Point of Law :
whether the Act, 2006 would apply to those contracts which were entered prior to commencement of the Act, but supplies were effected after the Act came into force. The Supreme Court said Act, 1993 is prospective to claim higher rates of interest under the Act, 1992 and such claim is valid only for sale agreements after the date of commencement of the Act

ORDER :

Heard Sri Vedula Srinivas learned counsel for petitioner, learned Government Pleader for Industries and Commerce for respondent no.1, and Sri P.Vishnuvardhana Reddy learned counsel for 2nd respondent.

2. Facts on record as averred in the affidavit filed in support of the writ petition and in the counter affidavit filed by the 2nd respondent disclose respective stands as under:

3. Petitioner claims to be the infrastructure conglomerate working in the field of building construction, pipeline works, power plants, mining, etc. GMR awarded the contract for civil and structural works for establishing 15MW Solar Power Plant in Charanaka village of Patan District in the State of Gujarat. The value of the contract was Rs.9,59,05,479/-. Consequently, petitioner issued letter of intent dated 04.06.2011 in favour of 2nd respondent for supply, fabrication and erection of cold rolled structures including transportation and installation of modules along with necessary civil and structural works for foundation and support structures for 15 MW Solar Power Plant. The letter of intent binds both parties. Clause-15 provides for dispute resolution mechanism. It requires the parties to refer a dispute to a panel of three arbitrators and should be decided under the provisions of the Arbitration and Conciliation Act, 1996 (Act, 1996). Petitioner alleges that 2nd respondent was negligent in performing his responsibilities under the letter of intent dated 04.06.2011 resulting in his failure to comply with the obligations with his Principal and the Principal was threatened to cancel the work order. Petitioner alleges that due to the negligent attitude, delay in execution of work and poor quality of work of the 2nd respondent, petitioner suffered huge damages and incurred huge loss, which may be around Rs.14.00 crores.

4. On the contrary, 2nd respondent claims that he executed the work in accordance with the contract entered with the petitioner. In terms of the contract, 2nd respondent is entitled to receive an amount of Rs.17,10,22,992/-, whereas petitioner paid only Rs.13,84,91,146/-. Remaining outstanding is Rs.3,35,31,846/- and despite the repeated requests and follow up action, petitioner failed to release the amount within a reasonable time. In the peculiar circumstances, 2nd respondent availed the remedy provided by the Micro, Small and Medium Enterprises Development Act, 2006 (for brevity, ‘Act, 2006’), submitting the claim petition before The Micro and Small Enterprises Council (for brevity hereinafter referred to as the Council) claiming that 2nd respondent is entitled to payment of balance amount and interest computing total due as Rs.7,78,93,992/-.

5. The first respondent Council by order dated 20.02.2016 directed the petitioner to pay the balance amount due as claimed by the 2nd respondent and Rs.6,64,68,829/- as interest, and total amount quantified as Rs.10,16,40,931/-. It also ordered interest with monthly rests at three times bank rate prevailing as on the date of award as notified by the RBI on the amount adjudicated by the Council. Aggrieved thereby and challenging the said decision, this writ petition is filed.

6. Sri Vedula Srinivas made the following submissions:

(i) The remedy provided under the Act, 2006 is available only if claimant answers the description of Micro enterprises Small enterprise/medium enterprise/suppliers and duty is casts upon the claimant to disclose his status. The primary requirement to avail the remedies provided by the Act, 2006 is that claimant must satisfy the Council that it is micro/small/medium/supplier, whereas the 2nd respondent failed to establish before the Council and in fact, claim petition is totally silent on the status of the 2nd respondent.

(ii) He would submit that the contract was entered on 04.06.2011, whereas 2nd respondent registered itself as Small Scale Industry (SSI) with the District Industrial Centre at Balanagar, Hyderabad on 23.04.2012 and, therefore, the 2nd respondent cannot avai