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2026 Supreme(Gau) 828
THE GAUHATI HIGH COURT, (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
DEVASHIS BARUAH, J.
Charu Engineering Industries, A Registered Proprietorship Firm And Anr. – Petitioners
Versus
The State Of Assam, Represented By The Secy. To The Govt. Of Assam, Public Health Engineering Deptt. And Ors. – Respondents
WP(C)/1509 of 2026
Decided On : 04-05-2026
For the Petitioners:Ms. M. Hazarika, Sr. Advocate, Mr. D. Khan, Advocate
For the Respondents:Mr. P.N. Goswami, Sr. Advocate, Mr. B. Gogoi, Addl. A.G., Mr. I. Kalita, Adv.
Writ courts may direct a verification process by state authorities for MSME payment disputes involving complex factual queries regarding supply dates and statutory interest calculations, while reserving the right of parties to approach statutory conciliation forums if the dispute remains unresolved.
Headnote:(A) Micro, Small and Medium Enterprises Development Act, 2006 - Sections 15, 16, 17 and 18 - Obligation of buyer to make payment - Liability to pay compound interest with monthly rests at three times bank rate - Where buyer fails to make payment within stipulated timeframe, supplier is entitled to statutory interest. (Paras 9, 10, 11)
(B) Writ Jurisdiction - Scope of judicial review when factual inquiry regarding supply and interest calculation is required - Where disputes entail verification of supply dates, acceptance of goods, and complex interest calculations, court may direct authorities for representation and verification rather than adjudicating questions of fact. (Paras 12, 13)
(C) Alternative and Efficacious Remedy - When parties have unresolved claims or are not in agreement on payments, reliance on the statutory council for conciliation serves as the intended mechanism for dispute resolution under the Act. (Paras 7, 13)
Facts of the case:
An enterprise sought judicial intervention to recover outstanding dues and interest for goods supplied to a public authority. Despite previous representations and a prior memorandum of understanding, payments were not made. The petitioner contended that as a small enterprise, it was entitled to statutory interest under the Act. The respondent argued that the petitioner had an alternative and efficacious remedy before the statutory council and that factual disputes existed regarding the claims, making the writ petition unsuitable.
Findings of Court:
The court observed that while the statutory mandate for interest calculation involves compound interest with monthly rests, the court cannot resolve factual issues such as specific dates of supply, acceptance of goods, and variable bank rates within writ jurisdiction. The court directed the petitioner to provide a detailed calculation and representation to the relevant department for verification, enabling a controlled timeline for resolution.
Issues: Whether a court can adjudicate claims for interest on delayed payments involving complex factual determinations under writ jurisdiction, and whether the existence of a statutory facilitation council bars such petitions when factual disputes persist.
Ratio Decidendi: The court held that where claims involve complex questions of fact regarding supply acceptance and interest calculations under the Act, the court can direct a transparent verification process by the buyer's department rather than deciding the merits directly. Disputes remaining after such administrative verification should be referred to the specialized statutory council for conciliation.
Result: Petition disposed of with directions for representation and verification within a specified timeframe, granting leave to approach the statutory council if disputes persist.
| Table of Content |
|---|
| 1. factual history regarding msme supply disputes and previous representations. (Para 1 , 2 , 3 , 4 , 5) |
| 2. applicability of section 18 msme act and availability of alternative remedies. (Para 6 , 7 , 8) |
| 3. methodology for calculating compound interest with monthly rests under msme law. (Para 9 , 10 , 11) |
| 4. writ jurisdiction limitations in determining disputed questions of fact. (Para 12) |
| 5. procedural directions for claim verification and interest calculation. (Para 13) |
JUDGMENT :
DEVASHIS BARUAH, J.
Heard Ms. M. Hazarika, the learned Senior Counsel assisted by Mr. D. Khan, the learned counsel appearing on behalf of the petitioners. Mr. P.N. Goswami, the learned Senior Counsel assisted by Mr. I. Kalita, the learned counsel appears on behalf of the PHE Department of the Government of Assam and Mr. B. Gogoi, the learned Additional Advocate General appears on behalf of the Finance Department of the Government of Assam.
2. The present writ petition has been filed by the petitioners seeking a direction upon the respondents to perform their statutory duties and obligations under the Micro, Small and Medium Enterprises Development Act, 2006 (for short, “the Act of 2006”) and, in consequence thereof, to release the outstanding dues of the petitioners along with interest thereon as per the provisions of the said Act.
3. It is relevant to take note of that the petitioner No. 1 herein claims to be a small enterprise within the meaning of the Act of 2006. Pursuant to certain work orders issued, the petitioners supplied various UPVC pipes and thereupon claimed the dues. On account of non-payment, the petitioners submitted a representation and as the said representation was not considered, a writ petition being WP(C) No. 3246/2018 was filed before this Court. The learned Coordinate Bench of this Court vide order dated 23.05.2018 disposed of the said writ petition thereby directing the Chief Engineer, PHE, to consider the petitioners’ representation dated 17.01.2018 for payment of the outstanding dues with interest within a period of 3 (three) months from the date of receipt of the certified copy of the order. It is the further case of the petitioners that in spite of the said order dated 23.05.2018 in WP(C) No. 3246/2018, no steps were taken for disposal of the representation and making payment to the petitioners. Resultantly, the petitioners filed a contempt petition before this Court, which was registered and numbered as Cont. Cas(C) No. 513/2018. It is the further case of the petitioners that pursuant thereto, a Memorandum of Understanding was entered into by and between the petitioners and the PHE Department, Government of Assam, wherein it was duly agreed that an amount of Rs. 49,99,098/- would be the final payment towards the dues under the NRDWP account.
4. The record reveals that the said contempt petition was withdrawn by the petitioners in the year 2022 on the ground that the petitioners would not like to pursue the said contempt application in the present form. The records further reveal that pursuant to the said Memorandum of Understanding so entered into by and between the petitioners and the PHE Department, various other work orders were issued in the years 2020 and 2021 for the supply of UPVC pipes and it is the case of the petitioners that the petitioners duly made those supplies, however, no payment was made in that regard. It is under such circumstances, the petitioners submitted several representations since the year 2022.
5. It is also relevant to take note of that the PHE Department invited various parties, including the petitioners, for an amicable and equitable resolution to the disputes vide the communication dated 29.05.2024. The record further reveals that on 17.03.2025, the petitioners took up a stand that in view of non-payment of dues, the petitioners had withdrawn itself from the Memorandum of Understanding, which was informed to the Executive Engineer, Store & Workshop Division, PHE Department, Governme
