KMV Projects Limited v. Andhra Pradesh Micro and Small Enterprises Facilitation Council
2025-01-24
K.MANMADHA RAO
body2025
DigiLaw.ai
ORDER : This writ petition is filed under Article 226 of the Constitution of India for the following relief: “….to issue to issue a Writ of Mandamus or any other appropriate Writ or Writs Order or Direction declaring the Respondents minutes of the meeting dated 20.09.2023 in the proceedings vide reference no 21C/IFC/2023/2741 as arbitrary and illegal being inter alia in violation of the provisions of the Medium Enterprises Development Act 2006 and the Andhra Pradesh Micro Small and Medium Enterprises Facilitation Council Rules 2007 in addition to being in contravention of the principles of natural justice and consequently terminate the proceedings before the Respondent in 21C/IFC/2023/2741 between the 2 nd Respondent and the Petitioner as being without jurisdiction and pass…” 2. Brief facts of the case are that the petitioner is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in the execution of several large-scale infrastructure projects across the country. In the instant case, the Petitioner was awarded the work of construction of a bridge near Chamanur village in the Kalaburgi district of Karnataka. The Petitioner and the 2 nd Respondent (a partnership concern) executed the Sub-Contract dated 22.08.2018. whereby, the 2 nd Respondent was responsible for executing the entire works on a back-to- back basis. Under the Sub-Contract, the 2nd Respondent is, inter alia, responsible for planning, procuring, supplying, execution and installation, testing, quality and quantity checking for compliance and commissioning, and operation and maintenance of the above-noted bridge up to the defect liability period. The 2 nd Respondent's Reference relates to its purported claims under this Sub-Contract. It is further stated that several clauses of the Sub-Contract, including the recitals, make it clear that the 2nd Respondent had undertaken the entire responsibility for the works. The 2 nd respondent initiated a reference before the 1 st respondent by filing its reference, which is in the form of a statement of claim, the 2 nd respondent has advanced several claims against the petitioner allegedly arising under the Sub-Contract. The 2 nd respondent’s alleged claims aggregate to a principal claim amount of Rs.17,00,45,429/- and interest of Rs.14,45,40,417/-. It is further stated that, on 22.08.2023, the Petitioner received a "Notice Calling for Statement of Defence" from the 1 st Respondent under Rule 8(1) of the AP MSEFC Rules.
The 2 nd respondent’s alleged claims aggregate to a principal claim amount of Rs.17,00,45,429/- and interest of Rs.14,45,40,417/-. It is further stated that, on 22.08.2023, the Petitioner received a "Notice Calling for Statement of Defence" from the 1 st Respondent under Rule 8(1) of the AP MSEFC Rules. In this notice, the 1 st Respondent called upon the Petitioner to submit its statement of defence within 15 (fifteen) days of receiving the instant notice. In addition, the Petitioner was directed to pay an advance for costs referred to in Section 31 (8) of the Arbitration and Conciliation Act, 1996 (for short "Arbitration Act"). Further, in the notice, the 1 Respondent has further stated that the 2 nd Respondent has made the Reference to it to act as an "Arbitrator" regarding the 2nd Respondent's claims against the Petitioner. the petitioner has sent a letter to the 1 st respondent on 4.9.2023 stating that it required further time to collate the necessary documents and therefore requested an enlargement of time. Again on 5.9.2023 the petitioner received another “Notice Calling for Statement of Defence” from the 1 st respondent, which does not appear to have considered the petitioner’s request. Thereafter, without calling for any response from the petitioner, the 1 st respondent sent a notice dated 8.9.2023 informing that, a meeting will be held on 20.9.2023 for conciliation in terms of Section 18(2) of MSME Act. Objecting the same, the petitioner submitted a detailed Memo. After filing the Memo before the 1 st respondent during the meeting on 20.9.2023 the 1 st respondent shared a copy of a circular dated 4.1.2023 issued by the Ministry of Micro, Small and Medium Enterprises Government of India (for short “the Circular”). Relying on the above Circular, the 1 st respondent believed that the claims being agitated by the 2 nd respondent were within its jurisdiction and asked the petitioner to file its statement of defence. However a reading of the circular makes it clear that it is wholly inapplicable to the petitioner’s jurisdictional objections and the 1 st respondent has misdirected itself, in relying on the same. in any event, having not had the opportunity to review the contents of the Circular, the petitioner did not admit to the relevance of the circular during the meeting on 20.09.2023.
