The court clarified that registration under Section 8 of the MSMED Act is not a prerequisite for making a reference to the Facilitation Council under Section 18, emphasizing broad access to justice.

JUDGMENT :

PAMIDIGHANTAM SRI NARASIMHA, J.

1. Introduction: The old value of ‘Small is beautiful’¹ [E.F. Schumacher, ‘Small Is Beautiful: A Study of Economics as if People Mattered’ (1973) “We need the freedom of lots and lots of small, autonomous units, and, at the same time, the orderliness of large-scale, possibly global, unity and co-ordination. When it comes to action, we obviously need small units, because action is a highly personal affair, and one cannot be in touch with more than a very limited number of persons at any one time.”] has not lost its relevance. Recognising the contribution of micro, small and medium enterprises towards economic development, the United Nations declared June 27th as MSME day. MSMEs are said to be the backbone of many economies, including India. This resonates with the statement of the father of our nation, Mahatma Gandhi, declaring that the ‘salvation of India lies in cottage and small scale industries’. The Parliament enacted the Micro, Small and Medium Enterprises Development Act, 2006² [Hereinafter referred to as ‘the Act’] for facilitating the promotion and development of the enterprises by creating certain rights and duties and establishing a Board, Advisory Committee, and Facilitation Council. Importantly, the Act provided a mechanism for dispute resolution.

1.1 The MSME before us has a simple prayer. It seeks to refer the dispute that it has with the buyer regarding payment of its dues to the Facilitation Council for arbitration under Section 18 of the Act, which provides that “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.” The appellant opposes this prayer by contending that ‘any party’ can only be a ‘supplier’ and that supplier should have been registered under Section 8 of the Act even before execution of the contract, if not, the reference is impermissible. The High Court did not answer this question. Instead, it permitted the parties to raise such objections before the Arbitral Tribunal. The buyer is in appeal before us, raising the same question as a jurisdictional issue.

1.2 We have examined the text, context, and purpose of the Act to arrive at the decision that Section 18 is not restrictive and is a remedy for the resolution of disputes, and as such, it is kept open-ended to enable ‘any party’ to refer the dispute to seek redressal. For the reasons to follow, we rejected the submission that ‘any party to a dispute’ is confined to a ‘supplier’ who has filed a memorandum under Section 8 of the Act. We have also explained that the issue(s) that have arisen in the decisions of this Court in Silpi Industries v. Kerala State Road Transport Corporation, (2021) 18 SCC 790 and Gujarat State Civil Supplies Corporation Limited v. Mahakali Foods Private Limited, (2023) 6 SCC 401 were very different from the issue that has arisen for our consideration. However, for clarity and legal certainty, we have directed the appeal be placed before the Hon’ble Chief Justice of India for referring the matter to a bench of three Ju