HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
PUSHPENDRA SINGH BHATI, J.
M/s. K.K. Electro Trade, Through Director/authorized Representative Krishan Kumar Bansal - Petitioner
Versus
Sushil Agarwal, For M/s Balaji Info Lube and Anr. – Respondents
S.B. Civil Writ Petition No. 3662 Of 2022
Decided On : 31-10-2023
Micro and Small Enterprises Facilitation Council - Jurisdictional Issue - Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 - Section 2(n) - [Section 18 of the Act of 2006] - The court discussed the jurisdictional issue under Section 18 of the Act of 2006 and the definition of 'supplier' under Section 2(n). It highlighted the importance of registration as a small or micro enterprise and the implications on the council's jurisdiction. The court emphasized the availability of alternative remedies and the need to raise legal issues before the Appellate Authority.
Fact of the Case:
The petitioner participated in a bidding process and was issued a work order for services. The respondent provided services and sought payment, leading to proceedings before the Micro and Small Enterprises Facilitation Council under Section 18 of the Act of 2006. The petitioner challenged the jurisdiction of the council and the subsequent orders.
Finding of the Court:
The court found that the petitioner's challenge to the council's jurisdiction and orders was not maintainable in the writ petition. It emphasized the availability of alternative remedies and the need to raise legal issues before the Appellate Authority.
Issues: Jurisdictional challenge, availability of alternative remedies, legal issues raised in the writ petition.
Ratio Decidendi: The court held that the petitioner's challenge to the council's jurisdiction and orders was not maintainable in the writ petition, emphasizing the availability of alternative remedies and the need to raise legal issues before the Appellate Authority.
Final Decision: The petition was dismissed, with the petitioner being granted liberty to approach the Appellate Authority concerned as provided under the law.
JUDGMENT :
1. This writ petition under Article 226 of the Constitution of India has been preferred claiming the following reliefs:
“It is, therefore, most respectfully and humbly prayed that;
i) The instant petition for writ may kindly be ordered to be allowed and a writ, order or direction in the appropriate nature may kindly be issued in favour of the humble petitioner;
ii) The impugned orders dated 29.09.2021 (Annexure-11) and order dated 24.11.2021 (Annexure-14) may kindly be suitably quashed and set-aside;
iii) The proceedings before Micro and Small Enterprises Facilitation Council, Rajasthan – IV, Jodhpur in case No.RJ/22/S/RJS/01043 bet set aside;
iv) Any other order which this Hon’ble Court may deems fit and proper in the facts and circumstances of the case also be passed in favor of humble petitioner along with cost of writ petition.
v) The cost of the writ petition may kindly be awarded in favour of the humble petitioner.”
2. Brief facts of the case, as placed before this Court by learned counsel for the petitioner, are that Raj COMP Info Services Ltd. (A Government of Rajasthan Undertaking) invited bids for Operational and Technical Support Services for GPS devices, in pursuance whereof, the petitioner submitted its bid to Raj COMP Info Services Ltd. on 07.09.2015 and the same was accepted, whereupon work order was issued in favour of the petitioner on 02.09.2016. The petitioner approached the respondent no.1 for coordinating and operational training support for operational & technical services for GPS Devices for the period from 03.09.2016 to 02.03.2017.
2.1. The respondent no.1 provided the services in lieu of a sum of Rs.11,81,952/-, and for the same an invoice was issued to the petitioner. The petitioner paid only an amount of Rs. 3,43,890/-to the respondent no.1. In respect of the remaining amount, the respondent no.1 approached the Micro and Small Enterprises Facilitation Council, Jaipur (hereinafter referred to as ‘Council’) under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as ‘Act of 2006’) and the same was thereafter transferred to the Council at Jodhpur.
2.2. The petitioner filed an application before the Council regarding the objection in relation to jurisdiction and the Council proceeded with the matter and communicated to the petitioner to participate in the arbitration and conciliation proceedings. Thereafter, the Council vide order dated 29.09.2021 without deciding the petitioner’s objection, directed it to file the statement of claim.
2.3. Subsequently, the Council passed an order dated 24.11.2021 in favour of the respondent no.1, and thereafter, the Council passed the order/award dated 15.12.2021, directing the petitioner to pay the due amount in question alongwith interest.
2.4. Thus, being aggrieved, the present petition has been preferred claiming the afore-quoted reliefs.
3. Learned counsel for the petitioner submitted that the respondent no.1 does not fall under the definition of ‘supplier’ as provided under Section 2 (n) of the Act of 2006 because at the time of the work order dated 02.09.2016 issued in favour of the petitioner, the respondent no.1 was not a registered Unit, and therefore, as per the definition of ‘supplier’, it is necessary that the Unit concerned is registered as Small or Micro Enterprise.
For ready reference, Section 2(n) of the Act of 2006 is reproduced as hereunder:-
“(n) "supplier" means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of section 8, and includes,--
(i) the National Small Industries Corporation, being a company, registered under the Companies Act, 1956 (1 of 1956);
(ii) the Small Industries Development Corporation of a State or a Union territory, by whatever name called, being a company registered under the Companies Act, 1956 (1 of 1956);
(iii) any company, co-operative society, trust or a body, by whatever name called, registered or constitut
Silpi Industries & Ors. Vs Kerala State Road Transport Corporation & Ors. AIR 2021 SC 5487
AI
The literal interpretation of statutory provisions and the consideration of definitions are crucial in determining jurisdiction and eligibility under the law.
Registration as a supplier is not mandatory for invoking the jurisdiction of the Micro and Small Enterprises Facilitation Council.
The jurisdiction of the Micro Small and Medium Enterprises Facilitation Council is determined by the supplier's registered office location, overriding any contractual jurisdiction clauses.
A writ petition challenging an award under the MSME Act is not maintainable unless the petitioner deposits 75% of the awarded amount, as mandated by Section 19 of the MSME Act, 2006.
The award passed by the Facilitation Council is without jurisdiction and, therefore, a nullity.
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.