in any event, having not had the opportunity to review the contents of the Circular, the petitioner did not admit to the relevance of the circular during the meeting on 20.09.2023. The petitioner received a copy of Impugned Minutes which is in the nature of a non-speaking order, nearly four weeks after the meeting held on 20.09.2023. Questioning the same, the present writ petition came to be filed. 3. The counter affidavit has been filed by the respondent No.2. While denying all the allegations made in the petition, inter alia, contended that, the petitioner and this respondent have entered into a sub contract agreement dated 22.08.2018 for execution of the work of construction of a bridge near Chamanurvilalge in Kalaburgi District of Karnataka State, which is being sanctioned to the petitioner by the Chief Engineer, National Highways, public Works, Ports and Inland water transport Department Bengaluru vide Main contract Tender agreement No.ENH/KLB/TND/10 for 2017-18. In spite of execution of works the petitioner company has not released the payments to the 2 nd respondent firm to the tune of Rs.31,45,85,846/-. Further, though the 2 nd respondent firm has submitted several letters to the petitioner company for releasing of delayed payments, the petitioner company has not taken any steps so far. As such, the 2 nd respondent being MSME has availed the remedy under the MSME Act 2006 and has made a reference with the 1 st respondent Facilitation council for entering into reference under Section 18of MSME Act 2006 claiming an amount of Rs.17,00,45,429/- and interest amount of Rs.14,45,40,417/- from the petitioner company. Accordingly the 1 st respondent entered into reference vide Ref No.21C/ FC/2023/2741 and issued notice dated 14.08.2023 calling upon the petitioner company to furnish its statement of defence as per rule 8(1) of the Andhra Pradesh Micro & Small Enterprises Facilitation Council Rules 2007. In pursuance of the same, the petitioner company sent a letter dated 4.9.2023 requesting time for filing the statement of defence. It is further stated that, as scheduled on 20.9.2023 a conciliation meeting was held by respondent No.1 council, to which the representatives of both the petitioner’s company as well as 1 st respondent have attended.
In pursuance of the same, the petitioner company sent a letter dated 4.9.2023 requesting time for filing the statement of defence. It is further stated that, as scheduled on 20.9.2023 a conciliation meeting was held by respondent No.1 council, to which the representatives of both the petitioner’s company as well as 1 st respondent have attended. Thereafter, the petitioner company filed a Memo dated 20.09.2023 objecting for the jurisdiction of the 1 st respondent council in entering into reference made by 2 nd respondent, on the erroneous presumption that MSMEF council 1 st respondent cannot enter a reference with respect to work contracts and the Act takes its fold only manufacturing activities and Service activity. It is further stated that the petitioner company was provided with a copy of the circular and was informed and clarified by the 1 st respondent Facilitation Council that its jurisdiction and the representatives of the petitioner company have also accepted the same. It is not in dispute that a conciliation meeting under Section 18 (2) was held on 20.09.2023 which was attended by representatives of both petitioner company and also 2 nd respondent firm. Upon raising preliminary objection with respect to the jurisdiction of the 1 st respondent council the 1 st respondent council furnished a copy of the Circular dated 4.1.2023 and upon receiving the same the petitioner company consented with the contents of the circular and sought time for filing statement of defence. As such the present writ petition is liable to be dismissed. 4. Heard Sri Prahstha.M., learned counsel appearing for the petitioner; learned Government Pleader for Industries and learned counsel representing M/s Momos Vistas the Layers. 5. On hearing, learned counsel for the petitioner while reiterating the averments made in the petition, submits that, it is clear from a plain reading of Section 18 of MSME Act that only those disputes that arise concerning any amount due under Section 17 from a buyer of any goods supplied or services rendered by a supplier registered under the MSME Act are susceptible to the 1 st respondent’s adjudicatory jurisdiction under the MSME Act. Section 17, in turn, states that the buyer is liable to pay the amount due for any goods supplied or services rendered together with interest thereon.
