Gauhati High Court
Page No.# 1/55 vs The State Of Assam And 4 Ors on 13 November, 2025
Author: Devashis Baruah
Bench: Devashis Baruah
Page No.# 1/55
GAHC010175402023
2025:GAU-AS:15372
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/4631/2023
GARG POLY INDUSTRIES AND ANR.
A REGISTERED PROPRIETORIAL FIRM HAVING ITS REGISTERED OFFICE
AT S C ROAD ATHGAON GUWAHATI 781001
2: BABITA GARG
PROPRIETOR OF GARG POLY INDUSTRIES R/O NEHA APARTMENT
ATHGAON GUWAHATI 78100
VERSUS
THE STATE OF ASSAM AND 4 ORS.
REP. BY THE SECRETARY TO THE GOVT. OF ASSAM PUBLIC HEALTH
ENGINEERING DEPTT. DISPUR GUWAHATI 781003
2:THE PRINCIPAL SECRETARY
GOVT. OF ASSAM FINANCE DEPTT. DISPUR GUWAHATI 781003
3:THE CHIEF ENGINEER
PUBLIC HEALTH ENGINEERING DEPTT. GOVT. OF ASSAM HENGRABARI
GUWAHATI 781003
4:THE ADDITIONAL CHIEF ENGINEER
PUBLIC HEALTH ENGINEERING DEPTT O/O THE ENGINEER PUBLIC
HEALTH ENGINEERING DEPTT HENGRABARI GUWAHATI
5:THE EXECUTIVE ENGINEER
PHE STORES AND WORKSHOP DIVISION BETKUCHI GUWAHAT
Advocate for the Petitioner : MS M HAZARIKA, MR D KHAN
Advocate for the Respondent : SC, P H E, SC, FINANCE
Page No.# 2/55
Linked Case : WP(C)/5273/2023
SRK METALS AND PLASTICS PVT. LTD.
REPRESENTED BY ITS DIRECTOR
SHRI KRISHNA AGARWAL
A PRIVATE LIMITED COMPANY REGISTERED UNDER THE COMPANIES ACT
HAVING ITS REGISTERED OFFICE AND FACTORY AT VILLAGE BONDA
P.O BONDA
P.S PRAGJYOTISHPUR
GUWAHATI - 781026
DISTRICT KAMRUP METRO
ASSAM
VERSUS
THE STATE OF ASSAM AND 4 ORS.
REPRESENTED BY THE SECRETARY TO THE GOVERNMENT OF ASSAM
PUBLIC HEALTH ENGINEERING DEPARTMENT
DISPUR
GUWAHATI 781003
2:PRINCIPAL SECRETARY GOVERNMENT OF ASSAM
FINANCE DEPARTMENT
DISPUR
GUWAHATRI 781003
3:THE CHIEF ENGINEER
PUBLIC HEALTH ENGINEERING DEPARTMENT
GOVERNMENT OF ASSAM
HENGARABARI
GUWAHATI- 781003
4:THE ADDITIONAL CHIEF ENGINEER
PUBLIC HEALTH ENGINEERING DEPARTMENT
OFFICE OF THE CHIEF ENGINEER
PUBLIC HEALTH ENGINEERING DEPARTMENT
HENGARABARI
GUWAHATI.
5:THE EXECUTIVE ENGINEER
PHE STORES AND WORKSHOP DIVISION
BETKUCHI
GUWAHATI.
Page No.# 3/55
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Advocate for : MS K LOYA Advocate for : SC FINANCE appearing for THE STATE OF ASSAM AND 4 ORS.
Linked Case : WP(C)/5966/2023 KAMAKHYA POLY UDYOG AND ANR.
A REGISTERED PROPRIETORIAL FIRM HAVING ITS REGISTERED OFFICE AT S.C. ROAD ATHGAON GUWAHATI-781001.
2: MANOJ GARG PROPRIETOR OF KAMAKHYA POLY UDYOG RESIDENT OF NEHA APARTMENT ATHGAON GUWAHATI-781001.
VERSUS THE STATE OF ASSAM AND 4 ORS.
REPRESENTED BY THE SECRETARY TO THE GOVERNMENT OF ASSAM PUBLIC HEALTH ENGINEERING DEPARTMENT DISPUR GHY-781003.
2:PRINCIPAL SECRETARY GOVERNMENT OF ASSAM FINANCE DEPARTMENT DISPUR GUWAHATI-781003.
3:THE CHIEF ENGINEER PUBLIC HEALTH ENGINEERING DEPARTMENT GOVERNMENT OF ASSAM HENGRABARI GUWAHATI-781003.
4:THE ADDITIONAL CHIEF ENGINEER PUBLIC HEALTH ENGINEERING DEPARTMENT OFFICE OF THE CHIEF ENGINEER PUBLIC HEALTH ENGINEERING DEPARTMENT HENGRABARI GUWAHATI.
Page No.# 4/55 5:THE EXECUTIVE ENGINEER PHE STORES AND WORKSHOP DIVISION BETKUCHI GUWAHATI.
