IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.V. GANGAPURWALA, SANDEEP V. MARNE, JJ.
M/s.Metaforge Engineering (I) P.Ltd. – Appellant
Versus
Union of India and Ors. - Respondents
Writ Petition No.3034 of 2022
Decided on : 20-07-2022
Companies Act - Medium Enterprise - Micro, Small and Medium Enterprises Development Act, 2006 (Act, 2006) - Sections 2(n), 17, 18 - The court discussed the definition of 'supplier' under section 2(n)(iii) and its relevance to the jurisdiction of the Council under section 18 of the Act, 2006. It emphasized the literal interpretation of the provisions and the need to consider the definition of 'supplier' in determining jurisdiction. The court quashed the impugned order and directed the Council to consider the factual matrix of the case and decide the claim of the Petitioner based on its merits.
Fact of the Case:
The Petitioner, a Medium Enterprise under the Companies Act, filed an Application under section 18 of the Act, 2006 against the Respondent no.4 for payment. The Council rejected the Application stating that the Petitioner, as a Medium Enterprise, cannot invoke its jurisdiction.
Finding of the Court:
The court quashed the impugned order and directed the Council to consider the factual matrix of the case and decide the claim of the Petitioner based on its merits.
Issues: Jurisdiction of the Council under section 18 of the Act, 2006 for a Medium Enterprise as a 'supplier' of goods produced by micro or small enterprises and rendering services provided by such enterprises.
Ratio Decidendi: The definition of 'supplier' under section 2(n)(iii) is crucial in determining the jurisdiction of the Council under section 18 of the Act, 2006. The literal interpretation of the provisions and the consideration of the definition of 'supplier' are essential in deciding the eligibility of a Medium Enterprise to invoke the Council's jurisdiction.
Final Decision: The court quashed the impugned order and directed the Council to consider the factual matrix of the case and decide the claim of the Petitioner based on its merits.
JUDGMENT :
S.V.GANGAPURWALA, J.
1. Rule. Rule made returnable forthwith. By consent of the parties, matter is taken up for final disposal.
2. The Petitioner is a Company registered under the Companies Act. It is a Medium Enterprise. The Petitioner had filed an Application referable to section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (Act, 2006) against the present Respondent no.4 for payment of the amount. Request was made that the Council may act as a Conciliator and or Arbitrator. If conciliation fails then matter is to be referred to Arbitration. The Micro and Small Enterprises Facilitation Council rejected the Application on the ground that the Petitioner is a Medium Enterprise and cannot invoke the Jurisdiction of the Council under section 18 of the Act, 2006.
3. The learned counsel submits that the Petitioner has made a categorical statement that it is a supplier of the goods manufactured and produced by the small enterprise. The Petitioner is covered under the definition of supplier as defined under section 2(n)(iii) of the Act, 2006. The learned counsel to substantiate his argument relies on the judgment of the learned single Judge of Delhi High Court in the case of Ramky Infrastructure Private Limited vs. Micro and Small Enterprises Facilitation Council and another, (2018) 5 ADR 583.
4. We have heard the learned counsel for Respondent no.1 and the Respondent no.4. The learned Counsel for the Respondents support the order of the Council and submits that the Petitioner is a Medium Enterprise. It would not have availed the remedy under section 18 of the Act, 2006.
5. We have considered the submissions canvassed by the learned Counsel for the parties.
6. Before we advert to the contention of the learned counsel, it would be appropriate to refer to the relevant provisions; i.e. Sections 2(n), 17 and 18(1)(2) and (3) of the Act, 2006 which read thus:
(n) “supplier” means a micro or small enterprise, which has filed a memorandum with the authority referred to in subsection (1) of section 8, and includes,—
(i) ……
(ii)…...
(iii) any company, co-operative society, trust or a body, by whatever name called, registered or constituted under any law for the time being in force and engaged in selling goods produced by micro or small enterprises and rendering services which are provided by such enterprises;
Section 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.
Section 18 : 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 stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer to it 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 subsection (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
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