M/S Shravya Buildtech vs M/S Sew Infrastructure Ltd.,
2024 Latest Caselaw 9 AP

Andhra Pradesh High Court - Amravati

M/S Shravya Buildtech vs M/S Sew Infrastructure Ltd., on 2 January, 2024

Author: R. Raghunandan Rao

Bench: R. Raghunandan Rao

    IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI

 HON'BLE MR.JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE
                               &
         HON'BLE MR. JUSTICE R. RAGHUNANDAN RAO

                 WRIT APPEAL No.1310 of 2023


M/s. Shravya BuildTech
Admin office at:
Flat No.201, MM Plaza,
Beside Andhra Bank, Kommadi Junction,
Visakhapatnam - 530 048
Represented by its authorised signatory

                                                      ... Appellant

                             Versus


M/s. SEW Infrastructure Ltd.,
A company incorporated under
The Provisions of the Companies Act, 1956
6-3-871, Snehalata Green Lands Road,
Begumpet, Hyderabad - 500 016,
Represented by its authorised signatory,
S. Satyanarayana Swamy and another.

                                                    ...Respondents

Mr. Rama Chandra Rao Gurram, Counsel for the appellant.

Mr. Avinash Desai, learned Counsel appearing vice Mr. D. S. Sivadarshan, Counsel for respondents.

HCJ & RRR, J

DATE : 02.01.2024

PER DHIRAJ SINGH THAKUR, CJ:

1. The present writ appeal under clause 15 of the Letters Patent

has been preferred against the judgment and order dated

23.11.2023 passed in W.P.No.29656 of 2023. By virtue of the order

impugned the learned single Judge stayed the operation of the

order passed by the Andhra Pradesh Micro and Small Enterprises

Facilitation Council (hereinafter referred to as ―APMSEFC‖) for a

period of eight weeks.

2. With a view to understand the background in which the

present controversy has arisen, it is necessary to give in brief the

material facts:

Respondent No.1, after obtaining a work contract from

M/s. East Coast Energy Private Limited for Civil and Construction

works for sea water intake system in Srikakulam District in Andhra

Pradesh, awarded a sub-contract to the appellant herein and issued

a work order dated 29.04.2015 for completing the said civil works

as per the terms and conditions which were reflected in the said

work order. Disputes appear to have arisen between the appellant

and respondent No.1 in regard to and in connection with the said

sub-contract which resulted in the appellant approaching

APMSEFC/respondent No.2 herein in terms of Section 18 (1) of the HCJ & RRR, J

Micro, Small and Medium Enterprises Development Act, 2006

(hereinafter referred to as ―MSMED Act‖).

3. A preliminary objection appears to have been raised by

respondent No.1 before the said Council with regard to the

jurisdiction of the Council to entertain the reference made by the

appellant.

The objection raised was that the appellant could not invoke

the provisions of the MSMED Act inasmuch the appellant had been

registered as a MSME unit on 18.12.2015, by filing a Memorandum

of Application under Section 8 (1) of the MSMED Act and therefore,

was not a registered MSME unit at the time of entering into

contract on 29.04.2015. It was therefore, the case of respondent

No.1 that, the appellant on that account did not fall within the

definition of ―supplier‖ as defined by Section 2 (n) of the MSMED

Act which envisages as under:

―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,--

(i) the National Small Industries Corporation, being a company, registered under the Companies Act, 1956 (1 of 1956);

(ii) the Small Industries Development Corporation of a State or a Union territory, by whatever name called, being a company registered under the Companies Act, 1956 (1 of 1956);

(iii) any company, co-operative society, trust or a body, by whatever name called, registered or constituted under any law for the time HCJ & RRR, J

being in force and engaged in selling goods produced by micro or small enterprises and rendering services which are provided by such enterprises;‖

4. The Facilitation Council however by virtue of the order

impugned in the writ petition ruled that it had jurisdiction to

entertain the reference made by the appellant herein which became

the subject matter of challenge before the writ Court in a writ

petition filed by respondent No.1.