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BEFORE HON'BLE MR. JUSTICE DEVASHIS BARUAH Advocates for the petitioner(s) : Mrs. M Hazarika, Senior Advocate Mr. D Khan Advocates for the respondent(s) : Mr. RR Gogoi Standing Counsel, PHED Mr. A Chaliha, Standing Counsel Finance Department Date on which Judgment is reserved: NA Date of Pronouncement of Judgment : 13.11.2025 Whether the Pronouncement is of the : NA Operative Part of the Judgment Whether the Full Judgment has been : Yes Pronounced JUDGMENT & ORDER(ORAL) Heard Mrs. M Hazarika, the learned Senior Counsel assisted by Mr. D Khan, the learned counsel appearing on behalf of the petitioners in the three writ petitions. Mr. RR Gogoi, the learned Standing Counsel, PHED, appears on behalf of the respondent Nos.1, 3, 4 and 5 and Mr. A Chaliha, the learned Standing Counsel, Finance Department appears on behalf of the respondent No.2.
Page No.# 5/55
2. All these three writ petitions raise common questions of law and as such, they are taken up for disposal together by this common judgment and order. However, in order to deal with the claims of the petitioners in the three writ petitions, this Court finds it relevant to take note of the facts which led to the filing of the writ petitions:
WP(C)No. 4631 of 2023:
3. The petitioner No.1 herein is proprietorial firm belonging to the petitioner No.2. The said petitioners are engaged in the business of manufacturing, amongst others, UPVC Pipes and Fittings, Direct Action Hand Pumps, Casing Pipes, Ribbed Screens, etc.
4. The petitioners' industry was duly registered under Assam Preferential Stores Purchase Act, 1989 and was granted a Registration Certificate on 04.02.2014 bearing registration No.DICC/KMRP/APSP/6088. The petitioners' also applied for registration in terms with the Notification dated 29.09.2006 issued by the Ministry of Small Scale Industries, New Delhi and submitted the form of Entrepreneur Memorandum as was required.
5. The materials on record show that the petitioner No.1 commenced commercial production w.e.f. 08.02.2014 and thereupon was issued an Entrepreneur Memorandum Part II on 01.03.2014. It is also relevant to take note of that the petitioner No.1 was registered as Page No.# 6/55 a small scale industries, initially under the Assam Preferential Stores Purchase Act, 1989, and, thereafter under the Micro, Small and Medium Enterprises Development Act, 2006 (for short, the Act of 2006). It may not be out of place to take note of that the Assam Preferential Stores Purchase Act, 1989 was repealed by the Assam Repealing Act of 2015 and thereupon the State of Assam announced a policy in the name and style of the Assam Procurement Preference Policy, 2015.
6. The materials on record would also show that the petitioners herein were issued various work orders by the PHED Department of the Government of Assam. The details of the said work orders have been mentioned in paragraph No.18 of the writ petition and the chart given therein is reproduced herein:
SL DATE WORK ORDER REMARKS
1 22.05.2014 NO.PHE-43/MM/13-14/T-2044 At the time of being issued
this work order the
Petitioners unit was duly
registered as an MSME unit
vide Entrepreneurs
Memorandum No.
-18061201986 dated
01.03.2014
2 05.10.2015 NO.PHE-43/MM/13-14/T-8431 At the time of being issued
this work order the
Petitioners unit was duly
registered as an MSME unit
vide Entrepreneurs
Memorandum No.
-18061201986 dated
01.03.2014
3 05.10.2015 NO.PHE-43/MM/13-14/T-8410 At the time of being issued
this work order the
Petitioners unit was duly
Page No.# 7/55
registered as an MSME unit
vide Entrepreneurs
Memorandum No.
-18061201986 dated
01.03.2014
4 20.11.2015 NO.PHE-49/MM/2015-16/T-10175 At the time of being issued
this work order the
Petitioners unit was duly
registered as an MSME unit
vide Entrepreneurs
Memorandum No.
-18061201986 dated
01.03.2014
5 21.11.2015 NO.PHE-43/MM/13-14/T-10339 At the time of being issued
this work order the
Petitioners unit was duly
registered as an MSME unit
vide Entrepreneurs
Memorandum No.
-18061201986 dated
01.03.2014
6 21.11.2015 NO.PHE-43/MM/13-14/T-10349 At the time of being issued
this work order the
Petitioners unit was duly
registered as an MSME unit
vide Entrepreneurs
Memorandum No.
-18061201986 dated
01.03.2014
7 06.06.2015 NO.PHE-43/MM/13-14/T-3355 At the time of being issued
this work order the
Petitioners unit was duly
registered as an MSME unit
vide Entrepreneurs
Memorandum No.
-18061201986 dated
01.03.2014
8 06.06.2015 NO.PHE-43/MM/13-14/T-3372 At the time of being issued
this work order the
Petitioners unit was duly
registered as an MSME unit
vide Entrepreneurs
Memorandum No.
