Full Judgment Text
$~65
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Date of decision: 11 NOVEMBER, 2024
IN THE MATTER OF:
+ O.M.P. (COMM) 436/2024
IN-TIME GARMENTS PVT LTD .....Petitioner
Through: Mr. Rakesh Kumar, Mr. Abhimanu
Mahajan, Mrs. Preeti Kashyap, Mr.
Varun Pandit, Mr. Yash Dhawan and
Mr. Yash Tewari, Advocates.
versus
HSPS TEXTILE PVT LIMITED .....Respondent
Through:
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT (ORAL)
I.A. 42145/2024
1. This is an application on behalf of the Petitioner for condonation of
delay in re-filing.
2. For the reasons stated in the application, the delay of three days in re-
filing is condoned.
3. The application is disposed of.
O.M.P. (COMM) 436/2024 & I.A. 42142/2024, I.A. 42144/2024
1. The instant petition is one under Section 34 of the Arbitration &
Conciliation Act, 1996 challenging an Award dated 01.06.2024 passed by
the learned Sole Arbitrator.
2. By virtue of the Award, the learned Sole Arbitrator has allowed the
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 1 of 18
claim of the Respondent herein and has dismissed the counter claim of the
Petitioner herein.
3. Shorn of unnecessary details, the facts which are relevant for the
purpose of this challenge are as under:-
i. The Petitioner is a private limited company engaged in the
manufacturing of wearing apparel. It is stated that the Respondent
herein is also a private limited company engaged in the supply of
fabrics.
ii. It is the case of the Petitioner that it was approached by the
Respondent for supply of fabrics. It is stated that the Petitioner
placed four purchase orders for supply of fabrics on the
Respondent, which are as follows:-
a) Purchase Order No.305 dated 25.11.2019 for 23,000/- mtr.,
b) Purchase Order No.310 dated 19.12.2019 for 18,000/- mtr.,
c) Purchase Order No.311 dated 19.12.2019 for 12,000/- mtr.,
d) Purchase Order No.2201 dated 20.02.2020 for 6,000/- mtr.
iii. The claim of the Respondent is for the price of the goods
delivered to the Petitioner. As per the statement of claim, the
Respondent has made a claim of Rs.1,38,62,111.96/-, being the
unpaid amount of the fabrics supplied to the Petitioner.
iv. The case of the Petitioner herein, i.e., the Respondent in the
proceedings before the learned Arbitrator, was that the goods were
not delivered on time by the Respondent/Claimant and due to the
delay in supply of fabrics by the Respondent, the Petitioner herein
failed to complete the onward orders placed by the purchaser, i.e.
one M/s Trent Limited, which resulted in cancelling of the order.
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 2 of 18
v. It is the case of the Petitioner that they received a huge order from
the said M/s Trent Limited for supply of wearing apparel on
urgent basis. It is the case of the Petitioner herein that on coming
to know of such an order, the Respondent herein approached the
Petitioner for of supply of fabrics for the said order and the
Petitioner herein placed orders for supply of fabrics with the
Respondent herein.
vi. It is the case of the Petitioner that since the Respondent failed to
deliver the fabrics on time, M/s Trent Limited cancelled all the
purchase orders placed by it with the Petitioner herein. It is stated
that the goods could not be sold to anybody else and the
Respondent also did not take back all the material.
vii. The Respondent being a Micro, Small and Medium Enterprise
(MSME), approached the MSME Council. The MSME Council
referred the dispute to Delhi International Arbitration Centre
(DIAC) under Section 18 of the Micro, Small and Medium
Enterprises Development Act, 2006 ( in short 'MSMED Act').
viii. A Sole Arbitrator was appointed by the DIAC on 29.01.2024.
Along with the Claim Statement, the Respondent/Claimant also
placed to its registration under the MSMED Act. A copy of the
Registration of the Udyog Aadhar number was appended to the
Statement.
ix. In the statement of defence, the Petitioner herein disputed the
entire claim of the Respondent herein and it is the case of the
Petitioner herein that they suffered severe losses and damage on
account of delayed supply of material by the Respondent herein.
