The provisions of the MSME Act do not apply to contracts executed prior to supplier registration, emphasizing the mandatory composition of arbitration tribunals must be an odd number.

ORDER :

ARINDAM SINHA, J.

1. Mr. Banerji, learned ad vocate appears on behalf of petitioner and submits, his client seeks relief of quashing MSEFC Case no.68 of 2021 (M/s. Adarsh Nobel Corporation Ltd. v. Bridge & Roof Construction Company India Ltd.), pending before the Council. He submits, the contract was entered into by opposite party no.4 with his client on 11^th June, 2010, prior to its registration as a small enterprise, pursuant to date of filing on 18^th December, 2015. He relies on judgment of Supreme Court in Silpi Industries etc. v. Kerala State Road Transport Corporation available at AIR Online 2021 SC 993 paragraph-26. He relies on another judgment of the Supreme Court in M/s. Vaishno Enterprises vs. Hamilton Medical AG available at AIR online 2022 SC 386. He draws attention to paragraphs 8.2 and 8.3 in the print.

2. On leave obtained he files additional affidavit disclosing, inter alia, minutes/order dated 23^rd March, 2022 passed by the Council. He points out that the Council, being the arbitral tribunal under Micro, Small and Medium Enterprises Development Act, 2006, consists of four members. In terms of section 18, the arbitration under the Act has applicable to it, provisions of the Arbitration and Conciliation Act, 1996. The 1996 Act clearly mandates composition of the tribunal to be of uneven number of members.

3. Mr. Rath, learned advocate appears on behalf of opposite party no.4 (supplier). He submits, law declared by the Supreme Court is for applicability of the 2006 Act on dates of supply, as also relevant for the purpose. For this he also relies on Silpi Industries (supra) and Shanti Conductors (P) Limited vs. ASSAM SEB, reported (2019 19 SCC 529, paragraph 61.

4. He submits, in paragraph 26 of Silpi Industries (supra) there was reference to view taken by the Delhi High Court in GE T and D India Limited v. Reliable Engineering Projects and Marketing The Supreme Court did not overrule the view taken but distinguished it as not applicable on facts. This was because in Silpi Industries (supra), facts were that supplies had also been made prior to the registration. In Shanti Conductors (supra), he relies on the following passage in paragraph 61, reproduced below.

“ 61. … When the date of agreement is not referred as material or incidence for fastening the liability, by no judicial interpretation the said date can be treated as a date for fastening of the liability. The 1993 Act being beneficial legislation enacted to protect small scale industries and statutorily ensure by mandatory provision for payment of interest on the outstanding money, accepting the interpretation as put by the learned counsel for the Board that the day of agreement has to be subsequent to the enforcement of the Act, the entire beneficial protection of the Act shall be defeated. The existence of statutory liability depends on the statutory factors as enumerated in Section 3 and Section 4 of the 1993 Act. Factor for liability to make payment under Section 3 being the supplier supplies any goods or renders services to the buyer, the liability of buyer cannot be denied on the ground that the agreement entered into between the parties for supply was prior to the 1993 Act. To hold that liability of buyer for payment shall arise only when agreement for supply was entered into subsequent to enforcement of the Act, it shall be adding words to Section 3 which is not permissible under the principle of statutory construction.”

5. On constitution of the arbitral tribunal he submits, the objection is premature. It is just that failure of conciliation has been recorded and the arbitration is yet to