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2024 Supreme(All) 429
IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Mahesh Chandra Tripathi, J.
M/S Neeraj Potato Presarvation And Food Products Pvt. Ltd. - Petitioner
Vs.
U.P. Micro Small And Medium Enterprises Faciliation Council And Others - Respondent
Writ - C No. - 35190 of 2023
Decided On : 21-02-2024
For the Appellant : Mushir Khan
For the Respondent: C.S.C
IMPORTANT POINT
The jurisdiction of the Facilitation Council under the MSMED Act is limited to disputes arising from services registered under the Act at the time of disbursement.
Headnote:
Cold Storage Services - Jurisdiction of Facilitation Council under MSMED Act - Section 2(c) of Act, 1976, Section 22 of Act, 1976, Section 45 of Act, 1976, Section 8 of MSMED Act, National Industrial Classification Data 2008 - The court held that the alleged financial services rendered by the petitioner were not registered under the MSMED Act at the time of disbursement of the loan, thus the Facilitation Council did not have jurisdiction to entertain the dispute. The writ petition was dismissed.
Fact of the Case:
The petitioner company, engaged in running a cold storage, provided financial assistance to farmers. The company filed a claim petition for recovery of the loan and interest under the MSMED Act. The Council refused to entertain the matter, stating lack of jurisdiction.
Finding of the Court:
The court found that the petitioner's financial services were not registered under the MSMED Act at the time of loan disbursement, thus the Facilitation Council lacked jurisdiction to entertain the dispute. The writ petition was dismissed.
Issues: 1. Whether the loan/financial services provided by the petitioner fell under Cold Storage Services. 2. Whether the petitioner was registered for financial services under the MSMED Act. 3. Maintainability of the writ petition.
Ratio Decidendi: The court held that the petitioner's financial services were not registered under the MSMED Act at the time of loan disbursement, thus the Facilitation Council lacked jurisdiction to entertain the dispute.
Final Decision: The writ petition was dismissed.
JUDGMENT :
Mahesh Chandra Tripathi, Prashant Kumar, JJ.
1. Heard Shri Amit Saxena, learned Senior Counsel assisted by Shri Mushir Khan, learned counsel for the petitioner and Shri Manish Goyal, learned Addl. Advocate General assisted by Shri Fuzail Ahmad Ansari, learned Standing Counsel for the State respondents.
Facts of the case
2. M/s Neeraj Potato Preservation and Food Products Pvt. Ltd. (in short “the petitioner company”) is in the business of running cold storage at Shivrajpur. The farmers of that area grow crops and use the petitioner’s facility for storage of their potatoes and other crops and for this purpose the company charges rent/ fees (for the services provided) for keeping the crop in cold storage facility. When the farmers come to take back their crop, they pay the charges according to the period of storage and area occupied in petitioner’s cold storage. The respondent nos.2 and 3 are the farmers, who had used the services of the petitioner’s cold storage. They had stored their potatoes to be sold in the market at a suitable time. While the produce of the farmers is kept in cold storage, the farmers sometimes need financial assistance towards the input cost needed for fresh sowing, which may be provided by the petitioner company. Accordingly, the respondent nos.2 and 3, who needed financial assistance to sow their next crop took a loan from the petitioner company of Rs.4,09,022/-. It seems that the respondent nos.2 and 3 did not pay back the loan to the petitioner. The petitioner, claiming itself to be Micro, Small and Medium Enterprises (MSME) registered under the Micro, Small and Medium Enterprises Development Act, 2006 (in short “MSMED Act”) had filed a claim petition before the ‘U.P. Micro, Small and Medium Enterprises Facilitation Council, Kanpur Nagar’ (in short “the Council”) on 24.12.2020, which was registered as Claim Petition No.105 (127) of 2021 for the recovery of the principal amount of Rs.4,09,022/- along with interest at the rate of 18% per annum, as provided under the MSMED Act, which came out to be Rs.2,26,851/-, so the total claim was of Rs.6,35,873/-.
3. In the said proceeding, notices were issued to the respondents on 19.7.2021 calling them for settlement and to appear on 29.7.2021 for conciliation. It is contended that on 29.7.2021, the petitioner had appeared but the respondents did not appear before the Council, hence the reference could not be decided and the proceeding of Section 76 of the Arbitration and Conciliation Act, 1996 was terminated and the matter was referred for arbitration asking the respondents to file reply within 15 days.
4. It is contended that once the aforesaid case/claim of the petitioner was not being decided, the petitioner approached this Court by preferring Writ-C No.4379 of 2022 (M/s Neeraj Potato Preservation and Food Products Pvt. Ltd. v. U.P. Micro and Medium Enterprises Facilitation Council and Anr.), which was decided on 2.3.2022 directing the Council to decide the claim of the petitioner preferably within three months.
5. Inspite of aforesaid direction, once the claim of the petitioner was not decided, the petitioner preferred Contempt Application (Civil) No.7143 of 2022 (M/s Neeraj Potato Preservation and Food Products Pvt. Ltd. v. Dr. Raj Shekhar/Chairman of U.P. Micro and Medium Enterprises Facilitation Council), which was decided on 25.11.2022 according three months further time to comply with the Writ Court order.
6. In response to the aforesaid order, the claim of the petitioner was decided by the order impugned. While passing the order impugned, the Council has framed following main issues for adjudication:-
(1) Whether the Claimant/ Supplier is entitled for the claim of Rs.4,09,022/- as Principal Amount from the Buyer?
(2) Whether the Claimant/Supplier is entitled for the claim of Rs.2,26,851/- as interest from the Buyer?.
7. While deciding the first issue, the Council opined that it has jurisdiction to decide the matter only for delayed payments in lieu of
