The High Court of Jammu, Kashmir and Ladakh has held that non-registration under Section 8 of the MSME Act at the time of supply does not render the Facilitation Council’s reference under Section 18(3) or the resulting arbitral awards a nullity. The Court clarified that registration under Section 8 of the MSME Act is not a jurisdictional precondition for the Facilitation Council to entertain a reference under Section 18(3) and refer the dispute to arbitration. An enterprise that is not registered under the MSME Act at the relevant time can still avail of the Council’s mechanism.
The Court also held that having regard to the definition of ‘supplier’, the classification of enterprises into micro, small, and medium with separate legal regimes, and the discretion vested in MSMEs for filing a memorandum under Section 8, the contention that the Facilitation Council cannot entertain a reference if the enterprise is unregistered under Section 8 must be rejected.
Re-registration under the Government of India’s notification dated June 26, 2020 (SO 2119(E)), which required all existing enterprises registered under EM Part-II or UAM to re-register on or after 1 July 2020, does not reset the original date of registration. The respondent’s Udyog Aadhaar Memorandum Certificate showed registration with effect from April 01, 2010, well before the supply transactions in 2014–2015, added the Court.
Briefly, the respondent, M/s Mother Choice Health Care India, had three separate supply transactions with the revision petitioners, namely M/s Kashmir Confectionary Store and others, M/s Mehak Trading Co., and M/s Naugraein Traders. When the amounts remained unpaid, the respondent approached the Himachal Pradesh Micro and Small Enterprises Facilitation Council (MSEFC), Shimla. The Facilitation Council first took up the matter for conciliation under Section 18(2) of the MSME Act. Upon finding that conciliation was not possible, it referred all three disputes to arbitration under Section 18(3) of the MSME Act. The arbitrator then passed three separate awards.
The respondent filed three execution petitions before the District Judge, Solan, Himachal Pradesh, for enforcement of these awards. Those petitions were transferred to the District Judge, Jammu for disposal. During the pendency of execution, the petitioners filed three separate objections under Section 47 read with Section 151 of the Code of Civil Procedure (CPC), challenging the executability of the decrees based on the arbitral awards. The Principal District Judge, Jammu dismissed all three objection applications.
A Single Judge Bench of Justice Sanjay Dhar noted that the Government of India, through the Ministry of MSME, issued a notification dated June 26, 2020 (SO 2119(E)) requiring all existing enterprises registered under EM Part-II or UAM to re-register on or after 1 July 2020. The respondent had re-registered in the year 2020 in compliance with that notification. The petitioners had mistaken this re-registration as a first-time registration, leading them to wrongly claim that the respondent was unregistered in 2014–2015. The Court found this basis to be misconceived, since the original registration dated back to 2010.
Even if it were assumed that the respondent was not registered under the MSME Act at the relevant time, the Court held that this alone would not render the arbitrator’s awards a nullity. Relying on the Supreme Court’s decision in NBCC (India) Ltd. v. The State of West Bengal [2025 INSC 54], the High Court noted that having regard to the definition of the expression ‘supplier’ and the ‘classification’ of enterprises into micro, small, and medium, with separate legal regimes for each as suggested by the Advisory Committee and notified by the Central and State Governments, and in view of the discretion specifically vested with the MSMEs for filing a memorandum under Section 8 of the MSME Act, the contention that the Facilitation Council cannot entertain a reference under Section 18(3) of the MSME Act if the enterprise is not registered under Section 8 must be rejected.
