MSME registration under Section 8 is not required for the Facilitation Council to refer disputes to arbitration, J&K High Court holds

The respondent sought recovery of amounts arising from three supply transactions through the Himachal Pradesh Micro and Small Enterprises Facilitation Council. After conciliation failed, the Council referred the disputes to arbitration under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act), and the arbitrator made three awards. Execution proceedings were transferred from Solan to Jammu.

The petitioners’ applications under Section 47 read with Section 151 CPC, challenging execution on the ground that the awards were nullities because the respondent was not registered under the MSME Act when the supplies were made, were dismissed by the Principal District Judge, Jammu. The petitioners challenged those dismissal orders in these revisions.

The respondent produced an Udyog Aadhaar Memorandum Certificate showing registration from 1 April 2010 and explained that it re-registered in 2020 pursuant to the Central Government’s notification dated 26 June 2020.

Whether the respondent’s alleged lack of registration under the MSME Act when the supplies were made rendered the arbitral awards nullities and made the Council’s reference under Section 18 invalid.

Whether the Principal District Judge’s orders dismissing the petitioners’ objections to execution warranted interference in revision.

Sections 18(2) and 18(3) of the MSME Act provide for conciliation by the Micro and Small Enterprises Facilitation Council and, where conciliation fails, reference of the dispute to arbitration; Section 8 concerns filing a memorandum by an enterprise, while Section 20 provides for establishment of Facilitation Councils.

The Court applied NBCC (India) Ltd. v. The State of West Bengal, 2025 INSC 54, which, having considered Silpi Industries v. Kerala State Road Transport Corporation, Vaishno Enterprises v. Hamilton Medical AG and Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd. (Unit 2), held that the contention that a Facilitation Council cannot entertain a reference under Section 18(3) merely because an enterprise has not registered under Section 8 must be rejected.

The Court also considered Government of India notification SO 2119(E), dated 26 June 2020, which required existing enterprises registered under EM-Part-II or UAM to re-register on or after 1 July 2020.

The Court first found that the petitioners’ factual premise was mistaken: the respondent’s certificate showed registration from 2010, and its 2020 registration was a re-registration pursuant to the 2020 notification, not its first registration.

In any event, the Court held that, under NBCC, even assumed non-registration at the relevant time would not by itself prevent the Council from entertaining the reference or render the resulting awards nullities. The sole ground advanced against the execution orders therefore failed.

All three revision petitions were dismissed.