Bombay High Court
Ambaco Chemicals And Life Sciences Pvt ... vs Kisan Mouldings Ltd on 21 November, 2025
2025:BHC-OS:21881
Megha 27_carbpl_25371_2024_fc.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION (L) NO.25371 OF 2024
Kisan Mouldings Ltd. ...Petitioner
V/s.
Micro and Small Enterprises
Facilitation and Anr. ...Respondents
WITH
INTERIM APPLICATION (L) NO.32715 OF 2024
WITH
INTERIM APPLICATION (L) NO.32720 OF 2024
WITH
INTERIM APPLICATION (L) NO.32718 OF 2024
IN
COMMERCIAL ARBITRATION PETITION (L) NO.25371 OF 2024
Ambaco Chemicals and Life Sciences
Pvt. Ltd
In the matter between ....Applicant
Kisan Mouldings Ltd. ...Petitioner
V/s.
Micro and Small Enterprises
Facilitation and Anr. ...Respondents
______________
Mr. Rashmin Khandekar with Mr. Yohaann Limathwalla, Mr. Amit
Tungare, Ms. Akshata Katara & Ms. Fleur D'souza i/b. M/s. Asahi
Legal for the Petitioner.
Mr. Sandeep Todi, for Respondent No.2 and for the Applicant in
IAL/32715/2024, IAL/32718/2024, IAL/32720/2024.
______________
Page No. 1 of 15
21 November 2025
Megha 27_carbpl_25371_2024_fc.docx
CORAM: SANDEEP V. MARNE, J.
RESERVED ON: 13 NOVEMBER 2025.
PRONOUNCED ON: 21 NOVEMBER 2025.
Judgment:
1) The Petitioner has filed the present Petition under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 (the Act of 1996) challenging the Award dated 14 July 2023 passed by the Micro and Small Enterprises Facilitation Council, Konkan (Facilitation Council). By the impugned Award, the Facilitation Council has allowed Reference Petition No.80 of 2021 filed by Respondent No.2 and has directed the Petitioner to pay to Respondent No.2 outstanding amount of Rs.55,81,817/- alongwith interest as per Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) till realisation of the amount.
2) Petitioner is engaged in the business of manufacture of PVC products. Respondent No.2 approached Petitioner to execute business deal for supply of TPR-02 PVC Heat Stabilize, Tinstab -BTM, Methyl Tin and Stabilizer (Special Grade) for its activity of plastic manufacturing. Petitioner issued purchase orders to Respondent No.2 for supply of material in the year 2011. In the year 2018, Petitioner issued purchase orders dated 31 August 2018, 30 September 2018, 12 November 2018, 22 November 2018, 26 December 2018, 25 January 2019 to Respondent No.2. On receipt of purchase orders, Respondent No.2 made supplies under 17 invoices issued between 15 November 2018 to 13 August 2019. According to Petitioner, Respondent No.2 registered itself as small enterprise under provisions of the MSMED Act on 31 January 2019 i.e. after issuance of purchase orders. It is Page No. 2 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx claimed that on 25 June 2019, Petitioner and Respondent No.2 entered into Memorandum of Understanding (MoU) setting out the manner in which due amounts under the purchase order and invoices were to be paid by Petitioner to Respondent No.2. On 26 August 2020, Respondent No.2 initiated proceedings under Section 18 of the MSMED Act for recovery of amount due to it from the Petitioner.
Respondent No.2 claimed that an aggregate sum of Rs.69,82,937/- was payable by the Petitioner, out of which part amount of Rs.14,01,120/- was paid leaving behind outstanding amount of Rs.55,81,817/-. It appears that the Petitioner did not remain present before the Facilitation Council. The Council proceeded to make Award dated 14 July 2023 directing Petitioner to pay outstanding amount of Rs.55,81,817/- together with interest under Section 16 of the MSMED Act. Aggrieved by the Award of Facilitation Council dated 14 July 2023, Petitioner has filed the present Petition under Section 34 of the Act of 1996. By order dated 25 September 2024, this Court adjudicated the issue of delay in filing the Arbitration Petition and ruled that there was no delay in filing of the Petition.
