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2024 (11) TMI 980 - HC - Indian LawsJurisdiction of Micro and Small Enterprises Facilitation Council to refer the purported disputes obtaining between MRPL and Driplex for adjudication via arbitration - Validity of the No Claim Certificate issued by the supplier and its impact on the claims - Jurisdiction of Micro and Small Enterprises Facilitation Council to refer the purported disputes obtaining between MRPL and Driplex for adjudication via arbitration - HELD THAT - In the instant matter, MRPL and Driplex entered into an agreement on 01.12.2009. Driplex submitted a memorandum to register itself as a small enterprise under the 2006 Act on 09.12.2011. Concededly, Driplex completed its work and obtained a certificate from MRPL after registration under Section 8 of the 2006 Act i.e., only on 11.03.2013. Since Driplex had been awarded a turnkey contract, the work, quite naturally, would have continued even after it filed a memorandum i.e., obtained registration under the 2006 Act. The judgment in Shanti conductors case 2019 (1) TMI 1906 - SUPREME COURT , which was rendered by a three-judge bench of the Supreme Court and concerned pari materia provisions contained in the 1993 Act tilts the balance in favour of Driplex as it, inter alia, holds that the applicability of the Act i.e., the 1993 Act would be determined on the date when the goods were supplied, and services were rendered and not the date when contract was entered into between the disputants. It is noted that MRPL had filed a reply dated 20.02.2016 in which the jurisdictional issue appears to have been raised before the Council. This was clearly given up at the later stage as, concededly, this issue was not raised before the learned Single Judge - thus, the Council had the jurisdiction to refer the disputes under Section 18 of the 2006 Act to the arbitral tribunal. Whether the present claims are tenable in the light of the No-Claim Certificate dated 25.09.2013 issued by the Claimant? - HELD THAT - This area need not be delved upon since a petition preferred by MRPL under Section 34 of the Arbitration Act is pending adjudication. Appeal disposed off.
Issues Involved:
1. Jurisdiction of the Micro and Small Enterprises Facilitation Council to refer disputes to arbitration under the Micro, Small and Medium Enterprises Development Act, 2006. 2. Validity of the "No Claim Certificate" issued by the supplier and its impact on the claims. Issue-wise Detailed Analysis: Issue No. 1: Jurisdiction of the Council The primary issue was whether the Micro and Small Enterprises Facilitation Council (hereafter referred to as "the Council") had the jurisdiction to refer disputes to arbitration under the Micro, Small and Medium Enterprises Development Act, 2006 (hereafter referred to as "the 2006 Act") when the supplier, Driplex, registered under the Act after entering into a contract with the appellant, MRPL. MRPL contended that the provisions of the 2006 Act could not operate retrospectively, arguing that Driplex did not qualify as a "supplier" under the Act at the time of the contract because it registered only after the contract was executed. The court examined the scheme of the 2006 Act, noting that its purpose was to facilitate the growth and development of small-scale industries by providing a legal framework for timely payments and dispute resolution. The court emphasized that the definition of "supplier" under Section 2(n) of the 2006 Act should be contextualized, as indicated by the opening words of Section 2, "unless the context otherwise requires." The court concluded that the benefits of the Act, including timely payment and interest on delayed payments, should be available to enterprises classified as micro, small, or medium, even if they registered after entering into a contract, provided they registered before the Council made a reference under Section 18 of the Act. The court found that Driplex had completed its work and obtained a completion certificate from MRPL after its registration under the 2006 Act. The arbitral tribunal had already determined that the disputes related to the period after Driplex's registration, and this finding was accepted by the court. The court distinguished the present case from the Supreme Court judgments relied upon by MRPL, noting that in those cases, the supply of goods or services was completed before registration. Therefore, the court held that the Council had jurisdiction to refer the disputes to arbitration. Issue No. 2: Validity of the "No Claim Certificate" The second issue concerned the "No Claim Certificate" (NOC) issued by Driplex to MRPL and whether it precluded Driplex from pursuing further claims. MRPL argued that the issuance of the NOC discharged its obligations due to accord and satisfaction. However, the arbitral tribunal had framed an issue regarding the NOC, but no arguments were advanced by either party on this point during the arbitration proceedings. The tribunal proceeded on the assumption that MRPL had not pressed this issue. The court agreed with the learned Single Judge's ruling that the issue of the NOC needed to be agitated before the arbitral tribunal. Since the tribunal had rendered an award and the issue was not pressed by MRPL during arbitration, the court did not delve into this area further. The court noted that a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award, was pending adjudication. In conclusion, the court dismissed the appeal, affirming the jurisdiction of the Council to refer the disputes to arbitration and leaving the issue concerning the NOC to be addressed in the pending Section 34 proceedings. The court emphasized that its decision on jurisdiction would not preclude MRPL from raising the NOC issue in the ongoing arbitration-related proceedings.
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