Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Analysis and Conclusion: A company preparing DPRs in manufacturing sector provides consultancy services, qualifying as a service enterprise under MSME Act if investment/turnover criteria met (post-2020 notification); not excluded like works contracts. Eligible for registration/benefits, unlike pure manufacturing. ["Hindustan Petroleum Corporation Limited VS West Bengal State Micro, Small Enterprises Facilitation Council - Calcutta"] ["Bridge and Roof Company (India) Ltd. Kolkata vs State of Orissa - Orissa"] ["AMR-BBB Consortium VS Bharat Coking Coal Ltd. - Delhi"] ["Civmill Industries Pvt. Ltd. VS Bihar Industrial Area Development Authority - 2022 0 Supreme(Pat) 501"]
In today's competitive business landscape, many companies in the manufacturing sector seek benefits under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. A common question arises: A company is involved in preparation of DPR in manufacturing sector, do such entity fall under scope of MSME act? Detailed Project Reports (DPRs) are crucial for project planning, but does providing this service classify the entity as a manufacturing MSME? This post breaks down the classification standards, eligibility for approvals, and procurement benefits, drawing from statutory provisions and judicial insights. Note: This is general information; consult a legal expert for specific advice.
The MSMED Act, 2006, classifies enterprises to promote growth and provide preferences in government procurement. Section 7 outlines distinct criteria for manufacturing and service enterprises. Kalloor Electronics and Lightings Pvt. Ltd. VS State Of Kerala - 2021 0 Supreme(Ker) 801
Medium: Investment > ₹10 crores but ≤ ₹50 crores (per S.O. 1702(E) dated 1.6.2020 and S.O. 2119(E) dated 26.6.2020). Kalloor Electronics and Lightings Pvt. Ltd. VS State Of Kerala - 2021 0 Supreme(Ker) 801Goutam Ghosh VS State of West Bengal - 2023 0 Supreme(Cal) 1224Civmill Industries Pvt. Ltd. VS Bihar Industrial Area Development Authority - 2022 0 Supreme(Pat) 501
Service enterprises, like consultancy or DPR preparation, use investment in equipment and turnover criteria.
Preparation of DPRs typically involves technical consultancy, feasibility studies, and report drafting—activities aligned with services rather than manufacturing goods. Thus, such entities generally qualify as service MSMEs if they meet service-specific thresholds, not manufacturing. A valid Udyam Registration Certificate specifying the activity (manufacturing or services) is essential for benefits. Goutam Ghosh VS State of West Bengal - 2023 0 Supreme(Cal) 1224
MSME status unlocks relaxations in government tenders and projects, especially in manufacturing.
For DPR preparation in manufacturing projects, if classified as a service MSME, benefits apply only if the tender specifies services. Manufacturing MSMEs get exemptions from prior turnover/experience if they meet quality and technical specifications. Office Memoranda (e.g., 10.03.2016) confirm relaxations for capable MSMEs. Anusuya Prasad Nautiyal VS Union of India - 2024 0 Supreme(UK) 472Kalloor Electronics and Lightings Pvt. Ltd. VS State Of Kerala - 2021 0 Supreme(Ker) 801
| Criterion | Manufacturing MSME Standard | Relaxation Notes ||----------|-----------------------------|------------------|| Turnover | Relaxed (e.g., ₹10 lakhs min) | If quality met UTKAL PHARMACEUTICALS MANUFACTURERS ASSOCIATION VS STATE OF ORISSA - 2010 0 Supreme(Ori) 681 || Experience | Exempt if capable | Per MoF OMs Anusuya Prasad Nautiyal VS Union of India - 2024 0 Supreme(UK) 472 || Registration | Udyam specifying manufacturing | EMD exemption Goutam Ghosh VS State of West Bengal - 2023 0 Supreme(Cal) 1224 || Licenses | GMP, ISO, etc. | Essential for projects UTKAL PHARMACEUTICALS MANUFACTURERS ASSOCIATION VS STATE OF ORISSA - 2010 0 Supreme(Ori) 681 |
DPR firms must hold relevant certifications (e.g., ISO for consultancy) to claim relaxations.
Courts have clarified MSME applicability, emphasizing classification and jurisdiction.
