Ambaco Chemicals and Life Sciences Pvt Ltd vs Kisan Mouldings Ltd

Headnote:(A) Micro, Small and Medium Enterprises Development Act, 2006 - Sections 2(n), 8, 16, 17, 18 - Arbitration and Conciliation Act, 1996 - Section 34 - Registration as small enterprise - Requirement of filing Udyog Aadhaar Memorandum - Notification dated 18 September 2015 - Existing enterprises holding Entrepreneurs Memorandum II are exempted from filing Udyog Aadhaar Memorandum - Validity of registration for invoking jurisdiction of Facilitation Council - Memorandum of Understanding - Unsigned document - Not binding.

(B) The crucial date for determining status as 'supplier' under Section 2(n) of MSMED Act is the date of contract, but if the enterprise was already registered as small enterprise under prior regime (Entrepreneurs Memorandum II), it qualifies even if Udyog Aadhaar was obtained later. (Paras 19-24)

(C) An unsigned MoU cannot be relied upon to modify contractual terms. (Para 27)

Facts of the case:
The petitioner challenged an award passed by the Micro and Small Enterprises Facilitation Council under Section 34 of the Arbitration and Conciliation Act, 1996. The award directed payment of outstanding amount of Rs.55,81,817/- with interest under Section 16 of MSMED Act. The petitioner contended that respondent No.2 was not registered as a small enterprise at the time of issuance of purchase orders as it obtained its Udyog Aadhaar Number only on 31 January 2019, after the purchase orders. The petitioner also relied on an unsigned Memorandum of Understanding dated 25 June 2019 to claim modification of payment terms. Respondent No.2 asserted it had been registered since 2008 via Entrepreneurs Memorandum II and that filing of Udyog Aadhaar was optional under notification dated 18 September 2015.

Findings of Court:
The court held that respondent No.2 was a registered small enterprise as on the date of issuance of purchase orders by virtue of its Entrepreneurs Memorandum II dated 7 April 2008. The notification dated 18 September 2015 exempted existing enterprises that had filed Entrepreneurship Memorandum I or II from filing Udyog Aadhaar Memorandum. Therefore, the challenge based on non-registration failed. Additionally, the unsigned MoU could not be considered as a valid agreement modifying the terms. The court dismissed the arbitration petition and permitted respondent No.2 to withdraw the deposited amount and recover the balance.

Issues: (i) Whether respondent No.2 was a registered small enterprise under the MSMED Act at the time of the contract so as to invoke the jurisdiction of the Facilitation Council; (ii) Whether an unsigned Memorandum of Understanding could alter the contractual terms.

Ratio Decidendi: The court reasoned that under clause 4 of Notification dated 18 September 2015, existing enterprises which had filed Entrepreneurship Memorandum I or II are not required to file Udyog Aadhaar Memorandum; their registration continues. Since respondent No.2 had filed Entrepreneurs Memorandum II in 2008, it was a registered small enterprise from that date. Therefore, it was a 'supplier' within Section 2(n) of MSMED Act at the time of purchase orders and could invoke Section 18. The unsigned MoU was denied by respondent No.2 and could not be given any evidentiary value.

Result: Arbitration petition dismissed. Interim applications disposed of. Stay on execution not continued.

Legal Category Hierarchy

1. Petition under Section 34 of Arbitration and Conciliation Act, 1996, challenging award of Facilitation Council under MSMED Act. (Para 1 , 2 , 3 , 16 )

2. Petitioner argued lack of jurisdiction as respondent not registered supplier at contract date; respondent contended registration since 2008 and unsigned MoU. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 )

3. Arbitration petition dismissed; respondent permitted to withdraw deposited amount with accrued interest. (Para 28 , 30 , 31 , 32 )

4. Was the respondent a registered small enterprise under the MSMED Act at the time of the contract?

Yes, the respondent was registered since 2008 under Entrepreneurs Memorandum II, and the 2015 notification exempts existing enterprises from filing Udyog Aadhar. (Para 22 , 23 , 24 )

5. Can an unsigned Memorandum of Understanding alter the terms of a contract?

No, an unsigned MoU cannot be accepted as altering the terms of the original purchase order. (Para 27 )

2025:BHC-OS:21881 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMMERCIAL ARBITRATION PETITION (L) NO.25371 OF 2024 Kisan Mouldings Ltd. ...Petitioner V/s.

Micro and Small Enterprises Facilitation and Anr. ...Respondents WITH INTERIM APPLICATION (L) NO.32715 OF 2024 WITH INTERIM APPLICATION (L) NO.32720 OF 2024 WITH INTERIM APPLICATION (L) NO.32718 OF 2024 IN COMMERCIAL ARBITRATION PETITION (L) NO.25371 OF 2024 Ambaco Chemicals and Life Sciences Pvt. Ltd In the matter between ….Applicant Kisan Mouldings Ltd. ...Petitioner V/s.

Micro and Small Enterprises Facilitation and Anr. ...Respondents ______________

Mr. Rashmin Khandekar with Mr. Yohaann Limathwalla, Mr. Amit Tungare, Ms. Akshata Katara & Ms. Fleur D’souza i/b. M/s. Asahi Legal for the Petitioner.

