Case Note & Summary
The petitioner, M/s. Metaforge Engineering (I) P. Ltd., a company registered under the Companies Act and classified as a Medium Enterprise, filed an application under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) against respondent no. 4 for payment of dues. The Micro and Small Enterprises Facilitation Council rejected the application on the ground that the petitioner, being a Medium Enterprise, could not invoke the jurisdiction of the Council under Section 18. The petitioner contended that it was a supplier of goods manufactured by a small enterprise and thus fell within the definition of 'supplier' under Section 2(n)(iii) of the Act. The respondents supported the Council's order, arguing that only micro or small enterprises could avail the remedy under Section 18. The High Court examined the definition of 'supplier' under Section 2(n)(iii), which includes any person who supplies goods manufactured by a small enterprise. The court held that the classification of the supplier itself is irrelevant; what matters is that the goods supplied are manufactured by a small enterprise. Therefore, a Medium Enterprise can invoke Section 18 if it supplies goods of a small enterprise. The court relied on the Delhi High Court judgment in Ramky Infrastructure Private Limited v. Micro and Small Enterprises Facilitation Council. The court set aside the Council's order and remitted the matter for fresh consideration on merits, directing the Council to decide the application in accordance with law.
Headnote
A) Micro, Small and Medium Enterprises - Supplier Definition - Section 2(n)(iii) and Section 18 of Micro, Small and Medium Enterprises Development Act, 2006 - Medium Enterprise as Supplier - The petitioner, a Medium Enterprise, supplied goods manufactured by a small enterprise. The Facilitation Council rejected its application under Section 18 on the ground that the petitioner is a Medium Enterprise. The High Court held that the definition of 'supplier' under Section 2(n)(iii) includes any person who supplies goods manufactured by a small enterprise, regardless of the supplier's own classification. Therefore, a Medium Enterprise can invoke Section 18 if it supplies goods of a small enterprise. The court relied on the Delhi High Court judgment in Ramky Infrastructure Private Limited v. Micro and Small Enterprises Facilitation Council. The order of the Council was set aside and the matter was remitted for fresh consideration. (Paras 6-9)
Issue of Consideration
Whether a Medium Enterprise, which is a supplier of goods manufactured by a small enterprise, can invoke the jurisdiction of the Micro and Small Enterprises Facilitation Council under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006.
Final Decision
The High Court set aside the order of the Micro and Small Enterprises Facilitation Council and remitted the matter for fresh consideration on merits, directing the Council to decide the application in accordance with law.
Law Points
- Interpretation of 'supplier' under Section 2(n)(iii) of MSMED Act
- 2006
- Medium Enterprise can invoke Section 18 if it supplies goods of small enterprise
- Liberal interpretation to achieve object of Act
