The MSME Act does not apply to works contracts, thus invalidating claims for payment without appropriate authorization.

JUDGMENT :

Rajarshi Bharadwaj, J.

1. The present review petition filed by the respondents seeks review of the Judgment and Order dated December 22, 2020, delivered by Hon’ble Justice Arindam Sinha, in W.P. No. 5193(W) of 2019 and related interlocutory applications. The applicants/respondents are constrained to move this review petition, being aggrieved by and dissatisfied with the aforementioned order.

2. The present matter relates to a dispute over payments claimed by the respondents/writ petitioners from the Howrah Municipal Corporation for services purportedly rendered in repairing the Hot Mix Plant and Paver Finisher. The writ petitioners submitted bills amounting to Rs.16,96,706/-. The Chief Officer of Finance of the Corporation internally approved the bill on July 19, 2018. However, this approval was not from the final competent authority authorized to sanction such payments. The respondents/writ petitioners were engaged through a contract characterized as a work contract, specifically related to repair services of machinery, rather than a supply contract. The tender documents and subsequent work order executed in their favour did not include any clauses incorporating the provisions of the MSME Act. After initial disputes regarding the payment, the Howrah Municipal Corporation disbursed the aforesaid amount pursuant to the judgment and order dated December 22, 2020 passed by the learned Single Judge. However, the Controller of Finance of the Corporation, who is the highest authority in the accounts section, raised serious concerns in an official note-sheet about the quality and satisfactory completion of the repair work claimed by the respondents/writ petitioners. Following the judgment, the Controller of Finance sought to summon the writ petitioners for a hearing on August 31, 2021, seeking relevant documents to verify entitlement to interest under the MSME Act, but the respondents/writ petitioners declined to appear, asserting that the court order did not empower the Controller for such further inquiries. The matter originally arose in 2015 and due to its antiquity, relevant documents and instructions were not available to the Corporation’s counsel at earlier stages, resulting in delayed proceedings, including a dismissed appeal filed subsequently before the Division Bench.

3. It is submitted on behalf of the applicants/respondents that the writ petitioners do not fall within the purview of the MSME Act in this case. The learned Single Judge erred in holding that the writ petitioners were entitled to the entire billed amount of Rs.16,96,706 based solely on the internal approval by the Chief Officer of Finance, who is not the competent final authority. Reliance on this internal note is misplaced and does not confer any legal entitlement. The sum claimed pertains to a works contract for repair services and does not qualify as a supply contract regulated under the MSME Act. Accordingly, the writ petitioners are not entitled to the principal amount.

4. The impugned judgment/order further misapplied Sections 2(b), 15 and 16 of the MSME Act by awarding interest to the writ petitioners on the amount, despite their lack of entitlement to the principal sum. This is contrary to the statutory scheme and relevant legal principles. The learned Single Judge overlooked Government Order No. 4245-S(4), Kolkata, dated May 28, 2013, issued by the Principal Secretary to the Government of West Bengal, Department of Finance, which explicitly excludes work contracts from coverage under the MSME Act. The Government Order distinguishes small- scale industrial units’ participation in government tenders by