the Respondent has not pressed this issue though raised. Thus, the tribunal would discuss the claims on merits" 38. Therefore, we need not delve into this area since a petition preferred by MRPL under Section 34 of the Arbitration Act is pending adjudication. 39. Accordingly, O.M.P. (COMM.) 235/2022 will be placed before the learned Single Judge, as per the roster, on 19.07.2024. 40. Needless to add, disposal of the above-captioned appeal will not come in the way of the concerned court dealing with this issue on merits in the pending action preferred under Section 34 of the Arbitration Act. 41. The appeal is disposed of in the aforesaid terms. However, there will be no order as to costs. FOOT NOTE :- 1. Section 2- In this Act, unless the context otherwise requires,-- Xxx xxx xxx (n) - "supplier" means....
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.... from the commencement of this Act, file the memorandum, in accordance with the provisions of this Act. 4. Section 15 - Liability of buyer to make payment. Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day: Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance. Section 16 - Date from which and rate at which interest is payable. Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly 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 ....
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....ssful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section(1) of section 7 of that Act. (4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under 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. 7. 61. We have noticed above that the incidence of applicability of the liability under the Act is supply of goods or rendering of service. In event the supply of goods and re....