Section 17, in turn, states that the buyer is liable to pay the amount due for any goods supplied or services rendered together with interest thereon. He further submits that, the term ‘buyer’ as per Section 17 is defined under Section 2(d) of the MSME Act as “whoever buys any goods or receives any services from a supplier for consideration” Section 2(n)(iii) defines “supplier” to mean a Micro or Small Enterprise that has filed a Memorandum with the authority referred to in sub section (1) of section 8 and includes “any company, co-operative society, trust or a body, by whatever name called, registered or constituted under any law for the time being in force and engaged in selling goods produced by micro or small enterprises and rendering services which such enterprises provide”. 6. Learned counsel for the petitioner has relied upon a decision of Hon’ble Supreme Court in a case of Larsen and Toubro Limited and others v. State of Karnataka and others , [ (2014) 1 SCC 708 ], and submits that a “works contract” is not a contract for supply of goods or provision of services. A “works Contract” is identifiable by law as a separate specie of contract, and includes within its purview works in addition to simply supplying goods or rendering related services. As such an enterprises registered under the MSME Act can be engaged in activities other than the supply of goods or services. However, the benefit of the MSME act will not be available those activities of the enterprise that do not fall within either of these categories. 7. Learned counsel for the petitioner further submits that, in the present case, the disputes submitted by the 2 nd respondent in reference to the 1 st 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 2 nd respondent reference which is liable to be rejected. He further submits that, it cannot be disputed that the petitioner appeared before the 1 st respondent under protest, having filed its jurisdictional objections by the Memo dated 20.09.2023. The petitioner cannot be said to have submitted to the 1 st respondent’s jurisdiction.
He further submits that, it cannot be disputed that the petitioner appeared before the 1 st respondent under protest, having filed its jurisdictional objections by the Memo dated 20.09.2023. The petitioner cannot be said to have submitted to the 1 st respondent’s jurisdiction. In any event, it is trite law that the parties’ consent cannot confer jurisdiction on an authority that inherently lacks jurisdiction to adjudicate a given dispute or proceedings. Therefore, even if the statement recorded in the Impugned Minutes to the effect that the Petitioner accepted the Circular is taken at face value, the Petitioner could not have waived statutory provisions and conferred jurisdiction on the 1 st Respondent. Further, it was nonetheless incumbent on the 1 st Respondent to have deliberated upon the Petitioner's jurisdictional objections, which were of such a nature as to go to the root of the matter. 8. To support his contentions, learned counsel for the petitioner hasrelied upon a decision of Hon’ble Supreme Court reported in RajasthanState Electricity Board, Jaipur vs. Mohan Lal and Ors., MANU/SC/0360/1967, wherein the Apex Court held that : ….” in our opinion, the High Courts fell into an error in applying the principle of ejusdem generis when interpreting the expression " other authorities" in Art. 12 of the Constitution, as they overlooked the basic principle of interpretation that, to invoke the application of ejusdem generis rule, there must be a distinct genus or -category running through the bodies already named. Craies on ,Statute Law summarises the principle as follows :- "The ejusdem generis rule is one to be applied with caution and not pushed too far.... To invoke the, application of the ejusdem generis rule there must be a distinct genus or category. The specific words must apply not to different objects of a widely differing character but to something which can be called a class or kind of objects.
To invoke the, application of the ejusdem generis rule there must be a distinct genus or category. The specific words must apply not to different objects of a widely differing character but to something which can be called a class or kind of objects. Where this is lacking, the rule cannot apply, but the mention of a single species does not constitute a genus.” (ii) In another case reported in Commissioner of Central Excise,Bolpur vs. Ratan Melting and Wire Industries, MANU/SC/4587/2008, wherein the HE Apex Court held that: Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law. (iii) In another case reported in Rashtriya Ispat Nigam Limited vs. The Union of India and Ors., MANU/AP/2696/2022, wherein the high Court of Andhra Pradesh at Amaravati, held that : In addition, in the opinion of this Court, the following definitions of Act 27 of 2006 are also important: 2 (d) 'buyer' means whoever buys any goods or receives any services from a supplier for consideration; (e) 'enterprise' means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (55 of 1951) or engaged in providing or rendering of any service or services; (n) 'supplier' means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of section 8, and includes,-- (i)... (ii)...