3) Petitioner filed Interim Application (L) No.28278 of 2024 seeking unconditional stay to the Award. By order dated 4 October 2024, this Court directed Petitioner to deposit 75% of the awarded amount in accordance with Section 19 of the MSMED Act of Rs.1,45,39,979.80. Accordingly, Petitioner has deposited the said amount in the Court and the operation and implementation of the Award dated 14 July 2023 is stayed by this Court. Respondent No.2 has filed Interim Application (L) No.32718 of 2024 seeking dismissal of the Arbitration Petition on the ground of this Court lacking Page No. 3 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx pecuniary and territorial jurisdiction. Respondent No.2 has also sought vacation of interim order dated 25 September 2024. Respondent No.2 has also filed Interim Application (L) No.32720 of 2024 to withdraw the deposited amount. Respondent No.2 has also filed Interim Application (L) No.32715 of 2024 for setting aside order dated 25 September 2024 on the ground that the same was passed without hearing Respondent No.2 and on the ground of filing of the Recall Application and Writ Petition before this Court challenging the Award.
4) With consent of the learned counsel appearing for the parties, the main Arbitration Petition is taken up for hearing and disposal.
5) At the outset, it is necessary to observe that though the issue of territorial and pecuniary jurisdiction of this Court to decide the Arbitration Petition is raised by Respondent No.2 by filing Interim Application (L) No.32718 of 2024, the learned counsel appearing for Respondent No.2 has fairly agreed not to press the said objection. Respondent No.2 has accordingly submitted to the jurisdiction of this Court.
6) Mr. Khandekar, the learned counsel appearing for the Petitioner would submit that the Award is without jurisdiction as Respondent No.2 was not registered as a small enterprise under the provisions of the MSMED Act at the time of issuance of the purchase orders. That Respondent No.2 was registered as small enterprise on 31 January 2019 when it obtained its Udyog Aadhar Number (UAN). Inviting my attention to paragraph 2 of the impugned Award, Mr. Khandekar, would submit that Respondent No.2 approached the Page No. 4 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx Facilitation Council with a specific case that it is a small enterprise registered under the MSMED Act and having UAN dated 31 January 2019. That thus, Respondent No.2 was not 'supplier' within the meaning of Section 2(n) of the MSMED Act at the time when purchase orders were issued.
7) Mr. Khandekar would submit that defence now raised by Respondent No.2 about its registration as small enterprise since 2008 is ex-facie erroneous as notification dated 18 September 2015 dispenses with the requirement of filing Udyog Aadhar Memorandum only in respect of existing enterprises or small scale industries having registration prior to coming into force of MSMED Act. That the MSMED Act came into force in the year 2006 whereas Respondent No.2 has relied on Entrepreneurs Memorandum Acknowledgment dated 7 April 2008. That therefore Respondent No.2 does not qualify for exemption from filing Udyog Aadhar Memorandum under notification dated 18 September 2015. That therefore Respondent No.2 is a small enterprise registered for the first time on 31 January 2019.
8) Mr. Khandekar would rely upon judgment of the Apex Court in Gujarat State Civil Supplies Corporation Limited v. Mahakali Foods Private Limited (Unit 2) and Another 1 in support of his contention that a party, who was not 'supplier' as per Section 2(n) of the MSMED Act as on the date of contract, cannot seek any benefit as supplier under the provisions of the MSMED Act. He would also rely upon judgment of the Apex Court in Vishnoo Enterprises V/s.