5. The learned single Judge however by virtue of the judgment

and order impugned stayed the order passed by the Facilitation

Council for a period of eight weeks by placing reliance upon the

Apex Court judgment in Gujarat State Civil Supplies Corporation

Ltd., vs. Mahakali Foods Private Ltd., and another1. What was held

by the learned single Judge is as under:

―... He also refers to the another decision in the case of Gujarat State Civil Supplies Corporation Ltd., Vs. Mahakali Foods 9 Private Ltd., and another reported in (2023) 6 SCC 401 wherein at Para No.51 of the said judgment it was observed that, ―the party who was not the ―supplier‖ as per Section 2 (n) of the MSMED Act, 2006 on the date of entering into the contract, could not seek any benefit as a supplier under the MSMED Act, 2006. A party cannot become a micro or small enterprise or a supplier to claim the benefit under the MSMED Act, 2006 by submitting a memorandum to obtain registration subsequent to entering into the contract and

(2023) 6 SCC 401 HCJ & RRR, J

supply of goods or rendering services. If any registration is obtained subsequently, the same would have the effect prospectively and would apply for the supply of goods and rendering services subsequent to the registration. ...‖

In that view of the matter, the learned single Judge then

proceeded to hold as under:

―... This Court would prima facie entertain the doubt whether the 1st respondent can proceed with those transactions under the provisions of MSMED Act and whether the order passed by the 1st respondent on the preliminary objection of the writ petitioner 11 herein is valid or not has to be examined in detail in this writ petition. For which, there shall be an interim order prohibiting the 1st respondent to proceed further.

In view of the same, the operation of the impugned order of the 1st respondent dated 09.10.2023 is stayed for a period of eight (08) weeks.

List on 04.01.2024, under the caption ―for hearing‖.‖

6. Learned counsel for the appellant would submit that the

impugned order is unsustainable as learned single Judge had not

noticed the ratio of the judgment rendered by the Apex Court in the

case of M/s. Silpi Industries etc., vs. Kerala State Road Transport

Corporation and another etc.,2 as also the judgment passed by Delhi

High Court in GE T & D India Ltd., vs. Reliable Engg. Projects &

(2021) 18 SCC 790 HCJ & RRR, J

Mktg.3, wherein it was specifically held that the provisions of the

MSMED Act could be invoked if the supplies were continued even

after registration of the entity under Section 8 of the Act.

7. Counsel for respondent No.1, on the other hand, placed

reliance upon the Apex Court judgment in the case of Vaishno

Enterprises vs. Hamilton Medical AG4, wherein it was held:

―15. It is not in dispute that the contract/agreement between the appellant and the respondent has been executed on 24.08.2020. Therefore, the laws of India applicable at the time of contract/agreement shall be applicable and therefore the parties shall be governed by the laws of India prevailing/applicable at the time when the contract was executed. It is admitted position that the date on which a contract/agreement was executed i.e. on 24.08.2020 the appellant was not registered MSME. Considering the relevant provisions of the MSME Act more particularly Section 2(n) read with Section 8 of the MSME Act, the provisions of the MSME Act shall be applicable in case of supplier who has filed a memorandum with the authority referred to in sub-section (1) of Section 8. Therefore, the supplier has to be a micro or small enterprise registered as MSME, registered with any of the authority mentioned in sub-section (1) of Section 8 and Section 2(n) of the MSME Act. It is admitted position that in the present case the appellant is registered as MSME only on 28.08.2020. Therefore, when the contract was entered into the appellant was not MSME and therefore the parties would not be governed by the MSME Act and the parties shall be governed by the laws of India applicable and/or prevailing at the time of execution of the contract. If that be

2017 SCC Online Del 6978

2022 SCC OnLine SC 355 HCJ & RRR, J

so the Council would have no jurisdiction to entertain the dispute between the appellant and the Respondent no. 1, in exercise of powers under Section 18 of the MSME Act. Therefore, in the aforesaid peculiar facts and circumstances of the case, more particularly the terms of the Agreement, the order passed by the learned Single Judge confirmed by the Division Bench holding the Council would have no jurisdiction with respect to Respondent No. 1 is not required to be interfered with.‖

8. We have heard learned counsel for the parties. Admittedly the

order impugned is to remain in operation only for a period of eight

weeks and the matter has also been directed to be listed for hearing

on 04.01.2024. The order impugned in the present Letters Patent

Appeal, in our view, does not suffer from any perversity which

would have warranted our interference considering the ratio of the

Apex Court judgment in Wander Ltd. vs. Antox India (P) Ltd.5,

wherein it was held:

―14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from the one

5 (1990) Supp SCC 727 HCJ & RRR, J

reached by the court below if the one reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion.‖

9. Considering the facts in the present case on the touchstone of

the principles laid down in the case of Wander Ltd. vs. Antox India

(P) Ltd. (supra), we do not feel this to be a case fit for interference

and leave the parties to argue the matter on the date fixed by the

learned single Judge.

10. In the result, the writ appeal is dismissed. No order as to

costs.

Pending miscellaneous applications, if any, shall stand closed.

DHIRAJ SINGH THAKUR, CJ R. RAGHUNANDAN RAO, J

SSN HCJ & RRR, J

HON'BLE MR.JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE & HON'BLE MR. JUSTICE R. RAGHUNANDAN RAO

DATE : 02.01.2024

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