Claims arising before MSMED registration are not maintainable under the MSMED Act.

The appellant, a sole proprietorship engaged in supplying aggregates and TMT steel bars, entered into contractual arrangements, including an MoU dated 9 February 2016, with the respondent, a Taiwan-incorporated company having a project office in India. Disputes arose concerning unpaid amounts for supplies made during 2016–2017/2018.

The appellant subsequently approached the Micro and Small Enterprises Facilitation Council (MSEFC), which, after failed conciliation, referred the disputes to DIAC under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”). The respondent challenged the tribunal’s jurisdiction under Section 16 of the Arbitration and Conciliation Act, 1996.

Whether claims arising from supplies made before the appellant’s registration under the MSMED Act were maintainable under the statutory dispute-resolution mechanism in Section 18?

Whether the appellant could rely on the alleged Rajasthan MSME registration/application of 2016 to establish maintainability of claims referred by the Delhi MSEFC?

Whether the arbitral tribunal’s findings on the distinct identity, nature and location of the Rajasthan and Delhi registrations could be interfered with under Section 37 of the Arbitration and Conciliation Act, 1996?

Whether the subsequent MSME reference was maintainable despite the appellant’s failure to pursue or challenge termination of the earlier arbitration concerning the same claims?

The Court applied Sections 2(n), 8, 17 and 18 of the MSMED Act. Under Section 2(n), a “supplier” is a micro or small enterprise that has filed the requisite memorandum under Section 8; Section 18 permits such supplier to invoke the MSEFC dispute-resolution mechanism, subject to the territorial jurisdiction of the Council where the supplier is located.

Relying principally on Silpi Industries v. Kerala State Road Transport Corporation, (2021) 18 SCC 790, the Court held that MSMED benefits operate prospectively: registration cannot retrospectively confer statutory benefits for contracts performed or supplies completed before registration.

The Court also referred to Shanti Conductors (P) Ltd. v. Assam SEB, (2019) 19 SCC 529, recognising the date of supply or rendering of services as relevant for determining applicability of the statutory regime.

The Court applied the limited scope of interference under Section 37 and held that a plausible factual and legal view of the tribunal could not be reappreciated merely because another view was possible.

It further relied on Harshbir Singh Pannu v. Jaswinder Singh, 2025 SCC OnLine SC 2742, for the principle that a party ordinarily must pursue the available remedy against termination of earlier arbitral proceedings and cannot reopen the same claims through subsequent proceedings.

The Court held that the appellant’s claims related to supplies completed between March 2016 and June 2017, whereas the Delhi MSME registration relied upon in the Statement of Claim was dated 26 February 2019. Under Silpi Industries, registration under the MSMED Act is prospective and cannot retrospectively convert a party into a statutory “supplier” for supplies already completed.

The Court further held that the appellant could not rely merely on the existence of a separate Rajasthan certificate or application. The tribunal had found that the Rajasthan document concerned a different enterprise/location and “manufacturing activity,” whereas the Delhi registration concerned the appellant’s Delhi establishment and “services”; the appellant had also relied on the Delhi registration in its pleadings and introduced the Rajasthan document only during arguments.

Since Section 18(4)–(5) contemplates reference by the MSEFC having territorial jurisdiction over the registered supplier, the Delhi Council could not use the later Delhi registration to entertain claims arising before that registration.

The tribunal’s factual findings were at least a plausible view and therefore did not warrant interference under Section 37.

Independently, the same claims had already been referred to arbitration and that proceeding had been terminated after the appellant failed to file its Statement of Claim. The appellant had not challenged that termination, and could not revive the same claims merely by obtaining subsequent MSME registration and initiating a new reference.

Accordingly, the appeal under Section 37(2)(a) was dismissed, with no relief granted to the appellant.