Supreme Court Judgment concerns the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The core issue is whether an enterprise must be registered under Section 8 of the Act before entering into a contract to utilize the dispute resolution mechanism provided in Section 18. The court analyzes the wording of the relevant sections, contrasting the “any party to a dispute” language in Section 18 with the definition of “supplier” in Section 2(n), and considers previous judgments, particularly Silpi Industries and Mahakali Foods. Ultimately, the court finds that prior registration is not a necessary precondition for referring a dispute under Section 18, highlighting the discretionary nature of registration for many enterprises and the Act’s purpose as beneficial legislation, but opts to refer the matter to a larger Bench for a definitive ruling due to conflicting precedents.
Micro, Small and Medium Enterprises Development Act, 2006, Section 18 – Micro, Small and Medium Enterprises – Reference to Arbitration – Dispute with regard to any amount due under section 17 – Appellant opposes this prayer by contending that ‘any party’ can only be a ‘supplier’ and that supplier should have been registered under Section 8 of the Act even before execution of the contract, if not, the reference is impermissible – High Court did not answer this question – Instead, it permitted the parties to raise such objections before the Arbitral Tribunal – The buyer is in appeal raising the same question as a jurisdictional issue – Held that Section 18 is not restrictive and is a remedy for the resolution of disputes, and as such, it is kept open-ended to enable ‘any party’ to refer the dispute to seek redressal – Submission that ‘any party to a dispute’ is confined to a ‘supplier’ who has filed a memorandum under Section 8 of the Act liable to be rejected – Held that Silpi Industries (supra) is not an authority on the issue that a reference under Section 18 cannot be made by a micro or small enterprise if supplies were made or contracts were executed before filing of the memorandum under Section 8 of the Act – Though it is possible for us to follow the precedents referred to in para 27 to arrive at the conclusion that the judgments in the case of Silpi Industries (supra) and Mahakali Foods (supra) coupled with the subsequent orders in Vaishno Enterprises (supra) and M/s Nitesh Estates (supra) cannot be considered to be binding precedents on the issue that has arisen for our consideration, taking into account the compelling need to ensure clarity and certainty about the applicable precedents on the subject, we deem it appropriate to refer this appeal to a three Judge Bench – Registry directed to place the appeal paper books along with our detailed judgment before the Hon’ble Chief Justice of India for constitution of an appropriate Bench.
(Para 1, 29 and 30)
Nbcc (India) Ltd V. State Of West Bengal
Supreme Court: 2025 INSC 54: (DoJ 10-01-2025)