(ii)... (iii) any company, co-operative society, trust or a body, by whatever name called, registered or constituted under any law for the time being in force and engaged in selling goods produced by micro or small enterprises and rendering services which are provided by such enterprises; The second and equally important issue raised is about the filing of the memorandum under section 8 of the Act 27 of 2006 and the invocation of the jurisdiction of the facilitation council. This Court finds that the definition of supplier in section 2(n) of the Act 27 of 206 is as follows: 2 (n) 'supplier' means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of section 8, and includes,-- In addition, the decision of the Hon'ble Supreme Court in Silpi Industries etc., (5 supra) supports this view. In para 25 of the said decision, the Hon'ble Supreme Court noted all the dates. It was found that bids were invited on 25.02.2010; bid was submitted on 17.05.2010; work was awarded on 21.09.2010 and contract was signed on 29.07.2011. The section 8 memorandum was applied for by the appellant on 25.03.2015. Thereafter, in para 26, the following was decided among other things: ....................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. ..................... 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.
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 (iv) In a case of National Textile Corporation Ltd., vs. Elixir Engineering Pvt. Ltd., and Ors, [MANU/MH/1047/2023], wherein the High Court of Bombay heldthat: It was further submitted that the Facilitation Council had no jurisdiction to enter into reference for arbitration in the facts of the present case, because a perusal of the contracts/work orders would show that they were nothing but works contracts. By relying upon judgment of this Court in the case of M/s. P. L. Adke Vs. Wardha Municipal Corporation/Council (judgment and order dated 01st March, 2021, passed in Arbitration Appeal (St) No. 30508 of 2019 in Arbitration Application (Commercial) No. 7 of 2019), it was submitted that the impugned awards deserve to be set aside. It was submitted that in the said judgment, this Court had specifically held that a works contract would not be amenable to the provisions of the MSMED Act and that therefore, the impugned awards in the present case also were clearly without jurisdiction. It was brought to the notice of this Court that the aforementioned judgment in the case of M/s. P. L. Adke Vs. Wardha Municipal Corporation/Council (supra) was followed by the Andra Pradesh High Court in the case of Rashtriya Ispat Nigam Ltd. vs. Union of India(MANU/AP/0689/2022,…” 9. Learned counsel for the petitioner while relying on the above decisions, prayed to allow the writ petition. 10. Whereas, learned Government Pleader opposed for allowing the writ petition and prayed to dismiss the same. 11. On the other hand, learned counsel appearing for the 2 nd respondent while reiterating the contents made in the counter affidavit, submits that, the meeting was held on 20-09-2023 and as per Rule 8 of APMSME Rules 2007 the Facilitation council is empowered to direct Petitioner Company to file Statement of Defence. As such the objection of petitioner’s company with respect to the same is incorrect.
As such the objection of petitioner’s company with respect to the same is incorrect. He further submits that the present interpretation and application of MSME Act, 2006 is in the nature of adopting an inclusive approach of including the claims of all MSME's regulated under the Act to make the Act efficacious and implementing effectively the machinery provided to expedite the claims of MSME's and to conduct the process in furtherance of promotion of objects and application of the Act. He further submits that, any narrow hyper technical interpretation devised to deny the relief of a forum and machinery under the Act of 2006 to any registered MSME of reference before MSME facilitation council would be contrary to the very object, and intent of the Act and defeat its purpose as laid down by this Hon'ble High Court and other High Courts. 12. Learned counsel for the 2 nd respondent reiterated that the issue in adjudication before Supreme Court of India in the rulings cited by petitioner company is not whether a claim from a works contract can be adjudicated by an MSME Facilitation Council or not but the Supreme Court was examining the legal position as to the modalities of imposition of sales tax on works contracts prior to the insertion of the clause 29-A of Article 366 of Constitution of India and hence the question was in relation to Article 366 (29-A) of Constitution of India and its interpretation. As such there is no authoritative precedent lying down that MSME Facilitation council is not entitled for resolution of claims under the Act in work contracts except claims relating to the manufacturing activity and services only. Such narrow interpretation would make the beneficial legislation ineffective defeating its very object. Therefore, learned counsel for the 2 nd respondent prayed to dismiss the writ petition. 13.
