The applicability of the MSME Act to disputes arising from work contracts/agreements and the need for a sole arbitrator to adjudicate disputes arising from interlinked agreements related to the same project.

JUDGMENT

Prathiba M. Singh, J.(Oral)

1. This hearing has been done through hybrid mode.

2. In these petitions, the Petitioner - Jaiprakash Associates Limited has challenged two reference orders dated 7th February, 2022 passed by the Micro and Small Enterprises Facilitation Council (North West), GNCTD (MSEFC) in MSEFC case no. F.DL/08/S/SEC/00134 and F.DL/08/S/SEC/ 00135. The impugned reference orders were passed under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act).

3. The impugned reference orders were issued by the MSEFC pursuant to certain disputes arising out of works contract/agreements between the Petitioner and the Respondent No.2 - Krishna Buildestates Pvt. Ltd. The agreements between the parties were in respect of civil works, electrical works and other structural works at the `Wishtown Klassic Block Towers, Jaypee Greens, Noida (UP)'. The details of the said works contract/agreements, which are the subject matter of the impugned reference orders are as under:

4. It is stated that the bills qua these works contract/agreements were raised from time to time by the Respondent No.2 and were submitted to the Petitioner. Some of the said bills have been placed on record.

5. It is submitted that Respondent No. 2 got registered as an MSME under the MSME Act on 7th September, 2019. In view of the disputes arising out of the aforementioned work contracts/ agreements, the Respondent No. 2 invoked the jurisdiction of MSEFC for referring the disputes to arbitration. Thereafter, vide the two impugned reference orders dated 7th February, 2022, the MSEFC referred the disputes to arbitration by the Delhi International Arbitration Centre (DIAC)

6. Mr. Anil Dutt, ld. Counsel appearing for the Petitioner submits that the admitted position is that the entire work had come to a halt by 31st August, 2019 and bills were also raised prior to the registration of the Respondent No. 2 as an MSME. He relies on the written submissions filed by the Respondent No.2 before the MSEFC and submits that under these circumstances, the registration being post the execution and completion of work, the MSEFC has no jurisdiction to direct reference of disputes to arbitration.

7. Reliance is placed upon the judgement of the Hon'ble Supreme Court in M/s. Vaishno Enterprises v. Hamilton Medical AG & Anr., Civil Appeal No.1892 of 2022 to argue that under similar circumstances, the Hon'ble Supreme Court has held that the MSME Act would not be applicable. The relevant paras of the judgment read as under:

"8.2 It is not in dispute that the contract/agreement between the appellant and the respondent has been executed on 24.08.2020. Therefore, the laws of India applicable at the time of contract/agreement shall be applicable and therefore the parties shall be governed by the laws of India prevailing/applicable at the time when the contract was executed. It is admitted position that the date on which a contract/agreement was executed i.e. on 24.08.2020 the appellant was not registered MSME. Considering the relevant provisions of the MSME Act more particularly Section 2(n) read with Section 8 of the MSME Act, the provisions of the MSME Act shall be applicable in case of supplier who has filed a memorandum with the authority referred to in subsection (1) of Section 8. Therefore, the supplier has to be a micro or small enterprise registered as MSME, reg