-18061201986 dated
01.03.2014
7. It is the case of the petitioners that the petitioners duly supplied in terms with the work orders to the satisfaction of all concerned and certain amounts were paid. However, all payments were not made to the petitioners, in spite of the same being confirmed by the PHE Department. Under such circumstances, the petitioners filed a writ Page No.# 8/55 petition before this Court which was registered and numbered as WP(C)No.6045/2018.
8. This Court by the order dated 05.09.2018, disposed of the said writ petition with a direction to the Chief Engineer PHED to consider the representation so submitted by the petitioners on 09.07.2018 for making payment of the outstanding dues with interest within a period of 3(three) months from the date of receipt of the certified copy of the order.
9. The said order so passed by this Court on 05.09.2018 in WP(C)No.6045/2018 having not been complied with, resulted in initiation of a proceedings under the Contempt of Courts Act 1971, which was registered and numbered as Cont.Cas(C)No.101/2019. It is very pertinent herein to take note of that in the said contempt proceedings, an additional affidavit was filed by the petitioners, wherein it was alleged that the petitioners were forced to sign the Memorandum of Understanding (MoU) with the Government of Assam on certain terms and conditions. The said MoU was also enclosed to the said additional affidavit. The contents of the said MoU being relevant for the purpose of adjudication of the present dispute, the same are reproduced hereinunder:
"Government of Assam THIS MEMORANDUM OF UNDERSTANDING (MOU) made on this day of 14 thMay Page No.# 9/55 2019 between M/s Garg Poly Industries, Industry/Firm Incorporated under the Micro, Small & Medium Enterprise Development Act, 2006 (Act No-27 of 2006) having its Registered Office at Royal Enclave, S.C Road, Athgaon Guwahati-781001, Assam and Public Health Engineering Department Government of Assam. WHEREAS
1) The Government has agreed to pay to the Company/Industry/Firm the sums due under the terms of the Agreement.
2) The Final Principal amount under the NRDWP Head of Rs.42,56,645.00 (Forty Two Lakhs Fifty Six Thousand Six Hundred Forty Five Only) is due for payment as on 14.05.2019 under the head NRDWP. Further an amount as calculated up to 31 st March 2019 is payable by the Department towards Interest to the Company/Firm/Industry.
(A) Now this Memorandum has agreed to pay the entire Principal amount of RS.
42,56,645.00 (Forty Two Lakhs Fifty Six Thousand Six Hundred Forty Five Only) due under the head NRDWP by a one-time payment.
(B) Both the parties in consideration of the payment of the principal amount as per (A) above has agreed to full settlement of the principal amount due under the head NRDWP and the Company/Firm/Industry is agreed upon not to claim any Interest under the head NRDWP beyond 31st March 2019.
In witness whereof the parties have put their respective hands on the day 14.05.2019."
10. From the above-quoted contents of the MoU dated 14.05.2019, it would transpire that the PHED of the Government of Assam had agreed to pay the petitioners the sum due in terms with the agreement which was assessed at Rs.42,56,645/- as on 14.05.2019 and additionally an amount towards interest as calculated up to 31.03.2019. Another very important aspect in the contents of the MoU Page No.# 10/55 that the amounts agreed to be paid were in respect to NRDWP, which aspect would assume importance as would be seen at a later stage of the present judgment.
11. It is further seen from the materials on record that on 19.12.2019, a communication was issued by the Chief Engineer, PHED Assam to the petitioners in connection with the contempt proceedings initiated by the petitioners wherein it was stated inter alia that an amount of Rs.44,42,703/- had already been paid to the petitioners and in respect to further claim of the outstanding, if any, which is denied and disputed by the Department, the petitioners were given the liberty to make a reference to the Micro and Small Enterprises Facilitation Council as per Section 18 of the Act of 2006.
12. The records further reveal that despite the said communication issued by the Chief Engineer PHED, the contempt proceedings continued. This Court further finds it relevant to take note of an additional affidavit filed by the Chief Engineer PHED in the contempt proceedings sometime in the month of February 2021, wherein referring to the communication dated 19.12.2019, it was categorically mentioned that the Department had already decided to approach the MSME Facilitation Council for necessary arbitration and proposal had been submitted to the Government for permission. It was also mentioned that such steps were being taken so as to explore the Page No.# 11/55 scope of mediation as contemplated under Section 18 which shall save huge amount of public money. It was also mentioned that the respondent PHED had also made a proposal for a supplementary budget to the tune of Rs.2000.00 lakhs under the Head of Account to meet the liability against the State share for NWQSM Scheme. Out of the said amount, Rs.941.33595 lakhs have been proposed for payment of the outstanding principal amount against various Courts/Contempt of Courts cases and an amount of Rs.4554.82381 lakhs have been proposed under the Head of Account for payment of outstanding interest amount against the various Courts/ Contempt of Courts cases. Further to that, the Department had already placed supplementary demand to the Government on 17.12.2020 for an amount of Rs.12196.15976 lakhs along with documents related to Court cases. To the said affidavit, a statement was enclosed, wherein it was shown that in respect to the supplies made by the petitioners, the amount so payable from the Central Account i.e. NRDWP Scheme, an amount of Rs.44,42,703/- have already been paid. However, an amount of Rs.62,33,618/- which was the State's liability remained balanced and the interest up to 30.11.2020 was Rs.4,55,79,715/-.