Such narrow interpretation would make the beneficial legislation ineffective defeating its very object. Therefore, learned counsel for the 2 nd respondent prayed to dismiss the writ petition. 13. To support his contentions, learned counsel appearing for the 2nd respondent has placed reliance on a decision reported in Jaiprakash Associates Limited versus Micro and Small Enterprises Facilitation Council and another, [2023 SCC OnLine Del 4601] , wherein the High Court of Delhi held that : In a nutshell, going by the facts and legal issues involved, there are primarily two short issues for consideration before this Court, namely [i] whether the reference orders under the MSME Act are tenable or not, and, if so, [ii] whether the reference orders for work contracts could be collectively referred for arbitration before the same learned Arbitrator. 15. While considering the first issue, this Court finds on the facts disclosed that even though KBPL was registered under the MSME Act on 07.09.2019, it had been raising bills qua work contracts/agreements on JAL since before and furthermore the supplies took place post registration of KBPL as an MSME. As per the settled legal position laid down by the learned Single Judge in Chief General Manager (Contracts) (supra) which has been upheld by a Division Bench of this Court vide judgment dated 29.01.2020 in LPA 688/2019 and against which SLP(C) No. 9268/2020 has been dismissed by the Hon'ble Supreme Court vide order dated 22.09.2020, and also the judgment in GE T&D India Limited (supra), the aforesaid facts of work going on is sufficient for the reference by MSEFC to be legally tenable. In fact, it is an admitted position of the appellant that one of the invoices under the work contracts/agreements is indeed post registration of KBPL as a MSME. Thus, this Court is of the opinion that the MSEFC was well within its powers to refer the matter to arbitration and there was no error of any kind. 16. In the opinion of this Court, the contention of learned counsel for the appellant that the work contracts/agreements involved were composite indivisible contracts for different works itself ousts the jurisdiction of the MSEFC, cannot be accepted as the mere nomenclature used therein is not enough to determine the nature thereof.
16. In the opinion of this Court, the contention of learned counsel for the appellant that the work contracts/agreements involved were composite indivisible contracts for different works itself ousts the jurisdiction of the MSEFC, cannot be accepted as the mere nomenclature used therein is not enough to determine the nature thereof. The learned Single Judge in the first impugned order has not gone into the determination of the subject work contracts/agreements as such and has rightly left the issue, as to whether the work contracts/agreements were in fact work contracts which are indivisible contracts including the 'supply of goods' and which 'render a service' open to be adjudicated by the learned Arbitrator. As such, this Court cannot go into the said determination. 17. In any event, the contentions raised as to the lack of inherent jurisdiction of the MSEFC and that the agreements involved are work contracts, have been raised to enlarge the scope of the appeal which is not permissible in law. In the garb of an appeal, the appellant cannot raise new and fresh grounds not raised before the learned Single Judge, and this Court cannot consider these fresh grounds. (ii) In another case reported in M/s. Dalapathi Constructions versus The State of Andhra Pradesh and others, [2022 AIR (Andhra Pradesh) 150], wherein the High Court of Andhra Pradesh held that: 16. Section 7 of the Arbitration and Conciliation Act, 1996 requires an arbitral agreement in writing to be available before any dispute can be referred to arbitration. In the present case such an arbitral agreement is available in Clause-38 of the agreement dated 14.06.2018. However, Section 18 (3) of the Act provides that the arbitration conducted by the Facilitation Council shall be treated as arbitration, as if the said dispute was referred under an arbitration agreement referred to in sub- section (1) of Section 7 of the Arbitration and Conciliation Act, 1996 . Further, Section 18(4), which starts with a non-obstante clause states that 9 RRR,J the Facilitation Council shall have jurisdiction to act as arbitrator in any dispute between a supplier located with its jurisdiction and buyer located anywhere in India. In Shah & Parikh, Engineers & Contractors vs. Urmi Trenchless Technology Pvt. Ltd., and Ors., the learned Single Judge while dealing with a similar issue, at paragraph-22 had held as follows: "22. As regards the other defence is concerned, defendant no.
