MSME Supplier's Non-Registration At Time Of Transaction Does Not Render Facilitation Council's Award A Nullity: J&K&L High Court
LIVELAW NEWS NETWORK
7 Oct 2026 5:00 PM IST
The Jammu & Kashmir and Ladakh High Court has held that even if an enterprise was not registered under the Micro, Small and Medium Enterprises Development Act, 2006 at the time of a transaction, such non-registration by itself would not render an award passed under the MSME Act a nullity.
The Court clarified that an objection to the supplier's registration status cannot, by itself, oust the jurisdiction of the Micro and Small Enterprises Facilitation Council to entertain a reference under Section 18 of the MSME Act and refer the dispute to arbitration.
The Court was hearing three revision petitions challenging orders passed by the Principal District Judge, Jammu, which had rejected objections to the execution of three arbitral awards passed in favour of M/s Mother Choice Health Care India in disputes concerning unpaid amounts for supply of goods.
Justice Sanjay Dhar observed that “even if it is assumed that the respondent concern was not registered under MSME Act at the relevant time, still then for this reason only, the awards passed by the learned Arbitrator under the MSME Act would not become a nullity.”
The respondent had approached the Himachal Pradesh Micro and Small Enterprises Facilitation Council, Shimla, for recovery of unpaid amounts arising from three transactions with the petitioners. After conciliation failed, the Council referred the disputes to arbitration under Section 18(3) of the MSME Act, resulting in three separate awards.
The awards were subsequently sought to be executed before the District Judge, Solan, Himachal Pradesh, and the execution proceedings were later transferred to the District Judge, Jammu. The petitioners challenged the execution by filing objections under Section 47 read with Section 151 CPC.
The petitioners contended that the awards were nullities because the respondent was allegedly not registered under the MSME Act when the supplies were made in 2014-15 and, therefore, could not have invoked the dispute-resolution mechanism under the Act.
Court's Observations:
The Court first rejected the factual premise of the challenge. The respondent produced its Udyog Aadhaar Memorandum Certificate showing registration under the MSME Act with effect from April 1, 2010.
The Court noted that the respondent had subsequently re-registered itself in 2020 pursuant to the Ministry of Micro, Small and Medium Enterprises' notification dated June 26, 2020. The petitioners had apparently treated the 2020 re-registration as the date on which the respondent obtained MSME registration for the first time.
The Court, however, went further and held that even assuming that the respondent was not registered at the relevant time, the arbitral awards would not become a nullity merely on that ground.
The petitioners relied upon the Supreme Court's decisions in M/s Silpi Industries v. Kerala State Road Transport Corporation, M/s Vaishno Enterprises v. Hamilton Medical AG and Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd. to contend that an unregistered enterprise could not invoke the MSME dispute-resolution mechanism.
The High Court relied upon the subsequent Supreme Court judgment in NBCC (India) Ltd. v. State of West Bengal, 2025 INSC 54, which, after considering the earlier authorities, held that the contention that the Facilitation Council lacks jurisdiction to entertain a reference merely because the enterprise is not registered under Section 8 of the MSME Act cannot be accepted.
The Court observed that, having regard to the statutory definition of “supplier”, the classification of enterprises and the statutory scheme governing filing of memorandum under Section 8, and underscored,
“the contention that the Facilitation Council cannot entertain a reference under section 18(3) of the MSME Act, if the enterprise is not registered, under section 8 of the MSME Act, must be rejected.”
Applying this principle, the Court held that even on the petitioners' own assumption regarding non-registration, the reference of the disputes to the Facilitation Council and their subsequent reference to arbitration were legally valid.
Accordingly, the Court held that the arbitral awards did not become a nullity on the ground of alleged non-registration and found no reason to interfere with the orders of the Principal District Judge, Jammu. The three revision petitions were consequently dismissed.
Case Title: M/s Kashmir Confectionary Store & Others v. M/s Mother Choice Health Care India Case
Citation: 2026 LiveLaw (JKL)
Appearances:
For the petitioners: Vishal Goel, Advocate. For the respondent: Shivam Gupta, Advocate.