13. The said affidavit alongwith the enclosure assumes importance in the context of the present case inasmuch as, it makes it clear that the communication dated 19.12.2019 by the Chief Engineer, PHED Page No.# 12/55 regarding payment of Rs.44,42,703/- was only in respect to the Central Government's share and not the payment which ought to have been made from the State's share which was to the tune of Rs.62,33,618/-.
14. In the said contempt proceedings, the petitioners filed an affidavit-in-reply to the affidavit filed by the Chief Engineer, PHED, wherein amongst others details were given that the respondent PHED have made interest payment to the other parties in terms with the Act of 2006. The particulars were provided in Annexure-A to the said affidavit-in-reply.
15. It is further seen that during the pendency of the said contempt proceedings, a speaking order was passed on 27.04.2023, wherein it duly acknowledged that the PHED was liable to make the payment of Rs.62,33,618/-, but held that the petitioners herein were not entitled to any additional interest on three grounds. First, on account of the MoU dated 14.05.2019. Secondly, it could not be ascertained as to whether the petitioners were in possession of a valid MSME Registration Certificate as was required under the Act of 2006 at the time when the work orders were awarded and executed by it. Lastly, it could not be ascertained if the petitioners had duly disclosed its status as an MSME entity, while the said work was allotted to them. Be that as it may, in the order dated 27.04.2023, it was categorically Page No.# 13/55 admitted that the amount of Rs.62,33,618/- was payable to the petitioners as principal amount due under the State sector, which shall be immediately paid upon receipt of the funds.
16. The petitioners being aggrieved had filed the present writ petition, assailing the order dated 27.04.2023 as well as seeking appropriate directions for payment of the amount of Rs.62,33,618/- and the applicable interest in terms with the Act of 2006.
17. Before dilating into the stand of the respondents in WP(C)No.4631/2023, this Court finds it relevant to state the material facts in the other two petitions.
WP(C) No.5273/2023:
18. The facts of the present case are also similar to the facts in WP(C)No.4631/2023 as well as the reliefs so sought for are also similar. In the instant case, the impugned speaking order is also dated 27.04.2023, wherein also the respondent PHED duly admitted that an amount of Rs.32,44,879/- was payable to the petitioner and rejected the contention on the grounds relating to entering into the MoU dated 14.05.2019; it could not be ascertained whether the petitioner was in possession of a valid MSME Registration Certificate as required under the Act of 2006, when the work was awarded and executed and it could not also be ascertained whether the petitioner had duly Page No.# 14/55 disclosed its status as an MSME entity while the said work was allotted to it.
19. This Court, finds it, however, pertinent to take note of certain other material facts in the present writ proceedings. The petitioner is a company registered under the provisions of the Companies Act, 1956 and was duly registered under the Assam Preferential Store Purchase Act, 1989 and was issued a Registration Certificate on 17.11.2009 bearing registration No. DIC/KMRP/APSP/5796. The Entrepreneur Memorandum Part II was issued on 29.10.2009, wherein it was mentioned that the petitioner had commenced its activity w.e.f. 22.10.2009. It is also pertinent to observe that even in the Registration Certificate issued on 29.10.2009, it was duly mentioned that on 18.10.2009 the petitioner was registered as MSE and the date of commencement of the commercial production and business on 22.10.2009.
20. The details of the work orders which have been mentioned in the instant writ petition are reproduced hereinunder in the form of a chart:
1 PHE-46/MM/10-11/22190 14.10.2010 At the time of being issued this work order the Petitioners unit Page No.# 15/55 was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
2 PHE-46/MM/10-11/20529 27.12.2011 At the time of being issued this work order the Petitioners unit was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
3 PHE-43/MM/10-11/11321 08.08.2012 At the time of being issued this work order the Petitioners unit was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
4 PHE/CE/B&S/PB-211- 29.09.2012 At the time of being issued this work order the Petitioners unit 12/3440 was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
5 PHE-46/MM/10-11/30995 30.03.2013 At the time of being issued this work order the Petitioners unit was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
6 PHE-43/MM/10-11/30898 30.03.2013 At the time of being issued this work order the Petitioners unit was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
7 SIDC/MKI/T/UPVC@/8/10- 15.02.2013 At the time of being issued this work order the Petitioners unit 11 was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
8 PHE-10/MM/12-13/26558 15.02.2013 At the time of being issued this work order the Petitioners unit was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
9 PHE-68/MM/10-11/T-672 27.08.2013 At the time of being issued this work order the Petitioners unit was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
1 SRKMPPL/PHE-DAHP/2013- 16.01.2014 At the time of being issued this work order the Petitioners unit 0 14/01(A) to03(B) was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
1 PHE-43/MM/10-11/T- 2611 30.05.2015 At the time of being issued this work order the Petitioners unit 1 was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
1 PHE-23/MM/15-16/T- 3132 08.09.2015 At the time of being issued this work order the Petitioners unit 2 was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
1 PHE-68/MM/2010-11/T- 17.10.2014 At the time of being issued this work order the Petitioners unit 3 7049 was duly registered as an MSME unit vide Entrepreneurs Memorandum No. -18241200183 dated 29.10.2009.
