Once Registered as MSME, the Nature of Activity Cannot Be a Bar to Any Relief under the Act: Andhra Pradesh High Court
The Andhra Pradesh High Court passed an Order on 5th of August, 2022 in which view of the matter, allowed directing the 2nd respondent to consider the claim of the petitioner in accordance with law and after proper notice and sufficient opportunity being afforded to both the petitioner and the 3rd respondent. This was seen in the case of M/S. Dalapathi Constructions, vs. The State of Andhra Pradesh and Others (Writ Petition No.4652 of 2022) and the case was presided over by The Honourable Mr. Justice R. Raghunandan Rao.
FACTS OF THE CASE:
Petitioner was previously a partnership firm and on 28th November 2022 registered itself under Micro, Small and Medium Development Enterprises Act, 2006 were into the business of Civil Constructions. Petitioner and Respondent entered into contract but Respondent noted that site where the construction was going to take place was already occupied by the huge sized Plant and Machinery and revoked the existence of the same.
After the revocation, Petitioner and 3rd Respondent signed Memorandum of Understanding regarding the sale of Plant and Machinery and asked for the sum of Rs. 2 crore 53 lakhs which was to be paid by 3rd Respondent. The 3rd Respondent didn’t make the payment due to the petitioner. Therefore, the petitioner filled application for the claims to the 2nd Respondent- Facilitation Council, and the same was rejected. Stating that petitioner was carrying beyond the scope and they were not into the business of plant and machinery. The Aggrieved petitioner filled petition for the recovery of money payable on the account of the sale of plant and machinery to the High Court of Andhra Pradesh.
JUDGEMENT:
The Honorable High Court has decided that the court is not going into the merits or demerits of the respective claims between claimant and the 3rd respondent. The same would have to be adjudicated upon by the competent authority. The issue in this writ petition whirls around the interpretation of the provisions of the Act had been validated to encourage the permission, development and enhancing competitiveness of MSMEs and for matters connected therewith and incidental thereto. The 3rd respondent resists that, in view of the arbitration clause in Clause-38 of the agreement dated 14th June 2018, the matter should be bring up to an arbitrator mentioned in the said clause and the same cannot be referred to the 2nd respondent under the provisions of the Act a linked reading of these provision would make it very much clear that a bringing up to the Facilitation Council for conciliation and subsequent arbitration if required, is not bolt on account of the existence of an arbitration agreement providing for a another method of constituting an Arbitral Tribunal. In the circumstances, the contention that Clause-38 of the Agreement dated 14th June 2018 would bolt the reference of the dispute to the Facilitation Council, has to be rejected. In that view of the matter, allowed directing the 2nd respondent to consider the claim of the petitioner in accordance with law and after proper notice and sufficient opportunity being afforded to both the petitioner and the 3rd respondent. There shall be no order as to costs and closed the matter.
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JUDGEMENT REVIEWED BY YAKSHU JINDAL.