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 3 of 18
x. A counter-claim of Rs.96,35,204.90/- together with interest was
filed by the Petitioner herein.
xi. In light of the disputes raised by the parties, the following issues
were framed in the Reference before the learned Arbitrator:-
"(i) Whether the claimant is entitled to any payment
from the respondent and to what extent?
(ii) Whether the claimant acted in breach of the
agreement by causing delay or failing to adhere to the
specifications?
(iii) Whether the respondents suffered any loss or
damage on account of the claimant; and, if so, to what
extent?
(iv) To what principal reliefs and further reliefs are the
parties entitled? "
xii. The Respondent/Claimant examined one witness who was posted
in the accounts department of the Respondent and the Petitioner
herein examined two witnesses.
xiii. The Arbitrator after going through the material on record and after
perusing the evidence held that the entire lot of goods covered by
the four purchase orders were delivered by the Respondent to the
Petitioner herein which was not always in accordance with the
stipulated schedule. However, the learned Arbitrator observed
that the goods were never sought to be returned by the Petitioner
herein to the Respondent/Claimant. The Arbitrator disbelieved the
story of the Petitioner herein regarding the return of goods which
was sought to be made in the statement of defence.
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 4 of 18
xiv. The Arbitrator was of the opinion that under Section 55 of the
Contract Act, if a supplier does not deliver goods to his buyer in
the given stipulated time, there are three courses of action open to
the buyer. First, the buyer may return the goods outright and
return the same to the seller or at the very least, inform the seller
that the seller should take back the goods. Two, the buyer may put
the seller on notice and accept the goods conditionally, subject to
the buyer's right to seek appropriate compensation for the delay,
three, the buyer may accept the delivery without any protest.
xv. The learned Arbitrator was of the opinion that it is the conduct of
the buyer which shows whether the time is really of the essence of
the contract between the parties. The Arbitrator held that if the
buyer does anything inconsistent with making the goods in a
deliverable state for the same to be returned to the seller upon the
delayed delivery thereof, the buyer cannot assert the delay or seek
to cancel the agreement.
xvi. The learned Arbitrator was of the opinion that in the present case,
the buyer, i.e., the Petitioner herein, had accepted the delivery
without any protest. In fact, the goods had been accepted and were
sent to dying immediately.
xvii. The learned Arbitrator held that it was for the Petitioner herein to
establish by a cogent evidence that the Claimant was made aware
prior to the purchase orders or simultaneously with the issuance of
the first purchase order that the goods covered by the purchase
orders placed by the Petitioner herein on the Respondent would be
used for supplying garments to M/s Trent Limited and that there
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 5 of 18
was a strict time schedule for the delivery of the garments by the
Petitioner herein to M/s Trent Limited, failing which the orders
placed by M/s Trent Limited on the Petitioner herein would stand
cancelled.
xviii. The learned Arbitrator has held that the Petitioner herein has not
established that the Respondent herein was made aware prior to
the time of first issuance order that the goods supplied by the
Respondent/Claimant are for making garments for M/s Trent
Limited that had to be delivered within the time stipulated or else
the orders placed by the Petitioner would be cancelled.
xix. The learned Arbitrator held that the last purchase order was issued
on 20.02.2020 and the agreement between the parties did not
include the part relating to the Petitioner's part with M/s Trent
Limited far less of even the possibility of M/s Trent Limited
cancelling the order placed on the Petitioner herein for delayed
delivery of the fabric by the Respondent/Claimant to the Petitioner
herein.
xx. The learned Arbitrator therefore held that the Respondent
/Claimant could not have reasonably expected to appreciate the
consequences of its delayed delivery of goods and in any event
damages on such account would be too remote and improbable.
The learned Arbitrator held that no evidence has been led by the
Petitioner that the Respondent herein had been informed of the
consequence of the delayed receipt of such goods. The learned
Arbitrator also rejected the argument raised by the Petitioner
herein that the Reference by the MSME Facilitation Council was
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 6 of 18
not correct as the Respondent herein was not registered under the
MSMED Act since the Registration Certificate of the Respondent
under the MSMED Act had expired.