Page No.# 16/55
21. This Court finds it pertinent to take note of the MoU so entered into on 14.05.2019 by and between the petitioner herein along with the PHED, Government of Assam, inasmuch as the contents appear to be different from the contents of the MoU so entered into by and between the petitioners in WP(C) No.4631/2023 with that of the PHED, Government of Assam. The contents of the MoU by and between the petitioner in the present writ petition with the PHED, Government of Assam are reproduced hereinunder:
"GOVERNMENT OF ASSAM THIS MEMORANDUM OF UNDERSTANDING (MOU) is made at Guwahati on this 14 th day of May 2019 between M/S. SRK Metals And Plastics Pvt. Ltd. A company/Industry/Firm Incorporated under the Micro, Small & Medium Enterprise Development Act, 2006 (Act No.27 of 2006) Having its Registered Office at Lokhara, Lalunggaon and Public Health Engineering Department Government of Assam.
WHEREAS
1). The Government has agreed to pay the Company / Industry / Firm the sums due under the terms of the Agreement.
2). The Final Principal amount of Rs.4858246/-(Rupees Forty Eight Lakhs Fifty Eight Thousand Two Hundred Forty Six only) is due for payment on 14 th May 2019 under the head NRDWP. Further an amount as calculated up to 31 st March 2019 is payable by the department towards Interest to the Company / Industry/Firm.
A) Now this Memorandum has agreed to pay the entire principal amount of Rs. 48,58,246/- (Rupees Forty Eight Lakhs Fifty Eight Thousand Two Hundred Forty Six only) due under the Head NRDWP by a onetime payment.
B) Both the parties in consideration of the payment of the principal amount as per (A) above has agreed to full settlement of the principal amount due under the head NRDWP and the Company / Industry / Firm is agreed upon not to claim Interest, under Page No.# 17/55 the head NRDWP beyond 31st March 2019.
In witness whereof the parties have put their respective hands on the day 14 th May 2019".
22. A perusal of paragraph No.24 of the instant writ petition would show that pursuant to the said MoU an amount of Rs.48,58,246/- under the NRDWP plan and only part interest payment of Rs.1,54,53,588/- was paid to the petitioner. It is also pertinent to take note of the affidavit-in-opposition filed by the Chief Engineer, PHED in the Contempt Case No.517/2018 filed by petitioner wherein a statement had been enclosed as regards the dues of the petitioner as on 31.03.2019 under the NRDWP and 30.06.2019 under State Sector. From a perusal of the said statement, it reveals that the principal amount under the NRDWP Head of Rs.58,63,470/- was duly paid. However, as regards the State Sector, the dues of Rs.32,44,879/- remained unpaid. Additionally the interest of an amount of Rs.1,54,53,588/- was paid to the petitioner, but there still remained an amount of Rs.2,25,24,232/- as regards the balance interest to be paid.
23. Before proceeding to the next writ petition, it is, however, very pertinent to observe that the impugned orders dated 27.04.2023 though states that there was no interest payment on account of the MoU entered into on 14.05.2019 as well as the registration of the Page No.# 18/55 petitioner as an MSME could not have been ascertained, but the respondent authorities had made payment of the interest and further disclosed that there is a balance of further interest to be payable. It, therefore, appears that the respondent authorities, while passing the orders dated 27.04.2023 did not take into account the said aspect, while passing the said impugned orders.
