Facts of the Case

This case has nothing to do with Goods and Services Tax – the reference to "GST Road" in the record is simply the name of a street in Chennai (Guindy) forming part of the postal address of the MSME Development and Facilitation Office, and has no connection whatsoever to the tax. Numaligarh Refinery Limited filed Writ Petition (C) No. 7217 of 2022 before the Gauhati High Court against the Union of India, the Joint Director and Head of Office, MSME Development and Facilitation Office (Chennai), and Solar Design Pvt. Ltd. (the supplier).

The dispute arose from a Work Order dated 28.09.2021 and Agreement dated 18.10.2021 under which Numaligarh Refinery engaged Solar Design Pvt. Ltd. for interior civil and electrical work, including supply of furniture, at the Paradip Bhawan Building, NRL Project Office, Paradip, Odisha. Solar Design filed a claim (Case No. TN/02/M/CHN/02164) before the MSME Facilitation Council for non-payment of its contractual bills. Numaligarh Refinery's position was that the materials supplied did not meet tender specifications and needed replacement before payment could be considered, while Solar Design contended it had completed the contract work. Numaligarh Refinery filed the writ petition seeking to set aside the MSME proceeding, contending that the Facilitation Council lacked jurisdiction to entertain the case.

Issues Involved

  1. Whether the MSME Facilitation Council had jurisdiction to entertain the supplier's claim for non-payment under Section 18(1) of the MSMED Act, 2006.
  2. Whether the dispute over quality/replacement of materials ousted the Council's jurisdiction or was a matter to be examined by the Council itself.

Petitioner's Arguments

  • The MSME Facilitation Council did not have jurisdiction to entertain the case filed by the supplier for non-payment of contractual bills.
  • The materials supplied by the respondent under the work order did not conform to tender requirements and were required to be replaced before any payment obligation could arise.

Respondent's Arguments

  • The supplier (respondent No. 3) contended that it had duly completed the contracted work and was entitled to pursue its claim for unpaid bills before the MSME Facilitation Council under Section 18(1) of the MSMED Act, 2006.
  • The Union of India and MSME authorities defended the jurisdiction of the Facilitation Council to entertain and adjudicate such payment disputes involving a registered micro/small enterprise supplier.

Court Order / Findings

  • The Court examined whether the MSME Facilitation Council had jurisdiction over the payment dispute between the refinery and its supplier.
  • Based on the record, the Court's assessment did not accept Numaligarh Refinery's jurisdictional challenge, and the petition seeking to set aside the MSME Facilitation Council proceedings was not accepted by the Court.
  • The dispute over the quality of materials supplied was treated as a matter for adjudication within the MSME proceeding itself, not a bar to the Council's jurisdiction.

Important Clarification

This judgment concerns jurisdiction under the Micro, Small and Medium Enterprises Development Act, 2006 over a commercial payment dispute — it is entirely unrelated to GST law. The "GST Road" reference in the case record is purely a Chennai street name in a government office address and should not mislead anyone searching for GST case law; this ruling carries no GST implications and should not be cited as one.

Sections Involved

  • Section 18(1), Micro, Small and Medium Enterprises Development Act, 2006 – reference to Facilitation Council for dispute resolution on delayed payments to micro/small enterprises.
  • Article 226, Constitution of India – writ jurisdiction invoked before the Gauhati High Court.

Decision – In Favour of

Decided against the petitioner (Numaligarh Refinery Limited) and effectively in favour of the supplier-respondent's position that the MSME Facilitation Council proceedings could continue. This is a Micro, Small and Medium Enterprises Development Act ruling with no GST content.

Case Details

  • Court: Gauhati High Court (High Court of Assam, Nagaland, Mizoram and Arunachal Pradesh)
  • Case No.: WP(C)/7217/2022
  • CNR: GAHC010230152022
  • Coram: Justice Michael Zothankhuma
  • Date of Judgment: 15 May 2023 (heard 04.05.2023)

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