Hamilton Medical AG &Anr.2 1 (2023) 6 SCC 401 2 2022 SCC OnLine SC 355 Page No. 5 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx 9) Mr. Khandekar would however fairly invite attention of
this Court to judgment of Apex Court in NBCC (INDIA) Limited V/s. State of West Bengal and Others 3 in which two Judge Bench of the Supreme Court has expressed contrary view and has referred the issue for decision by larger Bench. He would, however, submit that mere reference to larger Bench would not mean that the judgments in Gujarat State Civil Supplies Corporation Limited and Vishnoo Enterprises (supra) are not to be followed. He would rely on judgment of Hon'ble Apex Court in Union Territory of Ladakh and Others V/s. Jammu and Kashmir National Conference and Another 4 in support of his contention that matters need to be decided as the law stands and High Court cannot refuse to follow the judgment on the ground that it is doubted by a latter Bench and has referred the issue to a larger Bench.
10) Mr. Khandekar would submit that the Respondents suppressed Memorandum of Understanding dated 25 June 2019 from the Facilitation Council, who has passed Award in ignorance of arrangement agreed between the parties under the said MoU. On the above broad submissions, Mr. Khandekar would submit that Award of Facilitation Council is without jurisdiction and hence liable to be set aside.
11) Per contra, Mr. Todi, the learned counsel appearing for the Respondent No.2 would oppose the Petition submitting that the Award passed by the Facilitation Council does not warrant interference 3 (2025) 3 SCC 440 4 2023 SCC OnLine SC 1140 Page No. 6 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx in exercise of jurisdiction under Section 34 of the Act of 1996. That the Petitioner has admittedly defaulted in making payment of balance amount of Rs.55,81,817/- and has no valid defence in respect of claim of Respondent No.2. He would submit that the Award indicates issuance of various stage wise notices to the Petitioner and his failure to appear despite receipt of notices. That the Petitioner never disputed its liability to pay due amount to Respondent No.2 and that therefore there is no error in the impugned Award passed by the Facilitation Council. He would submit that in the ledger produced by Petitioner, the liability to pay the principal amount awarded by the Facilitation Council is admitted by the Petitioner.
12) Mr. Todi would further submit that under Section 8 of the MSMED Act, a person intending to establish a small enterprise can file Memorandum of Entrepreneur at his discretion. That therefore filing of such memorandum is not compulsory. That under provisions of Section 18 of the MSMED Act, 'any party to a dispute' with regard to amount due under Section 17 can make reference to the Facilitation Council. That therefore registration as a supplier is not necessary. That this interpretation of the MSMED Act has been upheld by the Supreme Court in NBCC (INDIA) Limited (supra). That therefore it is not necessary for Respondent No.2 to demonstrate that it is registered as small enterprise or is a supplier within the meaning of Section 2(n) of the MSMED Act.
13) Mr. Todi would alternatively submit that Respondent No.2 has been registered as small enterprise vide certificate dated 7 April 2008. He would submit that Respondent No.2 has filed Page No. 7 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx Entrepreneurs Memorandum II with the District Industries Center, Thane on 7 April 2008. He would rely upon notification dated 18 September 2015 in support of contention that the requirement of filing Udyog Aadhar Memorandum is dispensed with for existing enterprises, who had filed Entrepreneurs Memorandum II. He would also rely on office memorandum dated 6 August 2020 in support of his contention that Entrepreneurs Memorandum II are directed to be valid till 30 June 2020. He would therefore submit that Respondent No.2 has been a registered small enterprise under the MSMED Act since 2008 and that therefore it has rightly invoked jurisdiction of the Facilitation Council.
14) Mr. Todi would further submit the Memorandum of Understanding dated 25 June 2019 is an unsigned document and has no existence in law. That the Petitioner is deliberately delaying payment of due amount to Respondent No.2. That the total amount due to Respondent No.2 as in September-2025 was Rs.2,77,03,677/-. He would accordingly pray for dismissal of the Arbitration Petition.
15) Rival contentions of the parties now fall for my consideration.