WP(C)No.5966/2000:
24. The facts in the instant writ petition is also similar to the facts involved in the two writ petitions discussed above wherein also vide an order dated 27.04.2023, the PHED Government of Assam by a speaking order acknowledged that an amount of Rs.24,53,013/- was payable by the PHED Government of Assam under the State Sector to the petitioner and further rejected the payment of additional interest on account of the MoU dated 14.08.2019; it could not be ascertained as to whether the petitioners were in possession of a valid MSME Registration Certificate as required under the MSME Act 2006 at the time when the work was awarded and executed by it and it could not also be ascertained if the petitioners have duly disclosed their status as MSME entities, while the said work was allotted to the petitioners. The details of the work orders mentioned in the instant writ petition are reproduced herein in the form of a chart:
Page No.# 19/55 SL ORDER DATE WORK ORDER 1 At the time of being issued this work order the Petitioners unit was duly 07-11-2009 PHE-12/MM/2009-10/13670 registered as an MSME unit vide Entrepreneurs Memorandum (part-II) No. -18241200098 dated 12.11.2008 2 At the time of being issued this work order the Petitioners unit was duly 10-03-2010 PHE-12/MM/2009-10/21276 registered as an MSME unit vide Entrepreneurs Memorandum (part-II) No. -18241200098 dated 12.11.2008 3 At the time of being issued this work order the Petitioners unit was duly 12-03-2010 PHE-12/MM/2009-10/21647 registered as an MSME unit vide Entrepreneurs Memorandum (part-II) No. -18241200098 dated 12.11.2008 4 At the time of being issued this work order the Petitioners unit was duly 16-08-2011 PHE-12/MM/2009-10/9332 registered as an MSME unit vide Entrepreneurs Memorandum (part-II) No. -18241200098 dated 12.11.2008 5 At the time of being issued this work order the Petitioners unit was duly 20-09-2011 PHE-12/MM/2009-10/12289 registered as an MSME unit vide Entrepreneurs Memorandum (part-II) No. -18241200098 dated 12.11.2008 6 At the time of being issued this work order the Petitioners unit was duly 22-11-2011 PHE-12/MM/2009-10/17005 registered as an MSME unit vide Entrepreneurs Memorandum (part-II) No. -18241200098 dated 12.11.2008 7 At the time of being issued this work order the Petitioners unit was duly 09-12-2011 PHE-12/MM/2009-10/18525 registered as an MSME unit vide Page No.# 20/55
25. In the instant case, it would be relevant to take note of that the petitioner No.1 which is a proprietorship firm was also registered under the Assam Preferential Stores Purchase Act 1989 and was issued a Registration Certificate on 19.12.2008 bearing Registration No. DICC/K(IV)5130/APSP/2008. The petitioner No.1 also was registered under the Act of 2006 and was issued the Entrepreneur Memorandum Part II on 12.11.2008 acknowledging that the petitioners had commenced activity on and from 06.07.2002 in respect to PVC Pipes and on 04.11.2004 in respect to ACP Pipes. In the Udyog Aadhaar Memorandum, which is Annexure-5 to the writ petition, mention was made to the previous registration details of the petitioners bearing Entrepreneur Memorandum No. Part II 18241200098 which is in tune with the Entrepreneur Memorandum Part II enclosed as Annexure-3 to the writ petition.
26. The MoU which was entered into by and between the petitioners in the present writ petition and the PHED, Government of Assam being relevant is reproduced hereinunder:
"Government of Assam THIS MEMORANDUM OF UNDERSTANDING (MOU) made on this day of 14 thMay 2019 between M/s Kamakhya Poly Udyog industry/Firm Incorporated under the Micro, Small & Medium Enterprise Development Act, 2006 (Act No-27 of 2006) having its Registered Office at Royal Enclave, S.C Road, Athgaon Guwahati-781001, Assam and Public Health Engineering Department Government of Assam.
Page No.# 21/55 WHEREAS
1) The Government has agreed to pay to the Company/Industry/Firm the sums due under the terms of the Agreement.
2) The Final Principal amount under the NRDWP Head which covers Rs.1,42,124.37 (One Crore Forty Two Lakhs One Hundred Twenty Four & Paisa Thirty Seven Only) is due for payment as on 14.05.2019 under the head NRDWP.
Further an amount as calculated up to 31st March 2019 is payable by the Department towards Interest to the Company/Firm/Industry. (A) Now this Memorandum has agreed to pay the entire Principal amount of Rs.1,42,124.37 (One Crore Forty Two Lakhs One Hundred Twenty Four & Paisa Thirty Seven Only) due under the head NRDWP by a one-time payment.
(B) Both the parties in consideration of the payment of the principal amount as per (A) above has agreed to full settlement of the principal amount due under the head NRDWP and the Company/Firm/Industry is agreed upon not to claim any Interest under the head NRDWP beyond 31st March 2019.
In witness whereof the parties have put their respective hands on the day 14.05.2019."
27. In terms of the said MoU, it was agreed to that the final principal amount under the NRDWP Head was Rs.1,42,124.37p. It was also mentioned that the entire principal amount of Rs.1,42,124.37p due under the NRDWP Head would be paid by a one-time payment and there shall be no claim for interest under the NRDWP Head beyond 31.03.2019. It is, however, very pertinent to observe that the said MoU as above-quoted does not mention anything as regards the State-share payable as well as the interest accrued thereupon.
Page No.# 22/55
28. It is also apposite herein to observe that in the additional affidavit filed by the Chief Engineer, Public Health Engineering Department being Cont.Cas(C)No.103/2019, the statement of the payment payable to the petitioners have been duly mentioned. From the said statement, it is seen that on the NRDWP Head, an amount of Rs.1,42,31,062/- was payable and the same was duly paid. However, in respect to the State sector/fund, the amount payable was Rs.24,53,013/- which remained unpaid and interest as on 30.11.2020 was Rs.7,88,87,069/-.
