Telangana High Court
M/S Surabhi Security Services vs State Of Telangana And 2Others on 5 June, 2023
Author: P.Madhavi Devi
Bench: P.Madhavi Devi
THE HON'BLE SMT. JUSTICE P.MADHAVI DEVI
WRIT PETITION No.225 of 2023
ORDER:
This Writ Petition is filed seeking a writ of mandamus declaring the action of the respondent No.2, in summarily rejecting the application No.UDYAM-TS-02-0013555/00001 dated 24.01.2022 filed by the petitioner before the respondent No.2 under Section 18 of the Micro, Small and Medium Scale Enterprises Development Act, 2006 as not maintainable, as illegal and arbitrary and in violation of Articles 14, 19 and 21 of the Constitution of India and to pass such other order or orders.
2. Brief facts leading to the filing of the present Writ Petition are that the petitioner is a partnership firm registered with the Registrar of Firms on 25.01.2005 vide certificate dated 27.01.2005 and it was also registered with Ministry of Micro, Small and Medium Scale Enterprises vide certificate No.UDYAM-TS-02-0013555/00001 dated 04.01.2021. It is submitted that the respondent No.3-association had approached the petitioner for providing security services for their gated community and vide letter dated 10.08.2020, the services of the petitioner were engaged commencing from 01.09.2020 and accordingly, the petitioner has deployed its employees who rendered their services and the payments were also made by the 3rd respondent till the month of June, 2021. It is submitted that thereafter, the 3rd respondent-association PMD,J W.P.No.225 of 2023 2 stopped making payments to the petitioner and therefore, the petitioner invoked the provisions of the Micro, Small and Medium Scale Enterprises Development Act, 2006. It is submitted that the 3rd respondents-association is liable to make payment of the dues from September 2020 to September, 2021 and also thereafter under Section 15 of the MSMED Act, 2006. Therefore, the petitioner got issued a legal notice dated 02.12.2021 and since there was no response to the same from the 3rd respondent-association, the petitioner has filed an application before the 2nd respondent on 24.01.2022 under Section 18 of the MSMED Act. When the same was not considered within the prescribed period, the petitioner filed W.P.No.30036 of 2022 and the Writ Petition was disposed of vide orders dated 06.09.2022 directing the respondents to consider the said application and to pass appropriate orders thereon in accordance with law. It is submitted that thereafter, the respondent No.2 has rejected the application of the petitioner dated 24.01.2022 with an endorsement "the activity not comes under manufacturing or service related to industries, hence rejected". Challenging the said communication, the present Writ Petition is filed.
3. Learned counsel for the petitioner submitted that under Section 2(e) of the MSMED Act, 2006 an "enterprise" means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of PMD,J W.P.No.225 of 2023 3 goods, in any manner, pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951 or engaged in providing or rendering of any service or services. Learned counsel for the petitioner submitted that the petitioner is engaged in providing security services and hence, it falls within the definition of an "enterprise" under the MSMED Act and hence can avail the benefit of Section 18 (4) thereof and that under the said Act, the jurisdiction to deal with the issue lies with the 2nd respondent. Learned counsel for the petitioner therefore prayed for setting aside of the communication dated 28.11.2022 and a direction to be given to the 2nd respondent to consider the case of the petitioner under Section 18(4) of the MSMED Act, 2006. Learned counsel for the petitioner relied upon the averments made in the writ affidavit and also placed reliance upon the decision of the Hon'ble Supreme Court of India dated 26.03.2010 in Civil Appeal No.2763 of 2010 and also the definition of the term 'enterprise' under the provisions of MSMED Act in support of her contentions.
4. Learned counsel for the respondents, on the other hand, relied upon the averments made in the counter affidavit filed by the respondent No.2, wherein it is stated that an "enterprise" under Section 2(e) has to be in relation to the manufacturing or production industry and not to any service. He also placed reliance upon the order of this Court dated 16.02.2023 in W.P.No.2358 of 2023.
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5. Having regard to the rival contentions and the material on the record, this Court finds that the only issue in this Writ Petition is with regard to the nature of services rendered by the petitioner and whether it would fall within the meaning of "enterprise" under Section 2(e) of the Act and hence within the jurisdiction of Micro and Small Enterprises Facilitation Council i.e., respondent No.2 herein.
6. Therefore, in order to analyze the said provision, Section 2(e) of the MSMED Act is reproduced hereunder:
"(e) "enterprise" means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 or engaged in providing or rendering of any service or services;"
7. Thus, it can be seen that an enterprise under MSMED Act has to be an industrial undertaking or a business concern or any other establishment engaged in the manufacture or production of goods or engaged in providing any service or services. The interpretation given by the 2nd respondent is that the services also have to be in relation to manufacturing or production of goods only. However, a literal reading of the above provision makes it clear that there is no qualification in providing of services that they have to be in relation only to the manufacture or production of goods.