xxi. The learned Arbitrator was of the opinion that when the
Respondent herein made a Reference to the MSME Facilitation
Council and attempted mediation and when the matter was
referred to DIAC after mediation attempt has failed, no objection
was taken by the Petitioner herein, rather, the Petitioner herein
appeared before the Facilitation Council denied his liability to the
Respondent herein. The learned Arbitrator was of the opinion that
it is unconceivable that if the Petitioner herein was aware that the
Respondent/Claimant was not registered under the MSMED Act,
the objection would have been taken and such a response would
not have been taken at the very end of its submission in the
Reference.
xxii. The learned Arbitrator was of the opinion that the Petitioner
herein not only acquiesced in the authority of the Arbitral Tribunal
but also submitted to its jurisdiction and wholeheartedly embraced
the same by filing a substantial counter-claim and pursing the
same in right earnest. The learned Arbitrator did not accept the
argument raised by the Petitioner herein. The learned Arbitrator
allowed the claim of Rs.1,36,65,867/- which was the amount
which the Respondent/Claimant claimed as the balance due and
payable for the supply of fabrics and rejected the counter-claim
raised by the Petitioner herein.
4. Heard the Counsel for the Petitioner and perused the material on
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 7 of 18
record.
5. Learned Counsel for the Petitioner states that the specific case of the
Petitioner before the Arbitrator was that while placing purchase orders, RW-
2 had informed Ms. Shilpi Mathur, an employee of the
Respondent/company, about the final shipment of M/s Trent Limited and its
timeline. He states that CW-1/ Mr. Harish Kumar has admitted in his cross-
examination that Ms. Shilpi Mathur was the person who was dealing with
the Petitioner herein for the purchase orders, invoices, supply etc., and was
aware about the entire transaction. He states that despite the said fact, the
Respondent did not bring Ms. Shilpi Mathur to the witness box and instead
brought Mr. Harish Kumar who had no idea about the transaction. He states
that the only person who could have refuted the evidence of the Petitioner's
witness was Ms. Shilpi Mathur, who was deliberately not called as a witness
by the Respondent despite the fact that she is still employed with the
Respondent.
6. Learned Counsel for the Petitioner states that despite the above
acknowledgement, the learned Arbitrator has granted relief to the
Respondent and denied relief to the Petitioner herein on the ground that at
the relevant time, the Petitioner had not informed the Respondent that he had
received the orders from M/s Trent Limited and that the final product was to
be supplied to M/s Trent Limited.
7. Learned Counsel for the Petitioner states that while recording the
finding, the learned Arbitrator has ignored the vital evidence which clearly
stipulates that at the time when the purchase orders were placed, the
Respondent herein was aware about the final shipment of M/s Trent Limited
inasmuch as the learned Arbitrator has ignored Para 15 & 16 of the
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 8 of 18
Statement of Defence filed by the Petitioner herein, Para 6 & 7 of the
counter-claim filed by the Petitioner herein, Para 8 & 9 of the RW-1
evidence by way of affidavit, reply to the notice under Section 8 IBC, 2016,
legal notice dated 02.11.2020 issued by the Petitioner and the Whatsapp
chats between RW-2 and Ms. Shilpi Mathur (representative of the
Respondent). It is stated that the said chat reveals that from the very
beginning, the Respondent was quite aware about the final shipment and its
timelines. It is the contention of the learned Counsel for the Petitioner that
the Respondent herein was aware that time was the essence of the contract.
8. Learned Counsel for the Petitioner submits that the learned Arbitrator
has failed to appreciate that the Respondent was not entitled to claim
benefits under the MSMED Act. He states that the Respondent obtained a
Udyog Aadhar certificate on 20.12.2017 and the Ministry of MSME had
issued a notification dated 26.06.2020 and as per clause 7 of the notification,
the existing Udyog Aadhar certificate holders were supposed to migrate
themselves to Udyam, failing which the said MSME Unit ceases to be an
MSME and consequently cannot take the benefit under MSMED Act. He
states that the Respondent/Claimant on the basis of the Udyog Aadhar
certificate of 2017 has filed the claim on 11.05.2023. He further states that
there is no iota of submission in the entire claim that the Respondent has
been migrated to the Udyog Portal and has obtained registration therein.
Learned Counsel for the Petitioner therefore states that the argument of the
Petitioner could not be rejected only on the basis of acquiescence as the
Respondent was not statutorily entitled to claim any relief under the
MSMED Act.