In Shah & Parikh, Engineers & Contractors vs. Urmi Trenchless Technology Pvt. Ltd., and Ors., the learned Single Judge while dealing with a similar issue, at paragraph-22 had held as follows: "22. As regards the other defence is concerned, defendant no. 1 is admittedly a small enterprise registered under the MSME Act. The registration certificate is annexed at Exhibit „1? to the affidavit in support of notice of motion (L) no. 2266 of 2018 filed by defendant no. 1 under Section 8 of the Arbitration Act. The Registration Certificate is for "horizontal boring", which is nothing but drilling activity. Plaintiff in the course of arguments did not dispute that defendant no. 1 was registered under the MSME Act, but merely sought to contend that the work forming the subject matter of the contract between the parties was not the same activity for which defendant no. 1 had been registered. However, as stated above, this is misconceived as "horizontal boring" is in fact a drilling activity. Further, there is nothing in the MSME Act which provides that the registration for a particular activity will render an enterprise liable not to be regarded as a micro, small or medium enterprise for any other activity. (iii) In another case reported in Shah & Parikh versus Urmi Trenchless Technology Pvt. Ltd. and another, [2019 SCC OnLine Bom 340], wherein the High Court of Bombay held that: 21 Section 18 (3) of the MSME Act contemplates a reference to arbitration and there is a deeming provision that the arbitration should be deemed to have been instituted pursuant to an arbitration agreement under Section 7 of the Arbitration Act. As held by the Hon'ble Supreme Court in the context of the predecessor Act to the MSME Act [Secur Industries Limited (supra)], there is an incorporation of the Arbitration Act into the MSME Act by virtue of Section 18 (3) of the MSME Act. Section 18 (3) of the MSME Act clearly provides that the Arbitration Act shall apply to the disputes as if the arbitration was in pursuance of an agreement referred to in Section 7 of the Arbitration Act.
Section 18 (3) of the MSME Act clearly provides that the Arbitration Act shall apply to the disputes as if the arbitration was in pursuance of an agreement referred to in Section 7 of the Arbitration Act. 22 If the Arbitration Act is held to apply, then the provisions of the Arbitration Act including Section 23, which deals with Counter Claims/set off, is incorporated in the MSME Act and plaintiff herein would be at liberty to raise its counter claim before the Facilitation Council. This would be in consonance with justice and would avoid multiplicity of proceedings as also the unsatisfactory possibility of different fora taking different views on the same subject matter. (iv) In another case reported in Hindustan Petroleum Corporation Limited and another versus West Bengal State Micro, Small Enterprises, Facilitation Council and others, [2023 SCC OnLine Cal 1700], wherein the High Court of Calcutta held that : 58. Again, a learned Single Judge of the Andhra Pradesh High Court, in Rashtriya Ispat Nigam (supra) applied the proposition of Kone /Elevator (supra) erroneously to the MSME Act, which was followed by two other Single Judge decisions of the Bombay High Court in PP.L. Adke (Supra) and National Textile Corporation (supra). 59. As opposed to the said judgments cited by the petitioner, a rather correct approach, in the humble opinion of this Court, was adopted by a learned Single Judge of this Court and another learned Single Judge of the Andhra Pradesh High Court, respectively in Marine Craft Engineers (supra) and Dalapathi Constructions (supra). Althought eh judgment of this Court was not exactly in the context of a works contract, it was rightly observed that if a registration is obtained by a micro and small enterprise under Section 8(1) of theAct, the supplier fulfils the necessary conditions and comes within the purview of Section 18of the MSME Act. The Andhra Pradesh High Court also clearly recorded that there is nothing in the MSME Act which provides that the registration for a particular activity will render an enterprise liable not to be regarded as a micro, small or medium enterprise for any other activity. Once registered, the status of the enterprise is that of a registered enterprise under the MSME Act and all the provisions of the said Act apply with full force. 60.
Once registered, the status of the enterprise is that of a registered enterprise under the MSME Act and all the provisions of the said Act apply with full force. 60. Thus, in the context of the above discussion, the principle of Kone Elevator (supra) was erroneously applied by several High Courts in the judgments cited by the petitioner, as discussed above, the correct proposition of law, in my humble opinion, is that once an enterprise, otherwise coming within the contemplation of the Act is registered under section 18(1) the same has to attract the provisions of the MSME Act, including Section 18 of the same, vesting authority on the Council to resolve disputes in that regard. (iv) In another case reported in Marine Craft Engineers Private Limited Versus Garden Reach Shipbuilders and Engineers Limited, 2023 SCC OnLine Cal807 wherein the High Court of Calcutta held that : In light of the above discussion, the conclusion of this Court is as follows. The date of execution of a contract between a buyer and a supplier under the MSMED Act is irrelevant for the application of the provisions of the MSMED Act provided the supplier claims recovery of the amount due under section 17 for goods supplied or services rendered after the date of registration. In other words, whether the supplier was registered as an MSME on the date of the contract would not disqualify the supplier from making reference to the Micro and Small Enterprises Facilitation Council under section 18 for recovery of outstanding amounts as long as the amounts claimed are relatable to goods supplied or services rendered after the date of registration of the supplier as a micro, small or medium enterprise under section 8(1) of the Act. If the supplier fulfils the aforesaid condition and makes a reference to the Facilitation Council under section 18, the Council steps in as the only - and exclusive forum - to decide the reference under the provisions of the MSMED Act, 2006. 24. The exclusivity of the jurisdiction of the Facilitation Council to decide on the reference is clearly spelt out by the sub-sections to section 18 including the non obstante clause which is a precursor to the sub-sections.