29. The petitioners in the three writ petitions challenged the speaking orders dated 27.04.2023 rejecting their claim for reasons already discussed above and sought for appropriate directions for payment by following the mandate of the Act of 2006. This Court issued notices to the respondents vide the orders dated 14.08.2023, 13.09.2023 and 09.10.2023 respectively.
STAND OF THE RESPONDENTS IN THEIR AFFIDAVIT-IN- OPPOSITION:
30. The respondent PHED had filed the affidavits-in-opposition in all the writ petitions. Let this Court now take note of the stand of the respondents in the affidavits-in-opposition filed in the three writ petitions. It may not be out of place to observe that the contents of the respective affidavits-in-opposition are similar.
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31. At paragraph 7 of the affidavit-in-opposition filed by the respondent Nos. 1, 3, 4 and 5 through the Special Secretary to the Government of Assam, Public Health Engineering Department, it was mentioned that the claim of the petitioners for interest was rejected entirely on the ground that their status as MSME were doubtful and also in view of the MoU, they had executed with the Government of Assam through the Public Health Engineering Department on 14.05.2019, whereby they agreed not to claim any interest beyond 31.03.2019. However, the outstanding principal dues of the petitioners were directed to be paid immediately on receipt of the funds.
32. It was further mentioned that for payment of interest as contemplated under the Act of 2006, a Facilitation Council is provided under Section 18 of the Act of 2006 to resolve any dispute. It was also mentioned that although the interest is stipulated under Section 16 of the Act of 2006, but any dispute regarding payment must be resolved either by conciliation or by arbitration.
AFFIDAVITS-IN-REPLY FILED BY THE PETITIONERS:
33. It is also seen that the petitioners have also filed affidavits- in-
reply in all the writ petitions reiterating and reaffirming their stand made in the writ petition. It was also mentioned in the affidavits-in- reply so submitted by the petitioners that the calculation of interest Page No.# 24/55 was not done by the petitioners, but rather that interest calculation was done by the respondents. Further to that it was averred in the affidavits-in-reply that the question of the respondent authorities raising doubts as regards the petitioners being registered under the Act of 2006 does not arise inasmuch as, in the MoU's, which was entered into, the respondent authorities have duly admitted that the petitioners were registered under MSME Act 2006.
34. On the question of application of Section 18 of the Act of 2006, it was mentioned that the applicability of Section 18 of the Act of 2006 could have been there, if there were disputes regarding the amount due. It was further stated that the PHED have from time to time admitted the outstanding dues of the petitioners and the same not being disputed, the question of applying Section 18 of the Act of 2006 thereby to non-suit the petitioners did not arise. In addition to that, the petitioners have also referred to the various Annexures to the writ petition, wherein the Director MSME and the Commissioner Department of Industries and Commerce have written letters to the PHED asking them to release the outstanding bills to the petitioners.
DEVELOPMENTS DURING THE PENDENCY OF THE WRIT PETITIONS:
35. It is very pertinent to observe that though in the respective impugned orders dated 27.04.2023 assailed in the three writ petitions, Page No.# 25/55 the respondent authorities duly admitted certain amounts to be payable to the petitioners, but no payments were made. When the present writ petitions were taken up by this Court on 26.09.2024, it was submitted by the learned Standing Counsel for the PHED that the Finance Department's concurrence was pending in respect to the payment of the said amounts which the PHED duly admitted in the impugned orders.
36. The records further reveal that thereafter payments were made to the petitioners of the dues admitted in the impugned orders dated 27.04.2023 assailed in the three writ petitions. In respect to the writ petitioners in WP(C)No.4631/2023, the petitioners were paid an amount of Rs.62,70,645/- in the month of February 2025. In respect to the writ petitioner in WP(C)No.5273/2023, it was paid an amount of Rs.32,64,154/- in the month of January 2025. In the case of the writ petitioners in WP(C)No.5966/2023, they were paid an amount of Rs.24,53,013/- in the month of January 2025.
37. This Court further finds it also relevant to take note of that various adjournments were taken on the ground that the respondent authorities were trying to settle the matter out of the Court. However, after giving various accommodations, when it was seen that nothing substantial had progressed in the negotiations between the petitioners and the respondents, this Court took up the matter on 09.09.2025 for Page No.# 26/55 hearing. On 09.09.2025, while hearing the matter and further taking into account the stand taken by the respondents to support the impugned order dated 27.04.2023 to be prima facie misconceived and interest which had accrued in the meantime had become substantial. This Court requested both the parties, if by way of some sort of negotiations, the interest amount could be reduced.
38. Mrs. M Hazarika, the learned Senior Counsel, upon instructions submitted before this Court on 09.09.2025 that the petitioners were not adverse to having a further negotiation in the interest of the State. Mr. I Borthakur, the learned Standing Counsel appearing on behalf of the PHED also submitted that he would advise his clients in that regard.