9. The grounds on which an Award can be set aside has been
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 9 of 18
enumerated by the Apex Court in a number of judgments. Recently, the
Apex Court in OPG Power Generation Private Limited v. Enexio Power
Cooling Solutions India Private Limited & Anr., 2024 SCC OnLine SC
2600, has observed as under:-
" 60. Sub-section (2-A) of Section 34 of the 1996 Act,
which was inserted by 2015 Amendment, provides that
an arbitral award not arising out of international
commercial arbitrations, may also be set aside by the
Court, if the Court finds that the award is visited by
patent illegality appearing on the face of the award.
The proviso to subsection (2-A) states that an award
shall not be set aside merely on the ground of an
erroneous application of the law or by reappreciation
of evidence. In Saw Pipes (supra), while dealing with
the phrase „public policy of India‟ as used in Section
34, this court took the view that the concept of public
policy connotes some matter which concerns public
good and public interest. If the award, on the face of it,
patently violates statutory provisions, it cannot be said
to be in public interest. Thus, an award could also be
set aside if it is patently illegal. It was, however,
clarified that illegality must go to the root of the matter
and if the illegality is of trivial nature, it cannot be held
that award is against public policy.
61. In Associate Builders (supra), this Court held that
an award would be patently illegal, if it is contrary to:
(a) substantive provisions of law of India;
(b) provisions of the 1996 Act; and
(c) terms of the contract.
The Court clarified that if an award is contrary to the
substantive provisions of law of India, in effect, it is in
contravention of Section 28(1)(a) of the 1996 Act.
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 10 of 18
Similarly, violating terms of the contract, in effect, is in
contravention of Section 28(3) of the 1996 Act.
62. In Ssangyong (supra) this Court specifically dealt
with the 2015 Amendment which inserted sub-section
(2-A) in Section 34 of the 1996 Act. It was held that
“patent illegality appearing on the face of the award”
refers to such illegality as goes to the root of matter,
but which does not amount to mere erroneous
application of law. It was also clarified that what is not
subsumed within “the fundamental policy of Indian
law”, namely, the contravention of a statute not linked
to „public policy‟ or „public interest‟, cannot be
brought in by the backdoor when it comes to setting
aside an award on the ground of patent illegality.
Further, it was observed, reappreciation of evidence is
not permissible under this category of challenge to an
arbitral award.
63 . Perversity as a ground for setting aside an arbitral
award was recognized in Western Geco (supra).
Therein it was observed that an arbitral decision must
not be perverse or so irrational that no reasonable
person would have arrived at the same. It was
observed that if an award is perverse, it would be
against the public policy of India.
64 . In Associate Builders (supra) certain tests were
laid down to determine whether a decision of an
arbitral tribunal could be considered perverse. In this
context, it was observed that where : (i) a finding is
based on no evidence; or (ii) an arbitral tribunal takes
into account something irrelevant to the decision which
it arrives at; or (iii) ignores vital evidence in arriving
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 11 of 18
at its decision, such decision would necessarily be
perverse. However, by way of a note of caution, it was
observed that when a court applies these tests it does
not act as a court of appeal and, consequently, errors
of fact cannot be corrected. Though, a possible view
by the arbitrator on facts has necessarily to pass
muster as the arbitrator is the ultimate master of the
quantity and quality of evidence to be relied upon. It
was also observed that an award based on little
evidence or on evidence which does not measure up
in quality to a trained legal mind would not be held to
be invalid on that score.
65 . In Ssangyong (supra), which dealt with the legal
position post 2015 amendment in Section 34 of the
1996 Act, it was observed that a decision which is
perverse, while no longer being a ground for challenge
under “public policy of India”, would certainly
amount to a patent illegality appearing on the face of
the award. It was pointed out that an award based on
no evidence, or which ignores vital evidence, would be
perverse and thus patently illegal. It was also observed
that a finding based on documents taken behind the
back of the parties by the arbitrator would also qualify
as a decision based on no evidence in as much as such
decision is not based on evidence led by the parties,
and therefore, would also have to be characterized as
perverse.
66 . The tests laid down in Associate Builders (supra) to
determine perversity were followed in Ssyanyong
(supra) and later approved by a three-Judge Bench of
this Court in Patel Engineering Limited v. North
Eastern Electric Power Corporation Limited.