24. The exclusivity of the jurisdiction of the Facilitation Council to decide on the reference is clearly spelt out by the sub-sections to section 18 including the non obstante clause which is a precursor to the sub-sections. Section 18(1) begins with "Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council." To return to the present dispute, the unilateral act of the respondent in invoking the contractual arbitration clause and appointing the learned Sole Arbitrator on 23.9.2016 after the petitioner made a reference to the Facilitation Council is thus patently contrary to the provisions of the MSMED Act. Moreover, the respondent invoked the arbitration clause and proceeded with the arbitration and made a reference before the Arbitrator appointed by it being fully aware that the reference before the Facilitation Council under the MSME Act was pending as on the date of the appointment of the Arbitrator. The impugned Award dated 23.9.2018 by which the claim of the respondent (which was the claimant in the arbitration proceedings) of Rs. 30,24,849/- was allowed in full is hence in the form of a face-off with the provisions of the MSMED Act so to speak. 14. Perused the material on record. 15. On perusing the material on record and on hearing the submission of both the learned counsels, it is observed that the meeting was held by the 1 st respondent on 20.09.2023. It is not in dispute that a conciliation meeting under Section 18(2) was held on 20.09.2023 which was attended by representatives of both the Petitioner Company and also respondent No.2 firm. It is further observed that, upon raising preliminary objection with respect to the jurisdiction of the 1 st respondent council, it has furnished a copy of Circular dated 04.01.2023. 16. On a perusal of the above Circular, it is observed that the Circular does not interpret or consider the scope of Section 17and 18 of the MSME Act, which are the only provision under the MSME Act from which the 1 st respondent would derive its authority. The Circular also does not consider or to take note of the above decisions relied upon by the petitioner.
The Circular also does not consider or to take note of the above decisions relied upon by the petitioner. As such the Circular only concerns itself with the online registration portal and there is no clarification, express or implied, relating to jurisdiction of the 1 st respondent to adjudicate dispute arising from works contracts. It is also not in dispute that the petitioner appeared before the 1 st respondent under protest, having filed its jurisdictional objections by the Memo dated 20.09.2023. The petitioner cannot be said to have submitted to the 1 st respondent’s jurisdiction. 17. Viewed from any angle, it is trite law that he parties consent cannot confer jurisdiction on an authority that inherently lacks jurisdiction to adjudicate a given dispute or proceedings. Therefore, even if the statement recorded in the impugned Minutes to the effect that the petitioner accepted the Circular is taken at face value, the petitioner could not have waived statutory provisions and conferred jurisdiction on the 1 st respondent. Further, the express and unconditional legal proscription clarifies that the 1 st respondent is not empowered to adjudicate the disputes referred to it vide the 2 nd respondent’s reference since the dispute arises from a “works contract”. 18. Therefore, the 1 st respondent failed to adhere to the principles of natural justice. Further, the 1 st respondent issued the Circular, without giving any opportunity to the petitioner to make any submissions concerning the applicability of the Circular. It was incumbent on the 1 st respondent, a quasi judicial authority, to have followed the principles of natural justice before ruling on the petitioner’s Memo and that the 1 st respondent appears pre-determined to reject the petitioner’s jurisdictional objections. Therefore, the impugned Minutes are liable to be set aside. 19. Accordingly, the Writ Petition is allowed. The impugned Minutes of the Meeting dated 20.09.2023 is hereby set aside and the proceedings vide reference No.21C/IFC/2023/2741 of the 1 st respondent, which is in between the petitioner and the 2 nd respondent are herby terminated being without jurisdiction. No costs. 20. As a sequel, all the pending miscellaneous applications shall stand closed.