Andhra Pradesh High Court - Amravati
Sew Infrastructure Ltd vs The Andhra Pradesh Micro And Small ... on 25 October, 2024
APHC010470082024 Bench Sr.No:-1
IN THE HIGH COURT OF ANDHRA PRADESH
[3483]
AT AMARAVATI
WRIT APPEAL NO: 877 of 2024
M/s. Sew Infrastructure Ltd ...Appellant
Vs.
The Andhra Pradesh Micro and Small Enterprises Facilitation ...Respondents
Council (APMSEFC) and others
**********
Advocate for Appellant : Mr. Avinash Desai, Senior Counsel a/b
D S Sivadarshan
Advocate for Respondents : Mr. Rama Chandra Rao Gurram - R2
CORAM : THE CHIEF JUSTICE DHIRAJ SINGH THAKUR
SRI JUSTICE RAVI CHEEMALAPATI
DATE : 25th October, 2024
PC:
The present writ appeal has been preferred against the judgment and
order, 27.09.2024, whereby the petition filed by the appellant herein
questioning the jurisdiction of the Andhra Pradesh Micro and Small
Enterprises Facilitation Council [for short, „Facilitation Council‟] in terms of
Section 18 of the Micro, Small and Medium Enterprises Development Act,
2006 [„MSMED Act‟, for short] was dismissed.
2. Learned counsel for the appellant would submit that respondent
No.2 was registered as an MSME on 18.12.2015 and that most of the supplies
which formed the basis of its claim before the Facilitation Council pertained to
the period before the date of its registration in terms of Section 2(n) read with
Section 8 of the MSMED Act.
It was urged that respondent No.2 only with a view to somehow make
an effort to bring its claim within the purview of the MSMED Act also filed
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claim with regard to the supplies made and services rendered after the date of
its registration as an MSME.
3. Learned counsel for the appellant has placed reliance upon a
judgment of the Apex Court in Vaishno Enterprises v. Hamilton Medical AG
and another [2022 SCC Online SC 355] wherein the Apex Court held as under:
"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 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."
4. A perusal of the aforementioned judgment would show that the
contract in question between the parties before the Apex Court was entered
on 24.08.2020 whereas the claimant had been registered as an MSME on
28.08.2020.
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It is in those circumstances that the Apex Court held that on the date
when the contract was entered into between the parties, the claimant having
not been registered itself as an MSME would not be governed by the MSMED
Act and, therefore, as a necessary consequence held that the Facilitation
Council would have no jurisdiction to entertain the dispute between the
parties.
5. Learned counsel for respondent No.2, on the other hand, sought
to urge before us that in the instant case supplies were made not only before
the registration of respondent No.2 as an MSME but even after its registration
as such on 18.12.2015 and, therefore, once supplies were made after the
registration, it could file a claim even in regard to the supplies made before the
registration and, therefore, the Facilitation Council certainly did have the
jurisdiction.
6. Reliance in this regard is placed upon a judgment of the Delhi
High Court in GE T&D India Limited v. Reliable Engineering Projects and
Marketing [2017 SCC Online Del 6978]. This also is stated to have been
considered by the Apex Court in Silpi Industries Etc., v. Kerala State Road
Transport Corporation and another [2021 SCC Online SC 439]. The
relevant paragraph is paragraph No.26 in which the Apex Court observed as
under:
"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 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,
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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... "
In the context of the aforementioned judgment, learned counsel for
respondent No.2 would suggest that the view expressed by the Delhi High
Court in GE T&D India Limited was subsequently upheld by the Apex Court.
However, a copy of the same has not been produced before us much less any
reference made to the said judgment.
7. Be that as it may, the ratio of the aforementioned judgments of
the Supreme Court guide us to form a prima facie opinion that the Facilitation
Council would not have jurisdiction for supplies made before the date of
registration.
List for final consideration on 20.12.2024.
In the meantime, operation of the judgment and order impugned shall
remain stayed. The proceedings pending before respondent No.1 shall also
remain stayed till the next date of hearing.
DHIRAJ SINGH THAKUR, CJ
RAVI CHEEMALAPATI, J
Vjl
