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IN THE HIGH COURT OF BOMBAY AT GOA
BHARAT P. DESHPANDE, J.
M/s Bharat Kolkata Container Terminals Pvt. Ltd. – Appellant
Versus
Goa Micro and Small Enterprises – Respondent
Writ Petition No.555 of 2024(F)
Decided on : 11-07-2024
JUDGEMENT :
BHARAT P. DESHPANDE, J.
1. Rule.
2. Rule is made returnable forth with.
3. Matter is taken up for final disposal at the admission stage itself with consent of the parties.
4. The issue raised in the present matter is regarding the notice dated 04.01.2024 issued by the Nodal Officer for Goa Micro and Small Enterprises Facilitation Council stating therein that the hearing of the case was taken up on 08.12.2023 between the petitioner and the respondent no. 2 and since the conciliation is not possible, the Council invoked its power under Section 18 (3) of Micro, Small and Medium Enterprises Development Act 2006 (MSMED) to refer the matter for arbitration.
5. Mr. Sardessai learned senior counsel for the petitioner would submit that the said Council is not having jurisdiction even to entertain the conciliation proceedings launched on behalf of respondent no.2 and also to refer the matter to the arbitration. He submits that respondent no. 2 entered into a contract with the petitioner on 01.06.2018 which is purely a service contract. The said contract was terminated on 20.12.2018. He submits that at the time of entering into the contract with respondent no.2, the enterprise of respondent no.2 was not registered under the Act of 2006. He would further submit that respondent no.2 filed an application for registration under the MSMED Act 2006 on 17.12.2018. The contract was terminated on 20.12.2018 and between 17.12.2018 to 20.12.2018, there were no services rendered by respondent no. 2 to the petitioners.
6. Mr. Sardessai would submit that on receipt of notice of conciliation from the Nodal Officer of the Council, petitioners appeared and raised objections with regard to the jurisdiction of the said Council even to entertain the proceedings for and on behalf of respondent no.2 on the ground that as on the date of contract of respondent no.2 was not registered as a small or medium scale under the MSMED Act 2006. Even though such objections were raised, the council failed to decide whether the said Council is having jurisdiction even to consider the matter for the purpose of conciliation and then refer it to the arbitration.
7. Mr. Sardessai while pointing out the provisions of the MSMED Act 2006 and more particularly Sections 15, 16 and 18 would submit that the petitioner would be burdened to pay interest three times the bank rate in case such dispute is referred to arbitration and taken up without jurisdiction.
8. Mr. Priolkar appearing for the Council would submit that such an issue of jurisdiction is only required to be raised when the matter is referred for arbitration by the council and not at the time of conciliation. However, he agreed that the matter requires to be remanded back to the Council for deciding the aspect of jurisdiction.
9. The respondent no. 2 who is appearing in person initially raised a jurisdiction of this court to entertain the petition, however, would agree that the Council has to decide on its own jurisdiction.
10. Facts which are emerging from the statements made by the learned counsel for the parties and respondent no. 2 in person as well as found on the records, that the agreement between petitioner and respondent no. 2 is admittedly prior to the registration of the respondent no. 2 with the said Council. In this regard Mr Sardesai has rightly pointed out that in the case of Scigen Biopharma Private Limited vs M/S. Jagtap Horticulatuer, 2019 SCC online Bombay 4542, the learned Single Judge of this Court has observed in paragraph Nos. 29 and 30 that by taking recourse to sub-section (1) of Section 8, the service provider merely filing a memorandum would not have assumed a legal status of being classified under MSMED Act as a small scale enterprise and that too retrospectively, from the day on which he entered into a contract with the other party. It is also observed that such party could not have become a small scale or a supplier within the purview of the MSMED Act, 2006 by such prospective filing of an en
AI
The main legal point established in the judgment is that the Facilitation Council has the jurisdiction to act as an Arbitrator after the failure of conciliation proceedings under the MSME Act. The ri....
The registration under the MSMED Act, 2006 applies prospectively and not retrospectively, and the benefits of the Act do not apply if the registration is obtained subsequently to the agreement and th....
The MSMED Act, 2006 provides a statutory framework that allows the Facilitation Council to act as an arbitrator after conciliation, overriding the restrictions of the Arbitration Act, 1996.
The court upheld that statutory remedies under the MSMED Act take precedence over private arbitration agreements, affirming the Facilitation Council’s jurisdiction in disputes involving MSMEs.
The Arbitration and Conciliation Act, 1996 is overridden by the MSMED Act, 2006, establishing the jurisdiction of the Facilitation Council for disputes, thereby necessitating adherence to its terms o....
The court ruled that a party to a dispute cannot waive the mandatory conciliation requirement under Section 18(2) of the MSMED Act, validating subsequent arbitration proceedings.
The requirement of an arbitration agreement and the specific mechanism provided under Section 18 of the MSMED Act for conciliation and arbitration.
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