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8. Section 7 of the MSMED Act provides for classification of enterprises into Micro, Small and Medium Enterprises. The petitioner herein has been registered with the Ministry of Micro, Small and Medium Scale Enterprises as a Small i.e., Micro Enterprise. Section 7(1)(a)(ii) of the MSMED Act classifies a Small Enterprise as an enterprise, where the investment in plant and machinery is more than twenty five lakh rupees but not exceeding five crore rupees. Section 8 of the MSMED Act provides for memorandum of Micro, Small and Medium Enterprises and sub-section 2 thereof provides for the form of the memorandum, the procedure of its filing and other matters incidental thereto. The fact that the Ministry of Micro, Small and Medium Enterprise has already considered the application of the petitioner and has registered the petitioner as Small Enterprise, the presumption to be drawn is that the Ministry is satisfied that it is having the necessary equipment to be classified as a Small Scale Enterprise. The MSMED Act has been enacted with an objective to provide for facilitating the promotion and development and enhancing of competitiveness of Micro, Small and Medium Enterprises and for matters connected therewith or incidental thereto. Therefore, any issue relating to the Micro, Small and Medium Enterprises would come within the scope of the MSMED Act, 2006. In the decision relied upon by the learned counsel for the petitioner in the case of Pallawi PMD,J W.P.No.225 of 2023 6 Resources Ltd v. Protos Engineering Company Pvt. Ltd. cited supra, the Hon'ble Supreme Court has observed thus:
"13. A cardinal principle of statutory interpretation is that a provision in a statue must be read as a whole and not in isolation ignoring the other provisions of that statute. While dealing with a statutory instrument, one cannot be allowed to pick and choose. It will be grossly unjust if the Court allows a person to single out and avail the benefit of a provision from a chain of provisions which is favourable to him. Reference may be made to a constitutional bench decision of this Court in the case of Prakash Kumar v. State of Gujarat (2005) 2 SCC 409. The Court, in para 30, of that judgment observed as follows:
"30.By now it is well settled principle of law that no part of a statute and no word of a statue can be constructed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. It is also trite that the statute or rules made thereunder should be read as a whole and one provision should be construed with reference to the other provision to make the provision consistent with the object sought to be achieved."
14. We wish to also refer to a latest judgment of this Court reported as SAIL v. S.U.T.N.I.Sangam and Ors. 2009 (10) SCALE 416, wherein this Court, very succinctly reiterated the aforesaid position in para 79, as follows:
"79. The learned counsel, however, invited our attention to take recourse to the purposive interpretation doctrine in preference to the literal interpretation. It is as well settled principle of law that a statute must be read as a whole and then chapter by chapter, section by section, and then word by word. For the said purpose, the Scheme of the Act must be noticed. If the principle of interpretation f statues resorted to by the Court leads to a fair reading of the provision, the same would fulfill PMD,J W.P.No.225 of 2023 7 the conditions of applying the principles of purposive construction."
9. Thus, when the provision is read in conjunction with the aims and objects of the Act, it is clear that any enterprise which is engaged either in the manufacture or production of goods or in rendering services would come within the scope of the MSMED Act. Therefore, the respondent No.2 was not right in rejecting the application of the petitioner filed under Section 18 of the Act as not maintainable.
10. Learned Government Pleader has also taken an objection with regard to the maintainability of the Writ Petition itself and has relied upon a decision of the Division Bench of this Court in the case National Small Industries Corporation Ltd. NSIC v. State of Telangana in W.P.No.2358 of 2023 dated 16.02.2023 in support of such an objection.
11. However, this Court finds that in the said case, the writ petition was filed against the award passed by the Facilitation Council and the Division Bench of this Court observed that there is a provision for an Appeal under Section 34 of the Arbitration Conciliation Act against the award of the Council and therefore, the Division Bench had declined to entertain the Writ Petition. However, in the present case, it is the case of rejecting the application of the PMD,J W.P.No.225 of 2023 8 petitioner in limine on the ground that it is not maintainable before the Facilitation Council as it was not rendering services relating to manufacture or production of goods. Therefore, the question before this Court is about the jurisdiction before the Facilitation Council and not against the award of the Council. Thus, this Writ Petition is clearly maintainable and the respondent No.2 is therefore directed to consider the application of the petitioner accordance with the provisions of Section 18(4) of the MSMED Act and take a decision thereon in accordance with law after giving all the relevant parties adequate opportunity of hearing.
12. Accordingly, the Writ Petition is allowed. There shall be no order as to costs.
Miscellaneous applications, if any pending, shall also stand closed.
_____________________________ JUSTICE P.MADHAVI DEVI Date: 05.06.2023 PRN PMD,J W.P.No.225 of 2023 9 49 THE HON'BLE SMT. JUSTICE P. MADHAVI DEVI WRIT PETITION No.225 of 2023 Date: 05.06.2023 PRN