Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Definition of Supplier - Under Section 2(n) of the MSMED Act, 2006, a supplier is a micro or small enterprise that has filed a memorandum with the designated authority under Section 8(1). The filing of this memorandum is necessary to establish the status of a supplier eligible for benefits under the Act. ["Jks Infrastructure Private Limited VS Msme Facilitation Council - Delhi"], ["Solar Designs Private Limited, Represented by its Managing Director, A. A. K. Apath Sakaayem VS M. M. C. Doortech Services Private Limited - Madras"], ["Sterlite Power Transmission Limited VS Epc Solutions Llp - Delhi"], ["M/S RAFFLES RESIDENCY PVT LTD vs M/S ENKON ENGINEERING - Karnataka"], ["Marine Craft Engineers Private Limited VS Garden Reach Shipbuilders and Engineers Limited - Calcutta"], ["Marsons Electrical Industries VS Chairman, Madhya Pradesh Electricity Board (Madhya Pradesh State Electricity Board) - Allahabad"], ["Indian Oil Corporation Ltd. VS Micro Small And Medium Enterprises Facilitation Council - Delhi"], ["G.K. Granites vs Board of Directors of South Indian Bank Ltd. - Kerala"], ["M/S. G.K. GRANITES REPRESENTED BY ITS MANAGING PARTNER, GEORGE ANTONY vs BOARD OF DIRECTORS OF SOUTH INDIAN BANK LTD - Kerala"], ["M.D. Esthappan Infrastructure Pvt. Ltd. vs Reserve Bank of India, Represented by its Governor - Kerala"], [Lokopriya Gopinath Bordoloi Regional Institute of Mental Health, Tezpur, an Autonomous Society under the Ministry of Health and Family Welfare, Govt. of India, Represented by its Director vs Green Alliance Engineering Services Pvt. Ltd., ["Through its Managing Director/Authorized Representative - Gauhati"], ["GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. VS MAHAKALI FOODS PVT. LTD. (UNIT 2) - 2022 0 Supreme(SC) 1106"], ["Indur District Co-operative Marketing Society Ltd. VS Microplex (India) - Andhra Pradesh"], ["DEWAN REALTORS PRIVATE LIMITED vs UNITY SMALL FINANCE BANK - Bombay"]
Timing of Registration - Benefits under the MSMED Act cannot be claimed if the enterprise was not registered as an MSME at the time of entering into the contract. Registration subsequent to the contract does not confer retrospective benefits; it is prospective only. The enterprise must be registered as a micro or small enterprise before or at the time of the contract to qualify as a supplier under Section 2(n). ["Jks Infrastructure Private Limited VS Msme Facilitation Council - Delhi"], ["Solar Designs Private Limited, Represented by its Managing Director, A. A. K. Apath Sakaayem VS M. M. C. Doortech Services Private Limited - Madras"], ["Sterlite Power Transmission Limited VS Epc Solutions Llp - Delhi"], ["Marine Craft Engineers Private Limited VS Garden Reach Shipbuilders and Engineers Limited - Calcutta"], ["Marsons Electrical Industries VS Chairman, Madhya Pradesh Electricity Board (Madhya Pradesh State Electricity Board) - Allahabad"], ["Indian Oil Corporation Ltd. VS Micro Small And Medium Enterprises Facilitation Council - Delhi"], ["G.K. Granites vs Board of Directors of South Indian Bank Ltd. - Kerala"], ["M/S RAFFLES RESIDENCY PVT LTD vs M/S ENKON ENGINEERING - Karnataka"], ["Rashmi Cement Limited VS Radha Bhattad - Calcutta"], ["M.D. Esthappan Infrastructure Pvt. Ltd. vs Reserve Bank of India, Represented by its Governor - Kerala"], [Lokopriya Gopinath Bordoloi Regional Institute of Mental Health, Tezpur, an Autonomous Society under the Ministry of Health and Family Welfare, Govt. of India, Represented by its Director vs Green Alliance Engineering Services Pvt. Ltd., ["Through its Managing Director/Authorized Representative - Gauhati"], ["GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. VS MAHAKALI FOODS PVT. LTD. (UNIT 2) - 2022 0 Supreme(SC) 1106"], ["Indur District Co-operative Marketing Society Ltd. VS Microplex (India) - Andhra Pradesh"], ["DEWAN REALTORS PRIVATE LIMITED vs UNITY SMALL FINANCE BANK - Bombay"]