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 12 of 18
67 . In a recent three-Judge Bench decision of this
Court in Delhi Metro Rail Corporation Ltd. v. Delhi
Airport Metro Express Pvt. Ltd. 2024 INSC 292, the
ground of patent illegality/perversity was delineated in
the following terms:
“40. In essence, the ground of patent illegality is
available for setting aside a domestic award, if
the decision of the arbitrator is found to be
perverse, or so irrational that no reasonable
person would have arrived at it; or the
construction of the contract is such that no fair or
reasonable person would take; Or, that the view
of the arbitrator is not even a possible view. A
finding based on no evidence at all or an award
which ignores vital evidence in arriving at its
decision would be perverse and liable to be set
aside under the head of patent illegality. An
award without reasons would suffer from patent
illegality. The arbitrator commits a patent
illegality by deciding a matter not within its
jurisdiction or violating a fundamental principle
of natural justice.”
68 . The aforesaid judicial precedents make it clear that
while exercising power under Section 34 of the 1996
Act the Court does not sit in appeal over the arbitral
award. Interference with an arbitral award is only on
limited grounds as set out in Section 34 of the 1996
Act. A possible view by the arbitrator on facts is to be
respected as the arbitrator is the ultimate master of the
quantity and quality of evidence to be relied upon. It is
only when an arbitral award could be categorized as
perverse, that on an error of fact an arbitral award
may be set aside. Further, a mere erroneous
application of the law or wrong appreciation of
evidence by itself is not a ground to set aside an
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 13 of 18
award as is clear from the provisions of subsection (2-
A) of Section 34 of the 1996 Act."
(emphasis supplied)
10. Applying the law laid down by the Apex Court, the conclusion arrived
at by the Arbitrator, on the facts of the case that, the Respondent was not
made aware of the consequences of not supplying fabrics in time, does not
warrant any interference by this Court while exercising its jurisdiction under
Section 34 of the Arbitration Act. Under Section 34 of the Arbitration Act
the Court cannot re-appreciate evidence and substitute its own conclusion to
the one arrived at by the Arbitrator even though a different conclusion can
be arrived at on re-appreciating evidence. As has been rightly held by the
Courts that while exercising jurisdiction under Section 34 of the Arbitration
Act, the Courts do not sit at a Court of appeal and the onus to show that the
time was the essence of the contract is on the Petitioner herein and the
Petitioner cannot make a grievance that the Respondent did not examine Ms.
Shilipi Mathur. Nothing prevented the Petitioner from approaching the
Arbitrator to summon Ms. Shilpi Mathur and the Arbitrator, while
exercising his power under Section 27 of the Arbitration Act, could have
summoned Ms. Shilpi Mathur as a witness.
11. A perusal of the Award indicates that the learned Arbitrator has
meticulously gone into the evidence on record has appreciated the
contentions taken by the Petitioner and the Respondent has applied the
various provisions relied on by the Petitioner herein before rejecting the
counter-claim of the Petitioner herein and allowing the claim of the
Respondent/Claimant. Therefore, it cannot be said that the Award is based
on no evidence or that the learned Arbitrator has taken into account
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 14 of 18
something irrelevant to the decision while arriving at the conclusion or has
ignored any vital evidence in arriving at a decision which would make the
decision perverse.
12. This Court has once again gone through the statement of defence and
the counter-claim and the evidence filed by the Petitioner and is of the
opinion that it cannot be stated that the conclusion arrived at by the learned
Arbitrator is perverse or is such that would categorise the Award as perverse
or patently illegal.
13. A view has been taken by the learned Arbitrator on the facts of the
case and it is well settled that the learned Arbitrator is the ultimate master of
the quality and quantity of evidence to be relied on. It is settled that a
plausible view taken by the Arbitrator on facts of the case is to be respected.
