NBCC India Limited v. Micro and Small Enterprises Facilitation Council

1. The present petition is seeking to set aside impugned orders dated 08.04.2021 and 27.05.2022 passed by respondent no.1/Micro and Small Enterprises Facilitation Council, New Delhi, under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as „the Act‟). The dispute raised by respondent KUMAR KAURAV no.2 has been referred to the Delhi International Arbitration Centre (DIAC).

2. The principal grievance raised by the petitioner is that respondent no.2, had invoked the jurisdiction of the Council, without being registered under the Act, on the date of the contract, date of rendering of services, or on the dates, where, the invoices in question were raised. The petitioner, therefore, contends that respondent no.2 was not entitled to invoke the mechanism under Section 18 of the Act against the petitioner.

3. The issue at hand fell for the consideration before the Supreme Court in NBCC (India) Ltd. vs. The State of West Bengal & Ors[1]. The Supreme Court therein, held that remedy under Section 18 of the Act is not confined to suppliers who have filed a memorandum under Section 8(1) prior to the contract. The reasoning followed was that Section 18 uses the wider expression “any party to a dispute,” and that the definition of “supplier” is not to be confined only to micro and small enterprises that have filed a memorandum. The Court was of the opinion that filing of the memorandum under Section 8(1) is at the discretion of the micro and small enterprises. The relevant paragraphs of the judgement in NBCC (Supra) are extracted below for better clarity:-

40. Having considered the definition of the expression “supplier”, and also having considered the classification of enterprises into micro, small and medium with respect to each of which there is a separate legal regime to be suggested by the Advisory Committee and notified by the Central and State Governments, and in view of the discretion specifically vested with the micro and small enterprises for filing a memorandum under Section 8 of the Act, the submission that the Facilitation Council cannot entertain a reference under Section 18 if the enterprise is not registered under Section 8 must be rejected.”

4. This Court is conscious of the fact that the matter has been referred to a larger bench of the Supreme Court, and is pending consideration. However, the view expressed by the Supreme Court in NBCC (Supra) has been followed by this Court in number of cases, one such case is that of Municipal corporation of Delhi v M/S Vijay Bansal[2], wherein a similar challenge had been raised, on the ground that relevant work orders had been issued prior to the registration of the respondent therein under the Act as an MSME. This Court, relying on the reasoning followed in NBCC (Supra) dismissed the petition, and held that the said objection could not be accepted. The said order has WP(C) 12308/2023 dated 25.02.2026 been upheld by the divisional Bench vide order dated 15.04.2026[3].

5. This is the position that this Court has been taking consistently[4]. This consistent approach proceeds on the premise that the objection with respect to the date of registration cannot, by itself, be treated as a ground to interdict the statutory mechanism under Section 18 of the Act at the threshold.

6. The Impugned orders herein do not decide the entitlement of respondent no.2 on merits. It is merely referring the dispute to DIAC, in terms of the statutory mechanism contemplated in Section 18 of the Act.

7. In view of the aforesaid, this Court does not find any reason to interfere with the impugned order.

8. The rights of the petitioner and the respondents with respect to all other submissions stand reserved. They shall be entitled to contest the matter on merits.

9. The instant petition stands dismissed.

JUDGE APRIL 22, 2026 Nc