Filing of Memorandum - Filing a memorandum under Section 8(1) is voluntary and not mandatory for all MSMEs, but it is essential for claiming benefits under the Act. If a micro or small enterprise files this memorandum after entering into a contract, it does not gain the status of a registered MSME retroactively, and thus cannot claim the benefits of Section 18 or other provisions related to registered MSMEs. ["Solar Designs Private Limited, Represented by its Managing Director, A. A. K. Apath Sakaayem VS M. M. C. Doortech Services Private Limited - Madras"], ["Indian Oil Corporation Ltd. VS Micro Small And Medium Enterprises Facilitation Council - Delhi"], ["G.K. Granites vs Board of Directors of South Indian Bank Ltd. - Kerala"], ["M/S RAFFLES RESIDENCY PVT LTD vs M/S ENKON ENGINEERING - Karnataka"], ["Marine Craft Engineers Private Limited VS Garden Reach Shipbuilders and Engineers Limited - Calcutta"], ["Marsons Electrical Industries VS Chairman, Madhya Pradesh Electricity Board (Madhya Pradesh State Electricity Board) - Allahabad"], ["Sterlite Power Transmission Limited VS Epc Solutions Llp - Delhi"], ["M.D. Esthappan Infrastructure Pvt. Ltd. vs Reserve Bank of India, Represented by its Governor - Kerala"], [Lokopriya Gopinath Bordoloi Regional Institute of Mental Health, Tezpur, an Autonomous Society under the Ministry of Health and Family Welfare, Govt. of India, Represented by its Director vs Green Alliance Engineering Services Pvt. Ltd., ["Through its Managing Director/Authorized Representative - Gauhati"], ["GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. VS MAHAKALI FOODS PVT. LTD. (UNIT 2) - 2022 0 Supreme(SC) 1106"], ["Indur District Co-operative Marketing Society Ltd. VS Microplex (India) - Andhra Pradesh"]
Legal Proceedings and Dispute Resolution - The MSMED Act, 2006, permits a registered MSME (i.e., one that has filed a memorandum) to approach the MSME Facilitation Council for dispute resolution under Section 18. The Facilitation Council can act as an arbitrator or conciliator, even despite restrictions under the Arbitration Act, 1996, provided the enterprise is registered at the time of dispute. Non-registration at the time of the contract disqualifies a party from invoking these provisions. ["Jks Infrastructure Private Limited VS Msme Facilitation Council - Delhi"], ["Sterlite Power Transmission Limited VS Epc Solutions Llp - Delhi"], ["Twenty 4 Ventures Group Ltd. VS Haryana State Micro and Small Enterprises Facilitation Council - Punjab and Haryana"], ["G.K. Granites vs Board of Directors of South Indian Bank Ltd. - Kerala"], ["M/S RAFFLES RESIDENCY PVT LTD vs M/S ENKON ENGINEERING - Karnataka"], ["M.D. Esthappan Infrastructure Pvt. Ltd. vs Reserve Bank of India, Represented by its Governor - Kerala"], [Lokopriya Gopinath Bordoloi Regional Institute of Mental Health, Tezpur, an Autonomous Society under the Ministry of Health and Family Welfare, Govt. of India, Represented by its Director vs Green Alliance Engineering Services Pvt. Ltd., ["Through its Managing Director/Authorized Representative - Gauhati"], ["GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. VS MAHAKALI FOODS PVT. LTD. (UNIT 2) - 2022 0 Supreme(SC) 1106"]
Main Point & Conclusion:
References:- Section 2(n) of MSMED Act, 2006- Sections 8(1), 18 of MSMED Act, 2006- Supreme Court judgments emphasizing registration timing and its impact on eligibility for benefits.
In the dynamic world of micro, small, and medium enterprises (MSMEs), timely payments from suppliers are crucial for survival and growth. But what happens when disputes arise? A common question among MSME owners is: Can an MSME under the MSMED Act 2006 file a case against its supplier under Section 2(n)(iii) of the Act? This blog post dives deep into the legal nuances, drawing from statutory provisions, judicial precedents, and expert analyses to provide clarity.
Note: This article offers general information based on legal interpretations and is not a substitute for professional legal advice. Consult a qualified lawyer for your specific situation.
The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, aims to promote and protect MSMEs by ensuring prompt payments. Sections 15-23 mandate buyers to pay suppliers within stipulated timelines, with interest on delays. Disputes can be referred to the Micro and Small Enterprises Facilitation Council (MSEFC) under Section 18 for conciliation or arbitration.
However, invoking these benefits hinges on the claimant being a 'supplier' as defined under Section 2(n). This section is pivotal: 'supplier' means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of section 8... It also extends to entities like companies or societies engaged in selling goods produced by micro or small enterprises or rendering services provided by such enterprises, irrespective of whether they have filed a memorandum NBCC (India) Ltd. VS State of West Bengal - 2025 0 Supreme(SC) 86.