14. MSMED Act was brought in to free Micro, Small and Medium
Enterprises from the plethora of laws and regulations which they had to face
with their limited awareness and resources. Micro, Small and Medium
Industries have emerged as a significant contributor to the economy and is
primarily labour intensive. The MSMED Act was brought in to address the
concerns of Micro, Small and Medium industries. Chapter V of the MSMED
Act deals with delayed payments to the MSMEs. The said Chapter has been
brought in to ensure that when goods or services are supplied by the
MSMEs, the payments are made to these industries within time and Sections
under Chapter V provides for delayed payment at higher rate of interest. The
purpose of this chapter is to ensure that the MSMEs are not pushed out of
business. It is felt that failure to pay for the amount of goods and services
provided by these enterprises was resulting in many of the MSMEs going
out of business as they do not have the might to fight with the large scale
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 15 of 18
enterprises. Section 18 of the MSMED Act provides for reference of a
dispute to the MSME Facilitation Council. The MSME Facilitation Council
on receipt of a reference under Sub-Section 18(1) of the MSMED Act, the
Council shall either itself conduct conciliation in the matter or seek the
assistance of any institution or centre providing alternate dispute resolution
services by making a reference to such an institution or centre, for
conducting conciliation. In the present matter, prior to sending the matter to
the Arbitral Tribunal, an effort for conciliation was also made and the matter
was referred to the Arbitral Tribunal only after conciliation proceedings
have failed. Once the matter is referred to Arbitration and an award is
passed, the award can be challenged either by filing an application under
Section 34 of the Arbitration Act or by filing an application under Section
19 of the MSMED Act. [Refer to:- Executive Engineer & Ors. v. Bholasingh
Jaiprakash Construction Limited & Anr., 2024 SCC OnLine Del 1080 ].
15. The Apex Court in Gujarat State Civil Supplies Corporation Limited
v. Mahakali Foods Private Limited (Unit 2) & Anr., 2023 (6) SCC 401 , has
concluded as under:-
" 51 . Following the abovestated ratio, it is 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, could not seek any benefit as a supplier under
the Msmed Act, 2006. A party cannot become a micro
or small enterprise or a supplier to claim 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
rendering services. If any registration is obtained
subsequently, the same would have the effect
prospectively and would apply for the supply of goods
and rendering services subsequent to the registration.
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 16 of 18
The same cannot operate retrospectively. However,
such issue being jurisdictional issue, if raised could
also be decided by the Facilitation
Council/Institute/Centre acting as an Arbitral Tribunal
under the Msmed Act, 2006."
16. Applying the said law to the facts of the present case it can be seen
that the Respondent had filed a copy of the Udyog Aadhar Certificate issued
in the year 2017. The purchase orders are post the date of the registration.
The case of the Petitioner is that the Ministry of MSME issued a notification
on 26.06.2020 and as per the said notification existing Udyog Aadhar
Certificate holders were supposed to migrate themselves to Udyam. Once
the Respondent has been registered under the MSMED Act, the Respondent
is entitled to the benefits of the MSMED Act.
17. As stated by the learned Arbitrator, the Respondent was registered
under the MSMED Act in the year 2017 itself and therefore the benefit of
the MSMED Act cannot be declined to the Respondent herein and therefore
the statutory right conferred by the MSMED Act cannot be taken away from
the Respondent.
18. The learned Arbitrator has not rejected the argument of the Petitioner
merely on the basis of acquiescence. The learned Arbitrator was of the
opinion that the Petitioner herein knew that the Respondent is entitled to the
benefit of MSMED Act and that is the reason the Petitioner participated
before the MSME Council and in the arbitration proceedings without raising
this issue. In the considered opinion of this Court, that the arguments raised
by the Petitioner amounts to splitting hairs and clutching at straws which
cannot be countenanced and is impermissible in law. The conclusion arrived
at by the learned Arbitrator therefore cannot be found fault with under
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 17 of 18
Section 34 of the Arbitration & Conciliation Act either on the ground that it
is opposed to the policy or on the ground that it is in contravention with the
fundamental policy of Indian law or is in conflict with the basic notion of
morality and justice or is vitiated by patent illegality. Therefore, the
challenge to the impugned Award cannot be accepted.
19. In view of the above, the petition is dismissed along with pending
application(s), if any.
SUBRAMONIUM PRASAD, J
NOVEMBER 11, 2024
hsk
Signature Not Verified
Digitally Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:18.11.2024
19:42:23
O.M.P. (COMM) 436/2024 Page 18 of 18