MSMED Case Laws

Whether an MSME can make a reference to the Facilitation Council for dispute resolution under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 if it is not registered under Section 8 of the MSMED Act before the execution of the contract with the buyer? – NBCC (India) Ltd. Vs. The State of West Bengal and Ors. – Supreme Court

The Hon’ble Supreme Court rejected the submission that ‘any party to a dispute’ is confined to a ‘supplier’ who has filed a memorandum under Section 8 of the MSMED Act, 2006. The Hon’ble Court has also explained that the issue(s) that have arisen in the decisions of this Court in Silpi Industries v. Kerala State Road Transport Corporation and Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd. were very different from the issue that has arisen for our consideration. However, for clarity and legal certainty, the Court has directed the appeal be placed before the Hon’ble Chief Justice of India for referring the matter to a bench of three Judges for an authoritative pronouncement.

Whether an MSME can make a reference to the Facilitation Council for dispute resolution under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 if it is not registered under Section 8 of the MSMED Act before the execution of the contract with the buyer? – NBCC (India) Ltd. Vs. The State of West Bengal and Ors. – Supreme Court Read Post »

Whether seat of MSMEF Council will be the seat of arbitration in the spirit of Section 18 read with section 24 of the MSMED Act, 2006? | When will the interplay between the MSMED Act, 2006 and the Arbitration Act, 1996 will come to an end? | Can MSMED Act, 2006 be applied to determine the jurisdiction of the Court defined in Section 2(1)(e) of the Arbitration Act 1996? – Uttar Gujarat Vij Company Ltd. Vs. Gupta Power Infrastructure Ltd. – Gujarat High Court

The Division Bench of the Gujarat High Court held that:
(i) The provisions of Section 18(4) of MSMED Act would have an overriding effect only with respect to the jurisdiction of the MSME Felicitation Council in adjudication of the dispute as an Arbitrator and has no application beyond that point.
(ii) Once the challenge is put forth before the Court defined in Section 2(1)(e) of the Arbitration Act, 1996 by making pre-requisite deposit as per Section 19 of the MSMED Act, 2006, the interplay between the MSMED Act, 2006 and the Arbitration Act, 1996 would come to an end.
(iii) The MSMED Act, 2006 cannot be read and applied to determine the jurisdiction of the Court defined in Section 2(1)(e) of the Arbitration Act, 1996 before whom the challenge to an award is laid under Section 34.
(iv) The rejection of the application under Section 34 on the ground of entertainability, i.e. lack of jurisdiction has resulted in denial to set aside an arbitral award would be a ground to entertain the appeal under Section 37, incorporated in sub-section (1)(c) of Section 37.

Whether seat of MSMEF Council will be the seat of arbitration in the spirit of Section 18 read with section 24 of the MSMED Act, 2006? | When will the interplay between the MSMED Act, 2006 and the Arbitration Act, 1996 will come to an end? | Can MSMED Act, 2006 be applied to determine the jurisdiction of the Court defined in Section 2(1)(e) of the Arbitration Act 1996? – Uttar Gujarat Vij Company Ltd. Vs. Gupta Power Infrastructure Ltd. – Gujarat High Court Read Post »

The Management, Sam Turbo Private Ltd. Vs. The Development Commissioner / Additional Secretary, (Micro Small and Medium Enterprise) MSME and Ors. – Madras High Court

(2024) ibclaw.in 1451 HC IN THE HIGH COURT OF MADRAS Sam Turbo Pvt. Ltd.v.Development Commissioner/ Additional Secretary, MSME and

The Management, Sam Turbo Private Ltd. Vs. The Development Commissioner / Additional Secretary, (Micro Small and Medium Enterprise) MSME and Ors. – Madras High Court Read Post »

When Appellant appeared before the Micro and Small Enterprises Facilitation Council in the conciliation proceeding and denied the claim, the award passed under Section 18(3) of MSMED Act cannot be challenged under Article 226 on the ground that the conciliation was not conducted in accordance with the prescribed procedure – AES India (Pvt.) Ltd. Vs. State of Odisha and Ors. – Orissa High Court

The appellant had appeared before the Council in the conciliation proceeding, completely denying the claim of the respondent and had asserted to the extent of saying that it sought to abuse the beneficial legislation i.e. MSMED Act and sought to unjustly enrich itself at the cost of the appellant. Taking into account the rival stands by the parties, the Council had terminated the conciliation process under Section 18(2) of the MSMED Act on 17.11.2022. The appellant participated in the arbitration proceeding, as is evident from the impugned award made by the Council. From the award, it does not appear that the appellant ever raised any issue of non-compliance of the requirement under Section 18(2) of the MSMED Act read with the provisions under Part-III of the Arbitration and Conciliation Act.

When Appellant appeared before the Micro and Small Enterprises Facilitation Council in the conciliation proceeding and denied the claim, the award passed under Section 18(3) of MSMED Act cannot be challenged under Article 226 on the ground that the conciliation was not conducted in accordance with the prescribed procedure – AES India (Pvt.) Ltd. Vs. State of Odisha and Ors. – Orissa High Court Read Post »

MSME Borrower cannot later use MSME status to challenge SARFAESI proceedings if MSME status was not initially raised – P.K. Krishnakuma and Anr. Vs. Induslnd Bank and Ors. – Kerala High Court

A Division Bench of Hon’ble Kerala High Court held that:

(i) In cases where a borrower who qualifies as MSME does not initially raise its status to challenge a bank’s recovery proceedings under the SARFAESI Act but instead participates fully in the process without objection, cannot later use their MSME status to argue that the proceedings were without jurisdiction.
(ii) When the Appellants, by their actions, accepted the Bank’s authority without objection, the High Court will refuse to exercise its writ jurisdiction to assist such Appellants, even if there are questions about the jurisdiction of the Bank.

MSME Borrower cannot later use MSME status to challenge SARFAESI proceedings if MSME status was not initially raised – P.K. Krishnakuma and Anr. Vs. Induslnd Bank and Ors. – Kerala High Court Read Post »

Whether non-compliance of Section 18(2) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) would vitiate an award passed? | Is the provision of Section 18 a mandatory provision? – Deccan Power Products Pvt. Ltd. Vs. Hyderabad Metro Water Supply and Sewarage Board and Ors. – Telangana High Court

Hon’ble Telangana High Court held:

(i) Because of non-compliance of the statutory requirement as is envisaged under Section 18, particularly Section 18(2) and Section 18(3), the award at the first instance if any passed would stand vitiated.
(ii) Section 18 being a mandatory provision and those provisions needs to be adhered to. Non-adherence of the requirement under Section 18, particularly Section 18(2) and Section 18(3), the award passed in contravention to the mandatory provisions becomes nullity and void ab initio.

Whether non-compliance of Section 18(2) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) would vitiate an award passed? | Is the provision of Section 18 a mandatory provision? – Deccan Power Products Pvt. Ltd. Vs. Hyderabad Metro Water Supply and Sewarage Board and Ors. – Telangana High Court Read Post »

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