Filing a memorandum under Section 8(1) is discretionary—enterprises may, at their discretion file it NBCC (India) Ltd. VS State of West Bengal - 2025 0 Supreme(SC) 86. Courts have ruled it's not a mandatory precondition for recognition as a supplier NBCC (India) Ltd. VS State of West Bengal - 2025 0 Supreme(SC) 86J. K. Industries LTD. VS Chief Inspector Of Factories And Boilers - 1997 1 Supreme 222.
The answer to our central question is nuanced: An MSME can invoke proceedings against its supplier under Section 2(n)(iii) only if it qualifies as a 'supplier' at the time of the contract or supplyGUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. VS MAHAKALI FOODS PVT. LTD. (UNIT 2) - 2022 0 Supreme(SC) 1106Sonali Power Equipments Pvt. Ltd. VS Chairman, Maharashtra State Electricity Board, Mumbai - 2025 0 Supreme(SC) 1082Panchamy Pack (P) Ltd. vs Travancore Devaswom Board - 2025 0 Supreme(Ker) 1317.
For instance, in a case where supplies occurred post-registration, the MSMED Act applied, but pre-registration supplies did not Jaiprakash Associates Ltd. VS Micro And Small Enterprises Facilitation Council (South East) Govt. of NCT of Delhi - 2023 Supreme(Del) 738. The court found that if supplies took place post the registration as an MSME, the provisions of the MSME Act would be applicable Jaiprakash Associates Ltd. VS Micro And Small Enterprises Facilitation Council (South East) Govt. of NCT of Delhi - 2023 Supreme(Del) 738.
Section 2(n) has three clauses:1. Micro/small enterprise that filed a memorandum.2. Medium enterprise with memorandum.3. Entities selling goods produced by or services rendered by micro/small enterprises, irrespective of memorandum filingNBCC (India) Ltd. VS State of West Bengal - 2025 0 Supreme(SC) 86.
This broadens protection. Even without filing, if you're an MSME selling such goods/services, you may qualify NBCC (India) Ltd. VS State of West Bengal - 2025 0 Supreme(SC) 86. The expert committee and courts affirm: registration formalizes but doesn't create status retrospectively NBCC (India) Ltd. VS State of West Bengal - 2025 0 Supreme(SC) 86J. K. Industries LTD. VS Chief Inspector Of Factories And Boilers - 1997 1 Supreme 222.
Judicial precedents provide binding clarity:
Other rulings echo this:- It is admitted position that the date on which a contract/agreement was executed... the appellant was not registered MSME... Council would have no jurisdiction Vaishno Enterprises VS Hamilton Medical AG - 2022 4 Supreme 92.- Respondent No.1 cannot avail benefits of MSMED Act for contracts executed and supplies made prior to registration... provision is prospective and cannot be applied retrospectively JSW Steel Ltd. VS Kamlakar V. Salvi - 2021 Supreme(Bom) 375.
In contrast, some views emphasize liberal construction for beneficent legislation, allowing references without mandatory filing if dues relate to MSME supplies Sasan Power Limited, Singrauli VS Madhya Pradesh Micro and Small Enterprise Facilitation Council - 2020 Supreme(MP) 1087. However, timing remains non-negotiable across rulings.
Buyers outside India but contracting in India may still trigger MSME applicability, left open by Supreme Court Vaishno Enterprises VS Hamilton Medical AG - 2022 4 Supreme 92.
To strengthen your position:- Verify and document your micro/small status at contract/supply time (investment/turnover proofs).- File memorandum promptly for formal benefits, though not always mandatory.- Avoid relying on post-dispute registration—courts view it skeptically.- For disputes, approach MSEFC swiftly, but ensure foundational compliance.
Buyers should audit supplier status pre-contract to mitigate risks.
While the MSMED Act empowers MSMEs against delinquent suppliers under Section 2(n)(iii), success demands 'supplier' status at the contract or supply date. Retrospective claims falter, as affirmed by Supreme Court and High Courts. A party who was not the ‘supplier’... on the date of entering into contract cannot seek any benefit... subsequently Chhattisgarh Railway Corporation Limited(Crcl) VS Micro And Small Enterprises Facilitation Council(Msefc) - 2022 Supreme(All) 1316.
Key Takeaways:- Status checked at contract/supply, not registration date GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. VS MAHAKALI FOODS PVT. LTD. (UNIT 2) - 2022 0 Supreme(SC) 1106.- Memorandum discretionary for certain suppliers NBCC (India) Ltd. VS State of West Bengal - 2025 0 Supreme(SC) 86.- Post-registration: Prospective protection only.- Leverage case laws like Silpi Industries for strategy.
Stay proactive, document diligently, and seek expert counsel to navigate MSMED effectively. For tailored advice, contact a legal professional.
