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2025 Supreme(Online)(MP) 1206
HIGH COURT OF MADHYA PRADESH
VIVEK JAIN, J
Sebros Steels Pvt Ltd A Private Limited Company Registered Under The Companies Act 1956 – Appellant
Versus
Madhya Pradesh Micro Small And Medium Facilitation Council Bhopal – Respondent
WP 11649/2022
Rahul Diwaker,Advocate General
The location of the supplier's manufacturing site determines jurisdiction, not merely the registration location, and failure to object to jurisdiction may lead to waiver.
Headnote:(A) Madhya Pradesh Micro, Small and Medium Enterprises Facilitation Council Act, 2006 - Section 18(4) - Arbitration and Conciliation Act, 1996 - Sections 4, 16, and 37 - Challenge to the order of MSME Council rejecting claim for lack of territorial jurisdiction - The council's decision was based on the location of the respondent rather than the supplier's manufacturing site, which was within jurisdiction - The court held that the supplier's location is determined by the site of manufacturing, not merely by registration - The court declined to interfere, emphasizing the availability of an appeal as a statutory remedy. (Paras 2, 5, 17, and 19)
(B) Jurisdiction - The issue of territorial jurisdiction is distinct from subject matter jurisdiction - A party's failure to raise an objection may lead to waiver of territorial jurisdiction, but not of subject matter jurisdiction. (Paras 6, 7, and 16)
(C) Alternative Remedy - The court noted that the rejection of the claim for lack of jurisdiction does not constitute an award, thus the remedy under Section 34 of the Act of 1996 is not applicable. (Paras 8, 10, and 18)
(ORDER)
(Reserved on : 12/11/2025)
(Pronounced on : 17/02/2025)
None has appeared for the respondent No. 2 though notices were issued to the respondents vide order dated 21.07.2022 and as per office note, the respondent is reported to have been served. Therefore, this petition is taken up for hearing.
2. The present petition has been filed challenging the order dated 10.11.2021 (Annexure P/9) passed by Madhya Pradesh Micro, Small and Medium Enterprises Facilitation Council, Bhopal, whereby the reference made to the said council by the petitioner has been turned down at the stage of arbitration on the ground of the MSME Council of M.P. not having territorial jurisdiction over the dispute.
3. Learned counsel for the petitioner submits that the conciliation proceedings were undertaken by the council and upon failure of conciliation proceedings, the matter was taken on arbitration and at the stage of final decision of the matter by order dated 10.11.2021 Annexure P/9, the council has held itself to be not having territorial jurisdiction and rejected the claim of the petitioner.
4. It is contended by learned counsel for the petitioner that the petitioner is supplier and respondent No. 2 is the purchaser. The petitioner raised reference before the council as the petitioner had made certain supplies to the respondents in connection with its work/ tenders being executed by the respondents and various payments were not made to the petitioner. It is the case of the petitioner that the plant of the petitioner is situated at Chhindwara, M.P. and the items which were supplied to the respondents were manufactured at Chhindwara and supplied from Chhindwara. Learned counsel for the petitioner submits that the council has erroneously held that it does not have territorial jurisdiction only on account of the fact that the respondent purchaser is located at Tamilnadu and that the registration of the petitioner as MSME is also at Nagpur ( Maharastra). It is contended that the aforesaid order passed by the MSME Council is vulnerable for various reasons.
5. It is argued that the relevant factors for the MSME Council to entertain the dispute so far as territorial jurisdiction is concerned is that the supplier should be located within its jurisdiction in terms of the Section 18(4) of the Madhya Pradesh Micro, Small and Medium Facilitation Council, Act 2006, (for short referred to as “MSME). It was vehemently argued that the mere registration of supplier as MSME cannot be determinative factor to decide where it is located in a particular State. Since the manufacturing work of the petitioner are located at Chhindwara, M.P., therefore, it must be held to be a supplier located within M.P. though it may be registered in MSME in Maharastra. Therefore, factory/ plant of the supplier can also be a relevant fact establishing location of supplier within the State of Madhya Pradesh. It is argued that the term “located within its jurisdiction” cannot be given a restrictive meaning and interpreted to mean that only the Head Office or Registered Office of the supplier should be within the State. It is argued that even the location of work/ factory of the supplier can be relevant fact to establish its location within the said State.
6. It is further argued that not only on merits the order is vulnerable but also on account of the fact that the objection was not taken by the respondent but the MSME Council on its own rejected the proceeding for want of territorial jurisdiction and once no objection was taken by the respondents, such an order could not be passed because non submission of objection would amount to waiver in terms of the Section 4 of Arbitration and Conciliation Act, 1996 (for short hereinafter referred to as “Act 1996”). It is further argued that the MSME Council was not having any jurisdiction to deal with territorial jurisdiction once on objection raised by the respondents.
7. It is further argued by the petitioner that the issue of territorial
