MSME registration subsequent to contract execution does not bar reference to the Facilitation Council under Section 18.

The Petitioner, Food Corporation of India (FCI), challenged an order dated 17.11.2022 passed by the Micro and Small Enterprises Facilitation Council ("Council") under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act")

The impugned order referred a payment dispute involving Respondent No. 1 to the Delhi International Arbitration Centre (DIAC)

The Petitioner contended that the Council lacked jurisdiction because the contract with Respondent No. 1 was executed prior to the date the Respondent registered itself as an MSME

Additionally, the Petitioner alleged that fraud had occurred, noting the registration of an FIR by the CBI

Whether a Micro or Small Enterprise is barred from making a reference to the Facilitation Council under Section 18 of the MSMED Act if it was not registered under Section 8 of the Act at the time of the execution of the contract.

Section 18 of the MSMED Act, 2006, which governs the reference of disputes to the Facilitation Council

Supreme Court precedent in NBCC (India) Ltd. v. The State of West Bengal & Ors. (2025 INSC 54), which clarified that the definition of a "supplier" and the discretionary nature of registration under Section 8 mean that an enterprise’s unregistered status at the time of contract execution does not bar the Council's jurisdiction

The Court also cited a string of Delhi High Court precedents, including Sadbhav Engineering Ltd. v. KGTS Engineering India Pvt. Ltd. and Municipal Corporation of Delhi v. M/s Vijay Bansal, affirming this position

The Court noted that the central legal question regarding the timing of MSME registration was no longer res integra (an open question) due to the Supreme Court's definitive ruling in NBCC (India) Ltd.

Applying that precedent, the Court reasoned that the fact that Respondent No. 1 was unregistered when the contract was entered into or when invoices were issued is "immaterial" to the jurisdiction and powers exercised by the Council under Section 18 of the Act

Regarding the Petitioner’s allegations of fraud and the pending CBI investigation, the Court observed that these are merits-based arguments that the Petitioner had already raised before the Arbitrator

Therefore, the Court found no jurisdictional error in the Council's decision to refer the matter to arbitration

The writ petition was dismissed, affirming the Impugned Order referring the parties to DIAC

The Court reserved the parties' rights to contest all other substantive issues, including allegations of fraud, before the Arbitrator