#MSMEDAct #MSMELaw #BusinessLaw
Following the above-stated ratio, it is held that a party who was not the "supplier" as per Section 2 (n) of the MSMED Act, 2006 on the date of entering into the contract, could not seek any benefit as a supplier under the MSMED Act, 2006. ... (vi) A party who was not the `supplier' as per the defi....
Whether registration of the supplier as a MSME unit under Section 8 of the MSMED Act, 2006 is mandatory to seek relief under the Act. ... Considering the relevant provisions of the MSME Act more particularly Section 2(n) read with Section 8 of the MSME A....
(vi) A party who was not the `supplier' as per the definition contained in Section 2(n) of the MSMED Act, 2006 on the date of entering into contract cannot seek any benefit as the `supplier' under the MSMED Act, 2006. ... Following the above stated ratio, it is held that a party who was not the "supplier#HL....
The Council constituted under the MSMED Act, 2006 issued notice to respondent No. 4 who did not file any response despite several opportunities having been afforded. ... While interpreting section 19 of the MSMED Act, 2006 and after taking into consideration the earlier decision of this Court in the case of Goodyear (India) Ltd. v. ......
Section 2(n) of the MSMED Act defines "supplier" as a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of Section 8 of the MSMED Act. ... Section 8 of the MSMED Act provides that a micro or small enterprise may, at its discre....
The petitioner claims to be a “supplier” as defined in Section 2(n) of the 2006 Act. Section 2(n) envisages the supplier to file a memorandum with the authority under section 8(1) of the Act where the procedure is outlined. ... According to respondent, the petitioner is not a “supplier#HL_....
, 2006 (MSME Act, 2006). ... (vi) A party who was not the `supplier' as per the definition contained in Section 2(n) of the MSMED Act, 2006 on the date of entering into contract cannot seek any benefit as the `supplier' under the MSMED Act, 2006.....
(supra) has followed the earlier ratio and has held that if the parties is not registered under the MSME Act on the date of entering into the contract he will not get the benefit as the supplier [as per Section 2(n)] under MSMED Act, 2006. ... He further submitted that any industry registered with MSME can file claim....
Considering the relevant provisions of the MSME Act more particularly Section 2(n) read with Section 8 of the MSME Act, the provisions of the MSME Act shall be applicable in case of supplier who has filed a memorandum with the authority referred to in subsection (1) of Section 8. .....
The objection taken on behalf of the respondent is primarily on the ground that the respondent is an MSME or rather an entity defined under section 2 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 and that the respondent should accordingly get the protection of the 2006 Act. ... of the MSMED Act#HL_....
(vi) A party who was not the ‘supplier’ as per the definition contained in Section 2(n) of the MSMED Act, 2006 on the date of entering into contract cannot seek any benefit as the ‘supplier’ under the MSMED Act, 2006. If any registration is obtained subsequently, the same would have an effect prospectively and would apply to the supply of goods and rendering services subsequent to the registration. (v) The Facilitation Council/institute/centre acting as an arbitral tribunal b....
A party cannot become a micro or small enterprise or a supplier to claim the benefit under the MSMED Act, 2006 by submitting a memorandum to obtain registration subsequent to entering into the contract and supply of goods or rendering services. Following the above-stated ratio, it is held that a party who was not the “supplier” as per Section 2 (n) of the MSMED Act, 2006 on the date of entering into the contract, could not seek any benefit as a supplier under the MSMED Act, 2006.#HL_....
It is admitted position that the date on which a contract/agreement was executed i.e. on 24.08.2020 the appellant was not registered MSME. Therefore, the supplier has to be a micro or small enterprise registered as MSME, registered with any of the authority mentioned in sub-section (1) of Section 8 and Section 2(n) of the MSME Act. It is admitted position that in the present case the appellant is registered as MSME only on 28.08.2020. Considering the relevant provisions of the MSME A....
Referring to section 8 of the MSMED Act more particularly to the proviso thereto he submits that respondent No.1 was an existing or already established enterprise but nevertheless it did not register itself within the 180 days period prescribed under the proviso to section 8(1) but registered only on 14.10.2010 i.e. after more than four years of coming into force of the MSMED Act. Equally the MSMED Act would not apply to a “supplier” who is not so registered. Submission of Mr. Janak ....
The respondent No.2 is not a ‘supplier’ and was not entitled to file a reference under section 18 of the Act of 2006. Thus, it is a mandatory pre-requisite for an enterprise classified as micro/small unit to have an UAM issued by the authorities under the territorial jurisdiction of concern MSME Council. ‘Supplier’ is a unit which has filed a memorandum with the authority referred to in sub-section (1) of section 8. The definition of ‘supplier’ under the previous Act of 1993 has unde....
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