Mr. Sandeep Todi, for Respondent No.2 and for the Applicant in IAL/32715/2024, IAL/32718/2024, IAL/32720/2024.

______________

CORAM: SANDEEP V. MARNE, J.

RESERVED ON: 13 NOVEMBER 2025.

PRONOUNCED ON: 21 NOVEMBER 2025.

Judgment:

1) The Petitioner has filed the present Petition under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 (the Act of 1996) challenging the Award dated 14 July 2023 passed by the Micro and Small Enterprises Facilitation Council, Konkan (Facilitation Council). By the impugned Award, the Facilitation Council has allowed Reference Petition No.80 of 2021 filed by Respondent No.2 and has directed the Petitioner to pay to Respondent No.2 outstanding amount of Rs.55,81,817/- alongwith interest as per Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) till realisation of the amount.

2) Petitioner is engaged in the business of manufacture of PVC products. Respondent No.2 approached Petitioner to execute business deal for supply of TPR-02 PVC Heat Stabilize, Tinstab -BTM, Methyl Tin and Stabilizer (Special Grade) for its activity of plastic manufacturing. Petitioner issued purchase orders to Respondent No.2 for supply of material in the year 2011. In the year 2018, Petitioner issued purchase orders dated 31 August 2018, 30 September 2018, 12 November 2018, 22 November 2018, 26 December 2018, 25 January 2019 to Respondent No.2. On receipt of purchase orders, Respondent No.2 made supplies under 17 invoices issued between 15 November 2018 to 13 August 2019. According to Petitioner, Respondent No.2 registered itself as small enterprise under provisions of the MSMED Act on 31 January 2019 i.e. after issuance of purchase orders. It is claimed that on 25 June 2019, Petitioner and Respondent No.2 entered into Memorandum of Understanding (MoU) setting out the manner in which due amounts under the purchase order and invoices were to be paid by Petitioner to Respondent No.2. On 26 August 2020, Respondent No.2 initiated proceedings under Section 18 of the MSMED Act for recovery of amount due to it from the Petitioner. Respondent No.2 claimed that an aggregate sum of Rs.69,82,937/- was payable by the Petitioner, out of which part amount of Rs.14,01,120/- was paid leaving behind outstanding amount of Rs.55,81,817/-. It appears that the Petitioner did not remain present before the Facilitation Council. The Council proceeded to make Award dated 14 July 2023 directing Petitioner to pay outstanding amount of Rs.55,81,817/- together with interest under Section 16 of the MSMED Act. Aggrieved by the Award of Facilitation Council dated 14 July 2023, Petitioner has filed the present Petition under Section 34 of the Act of 1996. By order dated 25 September 2024, this Court adjudicated the issue of delay in filing the Arbitration Petition and ruled that there was no delay in filing of the Petition.

3) Petitioner filed Interim Application (L) No.28278 of 2024 seeking unconditional stay to the Award. By order dated 4 October 2024, this Court directed Petitioner to deposit 75% of the awarded amount in accordance with Section 19 of the MSMED Act of Rs.1,45,39,979.80. Accordingly, Petitioner has deposited the sa

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2025 Supreme(Online)(Bom) 248967

HIGH COURT OF BOMBAY
HON'BLE SHRI JUSTICE SANDEEP V. MARNE
Ambaco Chemicals and Life Sciences Pvt Ltd – Appellant
Versus
Kisan Mouldings Ltd – Respondent
IAL/32720/2024

An enterprise that has filed Entrepreneurs Memorandum II under the pre-2015 regime is considered a registered small enterprise under the MSMED Act from that date, and is not required to obtain Udyog Aadhaar Memorandum for invoking the Facilitation Council's jurisdiction.

Legal Category Hierarchy

Table of Contents

4. Was the respondent a registered small enterprise under the MSMED Act at the time of the contract?

5. Can an unsigned Memorandum of Understanding alter the terms of a contract?

2025 Supreme(Online)(Bom) 248967

HIGH COURT OF BOMBAYHON'BLE SHRI JUSTICE SANDEEP V. MARNEAmbaco Chemicals and Life Sciences Pvt Ltd – AppellantVersusKisan Mouldings Ltd – RespondentIAL/32720/2024

An enterprise that has filed Entrepreneurs Memorandum II under the pre-2015 regime is considered a registered small enterprise under the MSMED Act from that date, and is not required to obtain Udyog Aadhaar Memorandum for invoking the Facilitation Council's jurisdiction.

Legal Category Hierarchy

Table of Contents

4. Was the respondent a registered small enterprise under the MSMED Act at the time of the contract?

5. Can an unsigned Memorandum of Understanding alter the terms of a contract?

Cases Referred (2)

HIGH COURT OF BOMBAY
HON'BLE SHRI JUSTICE SANDEEP V. MARNE
Ambaco Chemicals and Life Sciences Pvt Ltd – Appellant
Versus
Kisan Mouldings Ltd – Respondent
IAL/32720/2024