Neutral Citataion Number : 2022/DHC/005314
LPA 595/2018 & connected appeals
HIGH COURT OF DELHI
Decision delivered on: 16.11.2022
LPA 595/2018, CM Nos.44016/2018 & 33189-90/2020
M/S THERMAX LTD ......Appellant
VERSUS
MICRO AND SMALL ENTERPRISES FACILITATION COUNCIL & ANR ......Respondents
LPA 596/2018 & CM No.44118/2018
M/S THERMAX LTD .....Appellant
VERSUS
FACILITATION COUNCIL & ANR ..... Respondents
LPA 598/2018 & CM No.44128/2018
M/S TERMAX LTD .....Appellant
VERSUS
FACILITATION COUNCIL & ANR .....Respondents
LPA 599/2018 & CM No.44142/2018
VERSUS
MICRO AND SMALL ENTERPRISES & ANR .... Respondents
LPA 600/2018 & CM No.44146/2018
VERSUS
MICRO AND SMALL ENTERPRISES & ANR ......Respondents
LPA 601/2018 & CM No.44150/2018
M/S THERMAX LTD ..... Appellant
VERSUS
FACILITATION COUNCIL & ANR ..... Respondents Present : Mr Akhil Sibal, Sr. Adv. with Mr R. Sudhinder, Mr Dattatray
Vyas, Ms Deboshree Mukherjee and Mr Nikhil Kumar Singh, Advs. for the appellant.
Mr Udit Malik, ASC, GNCTD for R-1.
Mr Pulkit Thareja and Mr Vishwajeet Dubey, Advs. for R-2.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
HON'BLE MS. JUSTICE TARA VITASTA GANJU [Physical Hearing/Hybrid Hearing (as per request)]
RAJIV SHAKDHER, J. (ORAL):
1. The above-captioned appeals are directed against the common judgment dated 13.09.2018 passed by the learned Single Judge.
2. The central issue, which arises for consideration in these appeals is: whether the provisions of Micro, Small and Medium Enterprises Development Act, 2006 [in short “2006 Act”] will apply concerning a dispute obtaining between the appellant and respondent no.2, qua which reference has been made by respondent no.1 to Delhi International Arbitration Centre (DIAC).
3. It is not disputed by respondent no.2 i.e., the contesting respondent and the supplier, that got registered in consonance with the provisions of the 2006 Act with respondent no.1 i.e., Micro and Small Enterprises Facilitation Council [in short “Council”] after the subject supplies had been made to the appellant.
4. Given this position, learned counsel for respondent no.2 cannot but accept, that this issue stands covered by the judgment rendered by the Supreme Court in Silpi Industries Etc. v. Kerala State Road Transport Corporation & Anr. 2021 SCC OnLine SC 439.
5. For the sake of convenience, the relevant observations made by the Supreme Court in paragraph 26 of the aforementioned judgment are extracted hereafter:
“26. Though the appellant claims the benefit of provisions under MSMED Act, on the ground that the appellant was also supplying as on the date of making the claim, as provided under Section 8 of the MSMED Act, but same is not based on any acceptable material. The appellant, in support of its case placed reliance on a judgment of the Delhi High Court in the case of GE T&D India Ltd. v. Reliable Engineering Projects and Marketing 2017 SCC OnLine Del 6978, but the said case is clearly distinguishable on facts as much as in the said case, the supplies continued even after registration of entity under Section 8 of the Act. In the present case, undisputed position is that the supplies were concluded prior to registration of supplier. The said judgment of Delhi High Court relied on by the appellant also would not render any assistance in support of the case of the appellant. In our view, to seek the benefit of provisions under MSMED Act, the seller should have registered under the provisions of the Act, as on the date of entering into the contract. In any event, for the supplies pursuant to the contract made before the registration of the unit under provisions of the MSMED Act, no benefit can be sought by such entity, as contemplated under MSMED Act. While interpreting the provisions of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, this Court, in the judgment in the case of Shanti Conductors Pvt. Ltd. & Anr. etc. v. Assam State Electricity Board & Ors. (2019) 19 SCC 529 has held that date of supply of goods/services can be taken as the relevant date, as opposed to date on which contract for supply was entered, for applicability of the aforesaid Act. Even applying the said ratio also, the appellant is not entitled to seek the benefit of the Act.
There is no acceptable material to show that, supply of goods has taken place or any services were rendered, subsequent to registration of appellant as the unit under MSMED Act, 2006. By taking recourse to filing memorandum under sub-section (1) of Section 8 of the Act, subsequent to entering into contract and supply of goods and services, one cannot assume the legal status of being classified under MSMED Act, 2006, as an enterprise, to claim the benefit retrospectively from the date on which appellant entered into contract with the respondent. The appellant cannot become micro or small enterprise or supplier, to claim the benefits within the meaning of MSMED Act 2006, by submitting a memorandum to obtain registration subsequent to entering into the contract and supply of goods and services. If any registration is obtained, same will be prospective and applies for supply of goods and services subsequent to registration but cannot operate retrospectively. Any other interpretation of the provision would lead to absurdity and confer unwarranted benefit in favour of a party not intended by legislation.”
6. Clearly, in view of the law enunciated by the Supreme in Silpi Industries, the reference made by respondent no.1/Council was without jurisdiction, as the 2006 Act could not have been triggered, in view of the fact that supplies were made before respondent no.2 got itself registered with respondent no.1 i.e., Council.
7. This view has also been reiterated in another judgment dated 24.03.2022, passed by the Supreme Court in Vaishno Enterprises v. Hamilton Medical AG & Anr. 2022 SCC OnLine SC 355. 7.[1] This position is also not disputed by Mr Udit Malik, who appears on behalf of respondent no.1/Council.
8. In these circumstances, the impugned judgment is set aside.
9. Liberty is, however, given to respondent no.2 to take further steps in the matter, if deemed necessary, albeit, as per law.
10. The above-captioned appeals are disposed of in the aforesaid terms.
11. Consequently, pending applications shall stand closed.
RAJIV SHAKDHER, J
TARA VITASTA GANJU, J
NOVEMBER 16, 2022
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