In cases involving works contracts, the MSME Facilitation Council (MSEFC) lacks jurisdiction: The MSEFC lacks jurisdiction to adjudicate disputes arising from works contracts, which necessitate arbitration under traditional frameworks, not the MSMED Act. Indian Oil Corporation Ltd. vs Adarsh Nobel Corporation Ltd. - 2025 Supreme(Ori) 780 The court set aside an award, holding works contracts fall outside Section 18. Indian Oil Corporation Ltd. vs Adarsh Nobel Corporation Ltd. - 2025 Supreme(Ori) 780
Similarly, The Facilitation Council lacks jurisdiction over disputes arising from works contracts under the MSME Act. Subcontracts for projects like bridges were deemed outside scope. KMV Projects Limited vs Andhra Pradesh Micro and Small Enterprises Facilitation Council - 2025 Supreme(AP) 391
Manufacturing units registered as SSI/MSME are protected, but service-like activities (e.g., DPR) must align: manufacturing unit of the respondent is an SSI Unit governed under the MSME Development Act, 2006. Porwal Sales VS Flame Control Industries However, Section 18(4) does not bar arbitration under other laws. Porwal Sales VS Flame Control Industries
Banks must follow MSME restructuring guidelines with statutory force under Sections 9, 21, and 35A. Pro Knits VS Board of Directors of Canara Bank - 2024 5 Supreme 629
For DPR preparers, if deemed a service, they access MSME benefits but not manufacturing reservations. Judicial enforcement upholds relaxations for compliant entities, striking arbitrary barriers. UTKAL PHARMACEUTICALS MANUFACTURERS ASSOCIATION VS STATE OF ORISSA - 2010 0 Supreme(Ori) 681Kalloor Electronics and Lightings Pvt. Ltd. VS State Of Kerala - 2021 0 Supreme(Ker) 801
State variations exist; e.g., Odisha aligns with central policy, while others amend. Central PSUs strictly follow. Kalloor Electronics and Lightings Pvt. Ltd. VS State Of Kerala - 2021 0 Supreme(Ker) 801
To leverage MSME benefits:- Register on Udyam portal with accurate NIC code for services/manufacturing.- Ensure investment/turnover fits criteria.- Obtain quality certifications (ISO, etc.) for tender eligibility.- Verify tender-specific rules; international funding may not override. Kalloor Electronics and Lightings Pvt. Ltd. VS State Of Kerala - 2021 0 Supreme(Ker) 801
Non-manufacturing activities like DPR preparation typically fall under services, limiting access to goods-reserved items. Goutam Ghosh VS State of West Bengal - 2023 0 Supreme(Cal) 1224
Best practice: Conduct self-assessment, update registrations post-2020 notifications, and align with tender documents.
Companies preparing DPRs in the manufacturing sector generally qualify as service MSMEs, not manufacturing, based on Section 7 criteria focused on plant/machinery investment for goods production. They may access procurement preferences and relaxations if registered appropriately and meeting quality standards, but reserved manufacturing items are off-limits. Judicial precedents reinforce strict classification, protecting genuine MSMEs from arbitrary exclusions while limiting overreach (e.g., no MSEFC jurisdiction on works contracts). Anusuya Prasad Nautiyal VS Union of India - 2024 0 Supreme(UK) 472Kalloor Electronics and Lightings Pvt. Ltd. VS State Of Kerala - 2021 0 Supreme(Ker) 801UTKAL PHARMACEUTICALS MANUFACTURERS ASSOCIATION VS STATE OF ORISSA - 2010 0 Supreme(Ori) 681Goutam Ghosh VS State of West Bengal - 2023 0 Supreme(Cal) 1224Civmill Industries Pvt. Ltd. VS Bihar Industrial Area Development Authority - 2022 0 Supreme(Pat) 501
Key Takeaways:- Verify Udyam certificate activity code.- Focus on service thresholds for DPR firms.- Leverage Section 11 for tenders with proven capability.- Seek professional advice for project-specific compliance.
Stay informed on notifications to maximize benefits.
#MSMEAct #ManufacturingMSME #BusinessLaw
the MSME Act. ... (for short, “the MSME Act”) for resolution. ... Learned senior counsel appearing for the petitioner has primarily argued, by placing reliance on certain definitions in Section 2 of the MSME Act, that the present case does not fall within the ambit of the said Act. 7. ... Learned senior counsel further submits that, following the judgment of the Supreme Court, several High Courts have held that a works contract does not fal....
The petitioner contends that the Facilitation Council could not have overridden the agreed dispute resolution mechanism, particularly when the dispute does not fall within the scope of the MSMED Act. ... The details of the scope of works quoted hereinabove demonstrates beyond a shadow of doubt that the scope of the contract involved both goods and services and therefore, the contracts in question is a works contract. ... The Court categorically ruled that works contracts fall....
