Court rejects claim that awards are nullity due to supplier's alleged non-registration at time of supply, relying on Supreme Court precedent to affirm jurisdiction of Facilitation Council
In a significant ruling dated September 30, 2026, the Jammu & Kashmir and Ladakh High Court, presided over by Justice Sanjay Dhar, dismissed three revision petitions challenging the execution of arbitral awards passed under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act). The petitions were filed by M/s Kashmir Confectionary Store and others against M/s Mother Choice Health Care India, contesting the validity of awards related to recovery of payments for supplied goods.
The petitioners contended that the respondent, M/s Mother Choice Health Care India, was not registered under the MSME Act at the time when the supplies were made, and therefore the orders of the Micro and Small Enterprises Facilitation Council (MSEFC) and the subsequent arbitration awards were null and void. They argued that since the respondent was allegedly first registered only in 2020 following a government notification, the Facilitation Council lacked jurisdiction to entertain the disputes or refer them for arbitration.
However, the court examined documentary evidence submitted by the respondent, including the Udyog Aadhaar Memorandum Certificate, which established that the respondent was initially registered under the MSME Act from April 1, 2010. The re-registration in 2020 was pursuant to a government notification dated June 26, 2020, which mandated re-registration of existing enterprises but did not signify first-time registration.
The court observed that the petitioners' claim was based on a misconception that the respondent's registration commenced only in 2020. Furthermore, the court held that even if the respondent was not registered at the relevant time, the arbitral awards would not become nullities. Citing the Supreme Court's recent decision in NBCC (India) Ltd. v. State of West Bengal (2025), the court noted that non-registration under Section 8 of the MSME Act does not bar the Facilitation Council from entertaining references under Section 18(3) of the Act.
The MSEFC had exercised its power under Section 18(2) of the MSME Act to attempt conciliation between parties. On failure of conciliation, the disputes were properly referred to arbitration under Section 18(3). The three awards passed by the arbitrator were challenged before the Principal District Judge, Jammu, who dismissed the objections. The High Court affirmed these orders, emphasizing that no grounds existed to declare the awards inexecutable or null.
Justice Dhar concluded that the execution of the awards was in full accordance with law and dismissed the revision petitions filed by the petitioners. This judgment clarifies that the procedural safeguards under the MSME Act, including registration requirements and jurisdiction of Facilitation Councils, should be interpreted in a manner that does not defeat the substantive rights of micro, small, and medium enterprises to seek timely dispute resolution.
Bottom Line:
MSME Act - Execution of arbitral awards - Objection that supplier was not registered under MSME Act at the time of supply rejected - Where respondent was in fact registered from 01.04.2010 and only re-registered in 2020 pursuant to Government notification, awards cannot be treated as nullity - Even otherwise, in view of Supreme Court decision in NBCC (India) Ltd. v. State of West Bengal, non-registration under Section 8 does not bar reference under Section 18(3) of MSME Act.
Statutory provision(s): Micro, Small and Medium Enterprises Development Act, 2006 Sections 8, 18(2), 18(3), 20; Code of Civil Procedure, 1908 Section 47
