An MSMED reference is unavailable absent an amount due for services rendered.

The petitioners issued a tender for architectural services at Haldia and awarded the respondent no. 4 the work for ₹12,50,000 plus applicable GST.

The petitioners paid an initial bill of ₹2,95,000 but alleged that the respondent failed to provide the required deliverables and estimates despite requests to do so.

Following a show-cause notice, the petitioners terminated the contract on 25 March 2025.

The respondent then applied to the HMSEFC under Section 18(1) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), claiming ₹18,40,800.

The petitioners challenged the Council’s jurisdiction and the maintainability of the proceeding by writ petition.

The respondents did not appear in the writ proceedings.

Whether the HMSEFC could entertain the respondent’s Section 18(1) reference when, according to the petitioners, no amount was due under Section 17 of the MSMED Act.

Whether the HMSEFC was the appropriate authority to determine the dispute arising from the termination of the contract.

Section 18(1) of the MSMED Act permits a party to refer a dispute to the Facilitation Council concerning an amount due under Section 17.

Section 17 makes a buyer liable to pay for goods supplied or services rendered by a supplier, with interest as provided under Section 16.

Section 15 requires a buyer to pay for goods or services within the agreed period, subject to a maximum of 45 days.

The Court also referred to the statutory definitions of “buyer” in Section 2(d), “goods” in Section 2(f), and “supplier” in Section 2(n).

The Court noted that the respondent had not completed the work awarded under the contract, had not submitted a final running-account bill, and had not raised any claim before the petitioners before approaching the Council.

It therefore concluded that no amount was due and payable under Section 17 on the facts before it, and that the respondent had not supplied goods to the petitioners.

The Court further held that the Council was not the authority to decide the contract-termination dispute, particularly as the termination order had not been challenged before another forum.

The Court set aside and quashed the proceeding before the HMSEFC.

The writ petition was allowed.