Section 21 of the Arbitration and Conciliation Act, 1996, while the MSME contractor approached the Facilitation Council under the MSMED Act.
In the year 2016, the petitioner availed mortgage loan from the Union Bank of India which was subsequently taken over by the first respondent under the category "Secured Business Loan for MSMEs in Manufacturing Sector" to the tune of Rs.3,85,00,000/-. ... The learned Counsel would also submit that subsequently, the Reserve Bank of India has been issuing circulars and communications directing the Banks that adequate care should be taken in respect of the MSME sector. ... Secondly, when the Committee was very much availabl....
It is stated that the members of the Petitioner Federation fall under Micro, Small and Medium Enterprises (hereinafter referred to as 'MSME') as enumerated in the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as 'the MSMED Act'), and have valid manufacturing ... licenses and Good Manufacturing Practices (GMP) certificates. ... 2.4 GeM has an in-built option to provide relaxations to MSMEs, which are in terms of the policies followed by the Central....
Industries Corporation, being a company, registered under the Companies Act, 1956 (1 of 1956); (ii) the Small Industries Development Corporation of a State or a Union territory, by whatever name called, being a company registered under the Companies Act, 1956 (1 of 1956); (iii) any company, co-operative ... However, he also raised a preliminary ground that the very claim before the MSME Council was without any jurisdiction and the MSME Council did not have any jurisdi....
Industries Corporation, being a company, registered under the Companies Act, 1956 (1 of 1956); (ii) the Small Industries Development Corporation of a State or a Union territory, by whatever name called, being a company registered under the Companies Act, 1956 (1 of 1956); (iii) any company, co-operative ... However, he also raised a preliminary ground that the very claim before the MSME Council was without any jurisdiction and the MSME Council did not have any jurisdi....
This Company will start its operations as a State owned Company. At a later stage, the State Government may invite private sector participation in this Company. This Company will operate on commercial principles. ... The Company will sell power to the transmission company for further sale to the distribution companies. This Company has already been registered under the Indian Companies Act. 14.The Government of Haryana has decided n....
the other Acts including the MSME Act as per Section 35 of the said Act. ... Bank of India [Lending to Micro, Small and Medium Enterprises (MSME) Sector] Directions, 2016,” vide the Notification dated 21st July, 2016. ... Amongst the other Directions, the Direction 4 contained in Chapter IV thereof, pertained to the common guidelines/instructions for lending to MSME Sector. ... plea of being an MSME at a belated stage. ... banking company#H....
The Geological Reports were provided by the respondent to the petitioner for preparation of DPR as per scope of work and in return, petitioner prepared a comprehensive DPR and submitted to the respondent for approval. ... Accordingly, in terms of Clause 4.1.l(xxxiii) of the Contract, the scope of Work included preparation of a Detailed Project Report ("DPR") & EMP by the Petitioner for the development and extraction of coal from the mine for commercial production peri....
7. Learned counsel for the petitioner further submits that, in the present case, the disputes submitted by the 2nd respondent in reference to the 1st respondent relate to the Sub Contract. The various clauses of the Sub Contract make it clear that the sub contract is a ‘works contract’ and not a simpliciter contract for the supply of goods or provision of services. Therefore, the MSME Act’s provisions cannot apply to the 2nd respondent reference which is liable to be rejected. He further submits that, it cannot be disputed that the petitioner appeared before the 1st respondent under protest,....
Thereafter vide Gazette Notification bearing No. S.O.3866 (E) dated 08.12.2017, the stretch of National Highway No. 127(B) was handed over to the National Highway Authority. Alignment Option I- Newly proposed Bypass Alignment. A feasibility of study was conducted through the Consultant Company, CE Testing Company Private Limited in the year 2015, feasibility Study/preparation of the DPR. The feasibility study conducted two alignments in the particular area in question;
The provisions of sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.” In this regard, it is submitted that manufacturing unit of the respondent is an SSI Unit governed under the MSME Development Act, 2006. Hence, this Hon’ble Court has no jurisdiction to try and entertain the present petition and is liable to dismissed on this ground alone.”
Hence, this Hon’ble Court has no jurisdiction to try and entertain the present petition and is liable to dismissed on this ground alone.” 11. In this regard, it is submitted that manufacturing unit of the respondent is an SSI Unit governed under the MSME Development Act, 2006. It is next contended that the document containing the arbitration agreement is a fabricated document is also clear from the fact that the correspondence which was entered into between the parties during the relevant period namely 10th March 2012 to 22nd March 2012 (pages 52 and 53 of paperbook) would ....
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