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2026 Supreme(Online)(Del) 2597
IN THE HIGH COURT OF DELHI AT NEW DELHI
Purushaindra Kumar Kaurav, J
East India Drums And Barrels Manufacturing Ltd – Appellant
Versus
Development Commissioner Msme – Respondent
W.P.(C) 16457/2024|CM APPLs.69454/2024|73853-55/2024|10569/2025
For the Appellants/Petitioners: Sanjeev Sindwani, Anuj Agarwala, Prakash Jha, Vipul Singh, Mukti Heliwal
For the Respondents: Chetan Sharma, Vikram Jetly, Shreya Jetly, Amit Gupta, R V Prabhat, Saurabh Tripathi, Shubham Sharma, Yash Wardhan Sharma, Naman
The cancellation of a statutory registration certificate without issuing a specific show-cause notice detailing the alleged violations constitutes a breach of the principles of natural justice, necessitating the setting aside of the impugned administrative order.
Headnote:The case concerns the cancellation of a MSME registration certificate without adherence to procedural fairness. The petitioner challenged an order cancelling its registration, contending that it was issued without a show-cause notice or adequate opportunity to respond. The court examined the administrative record and observed that while authorities had communicated with the petitioner regarding investment and turnover data, no formal show-cause notice outlining specific violations had been issued. The primary issue was whether the respondent followed the principles of natural justice before cancelling the registration. The court held that administrative decisions affecting professional certificates require a specific show-cause notice providing the party an opportunity to address identified discrepancies. The ratio decidendi emphasizes that procedural fairness, specifically the right to respond to articulated grievances, is a prerequisite for any punitive administrative action. The petition is disposed of with directions for the respondents to issue a formal show-cause notice, granting the petitioner an opportunity to file a reply and appear for a personal hearing before a reasoned order is passed.
| Table of Content |
|---|
| 1. summary of procedural background and interim orders regarding registration cancellation. (Para 1 , 2 , 3) |
| 2. parties' contentions regarding history of the company and compliance with msme figures. (Para 4 , 5 , 6) |
| 3. court holds violation of natural justice due to lack of show-cause notice. (Para 7 , 8) |
| 4. court mandates a fair hearing process prior to final administrative adjudication. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15) |
O R D E R
% 07.01.2026
1. The instant petition seeks setting aside of the letter dated 28.10.2024 issued by respondent no.1, whereby, the petitioner‟s UDYAM MSME Registration Certificate bearing no. UDYAM-MH-19-0068913 (hereinafter “UDYAM Certificate”) has been cancelled by the respondent no.1/department. It was also the case of the petitioner that the said order/communication dated 28.10.2024 has never been communicated to the petitioner, and therefore, an additional prayer has been made to produce the aforesaid communication/letter dated 28.10.2024.
2. On the first date of hearing i.e., 28.11.2024, the Court while taken into consideration the aforesaid contention had directed the respondents to produce a copy of the communication dated 28.10.2024 issued by the Office of Development Commissioner, MSME, New Delhi along with entire record of documents, on the basis of which the communication dated 04.11.2024 was issued by the MSME Development & Facilitation Office. Pursuant to the aforesaid direction, the respondents produced the entire record.
3. Order dated 02.12.2024 would further indicate that the Court had considered the rival submissions made by the parties and in paragraph no.13 of the said order, found that the petitioner had established a prima facie case, and accordingly, the cancellation of the petitioner‟s UDYAM MSME Registration Certificate was directed to be kept in abeyance. The respondents, however, were directed to issue an appropriate communication to this effect and to place the same on their official website. Thereafter, the matter was taken up on various dates and is, on date, pending for final adjudication.
4. The primary ground to assail the impugned decision of the respondents rests on the violation of the principles of natural justice. Mr. Sanjeev Sindwani, learned senior counsel appearing for the petitioner has taken the Court through various dates and events and has explained that earlier the petitioner was a proprietorship firm which, became partnership firm and, thereafter, it became a private company and ultimately a public limited company. He also tried to indicate that the Udyam Certificate was granted to one East India Drums and Barrels Manufacturing Pvt. Ltd., and the petitioner is the successor-in-interest of the said company by virtue of a reverse merger which was approved by the National Company Law Tribunal (‘NCLT’) vide its order dated 02.05.2023 in CP (IB) 2146 (MB)/2019 in the Corporate Insolvency Resolution Process (CIRP) of one Precision Containers Ltd.
5. According to Mr. Sindwani, this change took place w.e.f. 01.04.2024. Between August, 2023 and January, 2024, the MSME Authorities had doubts about the figures (turnover and investment) shown by the company on the UDYAM Portal, and because of those doubts, the authorities asked questions and sought clarifications from the petitioner. The company answered query, submitted documents and explained its position. He therefore, submits that before taking the decision, the respondents ought to have afforded an opportunity of hearing to the petitioner.
6. Mr. Chetan Sharma, learned Addl. Solicitor General of India controverts the submissions and strongly opposes the grant of relief in the instant petition. He has taken the Court through communications dated 09.08.2023, 01.09.2023 and the reply filed by the petitioner dated 02.09.2023. Additionally, he has also shown the CA certificate and has drawn the attention of the Court to the material which has been produced along with the additional affidavit. Accord