16) Petitioner has not disputed the transaction of supply of the goods covered by six purchase orders dated 31 August 2018, 30 September 2018, 12 November 2018, 22 November 2018, 26 December 2018 and 25 January 2019. Petitioner has also not contested correctness of the amount raised under 17 invoices by Respondent No.2. Petitioner has raised essentially only two defences with regard to Page No. 8 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx claim of Respondent No.2, which are also the grounds of challenge to the main Arbitral Award. The first ground of challenge is jurisdiction of Facilitation Council as Petitioner questions status of Respondent No.2 as registered small enterprise on the date of which purchase orders were issued. The second defence is with regard to Memorandum of Understanding dated 25 June 2019 under which Respondent No.2 had allegedly agreed to waive 50% interest and to settle the claim of Rs.83,11,766/- inclusive of interest. It is claimed that the MoU also provides for payment schedule. It is the claim of the Petitioner that the said MoU was suppressed by Respondent No.2 from Facilitation Council.
17) Before proceeding to deal with the two challenges raised by the Petitioner to the impugned Award, it must be observed that the Petitioner did not appear before the Facilitation Council. Perusal of the Award would indicate that the Council had issued stage wise notices to the Petitioner. The notice alongwith copy of the Petition was issued by the Council on 12 May 2021. Petitioner did not remain present in conciliation proceedings and accordingly the Council initiated arbitration proceedings by issuance of arbitration order dated 29 December 2022. Thereafter arbitration proceedings were fixed for hearing on 9 March 2023, 16 March 2023 and 19 March 2023 but Petitioner failed to remain present for the scheduled hearings. Petitioner has vaguely averred in the paragraph 11 of the Petition that it was not put to notice about any proceedings taken out by Respondent No.1 including Application filed under Section 18 by Respondent No.2. However, the ground of non-receipt of notice has not been seriously pressed during the course of oral submissions. Even Page No. 9 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx otherwise, there is no reason to doubt findings recorded by the Facilitation Council about service of notice on the Petitioner.
18) The Facilitation Council has accordingly proceeded to award the claim of Respondent No.2 in respect of outstanding amount of Rs.55,81,817/- alongwith interest payable under Section 16 of the MSMED Act 2006.
19) The main ground of challenge pressed before me to the impugned Award is non-registration of the Respondent No.2 as small enterprise under the MSMED Act. It is claimed by the Petitioner that Respondent No.2 was registered as small enterprise for the first time on 31 January 2019 i.e. long after issuance of purchase order and that therefore he was not a 'supplier' within the meaning of section 2(n) of the MSMED Act and could not have invoked the jurisdiction of the Facilitation Council under Section 18 of the MSMED Act. Petitioner relies on following case of the Petitioner as reflected in paragraph 2 of the impugned Award:-
Petitioner is a Small enterprises and registered under the MSMED Act, 2006 having Udyog Adhaar No.MH17B0043224 dt. 31.01.2019 is entitled to file the Petition fo the Facilitation Council.
20) On the other hand, it is the contention of Respondent No.2 that it is registered as Small Enterprise under the MSMED Act since the year 2008 vide certificate dated 7 April 2008. In support, Respondent No.2 has filed copy of Entrepreneurs Memorandum Acknowledgment II dated 7 April 2008, in which Respondent No.2 is shown to have been registered as small enterprise by the District Industries Center, Thane. The Acknowledgment states that Respondent No.2 had filed the Page No. 10 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx Memorandum for manufacturing activities at the given address, which activity had commenced from 10 April 2005 and Petitioner is assigned Entrepreneurs Memorandum No.270211201580.
