Supreme Court: Party Who Was Not ‘Supplier’ On The Date Of Entering Into Contract Cannot Seek Any Benefits As Supplier Under MSMED Act

The Supreme Court in the case Gujarat State Civil Supplies Corporation vs Mahakali Foods Pvt. Ltd observed that a party who was not ‘supplier’ on the date of entering into contract, the party cannot seek any benefit as the ‘supplier’ under the MSMED Act, 2006
The bench comprising of Chief Justice Of India UU Lalit and Justice Bela M. Trivedi observed that if any registration is obtained subsequently the same would have an effect prospectively and would be applied to the supply of goods and rendering services subsequent to the registration.
In the present case, the bench was considering a batch of appeals raising issues regarding the interplay between the MSMED Act, 2006 and Arbitration and Conciliation Act, 1996?
The report about the said aspect:
The bench stated stated that as per the Section 2(n) of the MSMED Act, 2006, the term “supplier” means a small or micro enterprise, which has filed a memorandum with the authority referred to in subsection (1) of section 8, and includes, — (i) the National Small Industries Corporation and being a company, registered under the Companies Act, 1956 (1 of 1956); (ii) the Small Industries Development Corporation of a Union territory or of a State, by whatever name called and being a company registered under the Companies Act, 1956 (1 of 1956); (iii) any co-operative society, company, trust or a body, by whatever name being called, registered or constituted under any law for the time being in force and is engaged in selling of goods produced by small or micro enterprises and rendering services which are provided by such enterprise.
Before the court, one of the contentions raised in the case was if the party Supplier was not the “supplier” within the meaning of Section 2(n) of the MSMED Act, 2006 on the date of the contract entered into between the parties and the same could not have made any reference of dispute to Micro and Small Enterprises Facilitation Council under Section 18(1) of the MSMED Act, 2006. The court contended that the Council would not have the jurisdiction for deciding the disputes as an arbitration.
While addressing these contentions, the bench referred to the case Industries etc. vs. Kerala State Road Transport Corporation and Anr, wherein the court held that a party who was not the “supplier” as per Section 2 (n) of the MSMED Act, 2006 on the date of entering into the contract, no benefits would be available to the supplier under the MSMED Act, 2006. However, a party cannot become a micro or small enterprise or a supplier for claiming the benefit under the MSMED Act, 2006 by submitting a memorandum to obtain registration subsequent to entering into the contract and supply of goods or for rendering services. Subsequently, if any registration is obtained the same would have the effect prospectively and would apply for the supply of goods and for rendering services which is subsequent to the registration and the same cannot operate retrospectively.
It has been clarified by the bench that since there being a jurisdictional issue, it could also be decided by the Facilitation Council, institute or a Centre acting as an arbitral tribunal if raised by a party under the MSMED Act, 2006.