21) Respondent No.2 has relied on Notification dated 18 September 2015, which provides thus:-
MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES NOTIFICATION New Delhi, the 18th September, 2015 S.O. 2576(E).-In exercise of the powers conferred by sub-section (2) of the section 8 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) and in supersession of the notification number S.O. 1643(E), dated the 29th September, 2006, published in Part II, Section 3, Sub-section (ii) of the Gazette of India, Extraordinary, dated 30th September, 2006, the Central Government, after obtaining the recommendations of the Advisory Committee in this behalf, specifies that every micro, small and medium enterprise shall file Udyog Aadhaar Memorandum in the form appended to this notification as Annexure-I and follow the following procedure for filing the Udyog Aadhaar Memorandum, namely:-
(1) There shall be no fee for filing the Udyog Aadhaar Memorandum; (2) Udyog Aadhaar Memorandum shall be filed online at http://udyogaadhaar.gov.in, the Udyog Aadhaar Portal maintained by the Ministry of Micro, Small and Medium Enterprises, by every micro, small and medium enterprise, but in exceptional cases where online filing is not possible for any reasons, a hard copy of the form as in Annexure 1, duly filled in may be submitted to the concerned District Industry Center which shall file the Udyog Aadhaar Memorandum online, on the behalf of such enterprise; (3) Udyog Aadhaar Acknowledgement as per Annexure 2 appended to this notification, shall be generated and mailed to the email address provided in the Udyog Aadhaar Memorandum which shall contain unique Udyog Aadhaar Number:
(4) existing enterprises, which have filed Entrepreneurship Memorandum-I or Entrepreneurship Memorandum-II or both, or the holders of Small Scale Industry registration, prior to the coming into force of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) shall not be required to file Udyog Aadhaar Memorandum, but if they so desire, they may also file the Udyog Aadhaar Memorandum;Page No. 11 of 15
21 November 2025 Megha 27_carbpl_25371_2024_fc.docx (5) in the Udyog Aadhaar Memorandum, the Aadhaar Number shall be of the managing partner, in case of proprietary enterprise, of the authorized partner, in case of partnership enterprise, and of the authorised person, in case of other forms of enterprises; (6) there shall be no restriction on filing more than one Udyog Aadhaar Memorandum using the same Aadhaar Number; (7) the Udyog Aadhaar Memorandum shall be filed on self- declaration basis, and no supporting document is required to be uploaded or submitted while filing the Udyog Aadhaar Memorandum, but the Central Government or the State Government or such person as may be authorized in this behalf may seek documentary proof of information provided in the Udyog Aadhaar Memorandum, wherever necessary.
[F. No. A-54/1/2014-CDN] SURENDRA NATH TRIPATHI, Addl. Secy.
22) Based on Notification dated 18 September 2015, it is contended by Respondent No.2 that filing of Udyog Aadhar Memorandum by existing enterprises, who had filed Entrepreneurship Memorandum II, was discretionary. On the other hand, it is contended by the Petitioner that only those enterprises, who had filed Entrepreneurship Memorandum II prior to coming into force of MSMED Act were exempted from filing Udyog Aadhar Memorandum. I am unable to agree with the contention raised on behalf of the Petitioner. Clause 4 of the Notification dated 18 September 2015 governs two classes of entities viz.,
(i) existing enterprises, which had filed Entrepreneurship Memorandum I or Entrepreneurship Memorandum II or both and (ii) holders of Small Scale Industry registration prior to coming into force of the MSMED Act. The requirement of filing of Entrepreneurship Memorandum cannot be linked to the timeline of coming into force of MSMED Act, 2006. Said timeline is applicable to the second category of holders of Small Scale Industry registration. Thus, every enterprise, who had filed Entrepreneurship Memorandum I or II as on 18 September 2015 were granted option of filing Udyog Aadhar Memorandum. They continued to Page No. 12 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx remain micro, small or medium enterprise by virtue of filing of Entrepreneurship Memorandum I or II notwithstanding the requirement of filing Udyog Aadhar Memorandum introduced under Notification dated 18 September 2015.
23) Apart from clear nature of Notification dated 18 September 2015, the Notification dated 29 September 2006, which is superseded by Notification dated 18 September 2015 makes this position even clearer. Under Notification dated 29 September 2006, the Central Government provided for format of memorandum and procedure of its filing. Thus, a person intending to set up micro, small or medium enterprise was required to file memorandum in the format prescribed in Notification dated 29 September 2006. What is done by Notification dated 18 September 2015, is prescription of requirement of Udyog Aadhar Memorandum in the prescribed format by person intending to set up micro, small or medium enterprise. Notification dated 18 September 2015, which introduces new requirement of filing Udyog Aadhar Memorandum saves the registration of enterprises already registered. The existing enterprises, who had filed Entrepreneurship Memorandum (I) or (II) were not required to file Udyog Aadhar Memorandum. Office Memorandum dated 6 August 2020 issued by Development Commissioner (MSME) has extended validity of Entrepreneurs Memorandum Part -II upto 31 March 2021.
24) Thus, it is more than apparent that Respondent No.2 was a registered small enterprise as on the date of issuance of purchase orders as well as on the date of supply. The principal ground of challenge sought to be raised by the Petitioner to the impugned Award accordingly fails.
25) Since Respondent No.2 is held to be registered small enterprise as on the date of issuance of purchase order, it is not necessary Page No. 13 of 15 21 November 2025 Megha 27_carbpl_25371_2024_fc.docx to deal with ratio of the judgment in Gujarat State Civil Supplies Corporation Limited and Vishnoo Enterprises (supra). Suffice it to observe that view expressed in Gujarat State Civil Supplies Corporation Limited and Vishnoo Enterprises is doubted by subsequent judgment of co-ordinate Bench in NBCC (INDIA) Limited (supra) and the issue has been referred for decision by larger Bench. It is however not necessary to go into the issue of permissibility for an entity not fitting into the definition of the term 'supplier' under Section 2(n) of the MSMED Act to invoke jurisdiction of Facilitation Council, since Respondent No.2 is factually held to be a registered small enterprise as on the date of execution of contract between the parties. It is therefore also not necessary to go into the issue of following of ratio declared in the existing judgment till decision of reference to the larger Bench as held by the Apex Court in Union Territory of Ladakh and Others (supra).
26) Therefore, challenge raised by the Petitioner to the impugned Award on the ground of Respondent No.2 not being registered as small enterprise as on the date of issuance of purchase order deserves rejection.
27) So far as the ground of alteration in terms of contract under the MoU dated 25 June 2019 raised on behalf of the Petitioner is concerned, it is seen that copy of the alleged MoU does not show signature of any of the parties. Same is thus unsigned document. Respondent No.2 has denied execution of such MoU. In that view of the matter, it cannot be accepted that the terms of original purchase order were modified in any manner on account of execution of the alleged MoU.
Page No. 14 of 15
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28) Petitioner has thus failed to make out any valid ground of
challenge to the impugned Award. The Arbitration Petition must fail. Arbitration Petition is accordingly dismissed.
29) Since the Facilitation Council has already awarded interest under Section 16 of the MSMED Act, which is three times the bank rate notified by the Reserve Bank of India compoundable at monthly rest, I consider it appropriate not to award further costs in favour of Respondent No.2.
30) Respondent No.2 shall be permitted to withdraw the amount deposited in this Court together with accrued interest with further liberty to recover the balance amount due under Award from the Petitioner.
31) With dismissal of the Arbitration Petition, nothing would survive in the Interim Applications and the same are accordingly disposed of.
[SANDEEP V. MARNE, J.]
32) After the judgment is pronounced, the learned counsel appearing for the Petitioner prays for continuation of stay of execution proceedings submitting that 75% of the awarded amount is already deposited. Considering the reasonings adopted while dismissing the Arbitration Petition, I am not inclined to continue the stay any further. Request is accordingly rejected.
[SANDEEP V. MARNE, J.] Signed by: Megha S. Parab Page No. 15 of 15 Designation: PA To Honourable Judge 21 November 2025 Date: 21/11/2025 18:40:53