39. Considering the above, this Court, therefore, passed an order on 09.09.2025, thereby fixing 15.09.2025 at 2.00 PM for the representatives of the petitioners to approach the Special Secretary, PHED for negotiation. Paragraph No.2 to paragraph No.9 of the said order dated 09.09.2025 being relevant are reproduced hereinunder:
"2. From the materials on record, it transpires that the impugned speaking order by which the petitioners' entitlement towards interest in terms with Section 16 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 (for short, the MSMED Act of 2006) had been denied appears to be prima facie not tenable. The reasons being that the Memorandum of Understanding dated 14.05.2019 would have no application in respect to the payment due by the PHE Department inasmuch as, the Memorandum of Page No.# 27/55 Understanding dated 14.05.2019 relates only to the Central Government share. The speaking order further bases its decision on the question that it could not be ascertained as to whether the petitioners would be small enterprise. But the materials on record clearly show that the said decision was arrived at without taking into consideration, the Entrepreneur Memorandum Part II which was issued to the petitioners on 01.03.2014 and the respondent PHE Department further have not taken into consideration the MSMED Act of 2006 read with the Notification dated 29.09.2006 issued by the Additional Secretary, Ministry of Micro, Small and Medium Enterprise, Government of India. It further appears that the respondent PHED have also not taken into consideration the Circular dated 01.08.2007. The Notification dated 29.09.2006 and the Circular dated 01.08.2007 have been brought on record by filing an additional affidavit by the petitioners.
3. This Court further takes note of that as on 30.11.2020, the PHE Department have already admitted that in respect to WP(C)No.4631/2023, the petitioner therein would be entitled to an amount of Rs.62,33,618/- payable by the respondent PHED and further the interest as on that date was Rs.4,55,79,715/-. In respect to WP(C)No.5273/2023 and WP(C)No.5966/2023, similar are the state of affairs.
4. It further appears from a reading of Section 16 read with Section 17 of the MSMED Act of 2006 that statutorily the entitlement of the interest have been prescribed and further this entitlement is statutorily also recognized by Section 17 of the said Act.
5. This Court while hearing the learned counsels appearing on behalf of the parties and taking into account the implication of the huge amount of interest had enquired with the learned counsels appearing on behalf of the parties as to whether some sort of settlement can be arrived at so that the interest portion could be reduced.
6. Ms. M Hazarika, the learned Senior Counsel appearing on behalf of the petitioners in the three writ petitions submitted that her clients are not adverse to having a negotiation.
7. Mr. I Borthakur, the learned Standing Counsel, PHE further submitted that he would also advise his client in that regard.
8. As the matters have been heard at length, this Court fixes the instant proceedings on 19.09.2025 at the top of the list for further hearing.
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9. In the meantime, the petitioners and the respondents would be at liberty to take steps for an amicable settlement."
40. On 19.09.2025, when the matter was taken up by this Court, it was informed to this Court by the learned Standing Counsel, Mr. D Gogoi that there were certain deliberations going on between the petitioners in the present batch of writ petitions with the Special Chief Secretary of the PHED and there was a likelihood that the dispute could be amicably resolved. Taking into account the above, this Court, therefore, fixed the matter on 15.10.2025.
41. When the writ petitions were listed on 15.10.2025, the learned Standing Counsel of the PHED, namely, Mr. I. Borthakur, submitted that some form of negotiated settlements have been arrived at on the basis of which, the PHED is taking steps. The learned Standing Counsel, therefore, sought for a week's time for the purpose of providing the details as to how much amount the PHED would be willing to pay to the petitioners in the three writ petitions. Under such circumstances, this Court fixed the matter on 30.10.2025 for further hearing.
42. On 30.10.2025, Mr. D Gogoi, the learned Standing Counsel PHED appeared and submitted that no negotiated settlements were arrived at, rather, a communication was issued by the Chief Engineer PHED to the Secretary to the Government of Assam, Public Health Engineering Page No.# 29/55 Department, wherein certain claims of the petitioners were forwarded. In that view of the matter, as there were no negotiated settlements arrived at, this Court vide the order dated 30.10.2025 fixed the present batch of writ petitions for hearing on 06.11.2025.
SUBMISSIONS MADE BY THE LEARNED COUNSELS ON BEHALF OF THE RESPECTIVE PARTIES:
43. Mrs. M Hazarika, the learned Senior Counsel appearing on behalf of the writ petitioners submitted that the speaking orders which have been assailed in the three petitions all dated 27.04.2023 cannot be sustained in law, inasmuch as, the reasons assigned in the said orders are contrary to the settled principles of law as well as the provisions of the Act of 2006. The learned Senior Counsel submitted that the reasons assigned in the impugned orders dated 27.04.2023 are three- fold: First, MoUs dated 14.05.2019 were maliciously read by the respondents by a stand that the petitioners are not entitled to additional interest which no reasonable person could have done so. The learned Senior Counsel further submitted that the second reason so assigned is, however, contrary to the first reason, inasmuch as, in the second reason, it was stated that it could not be known whether the petitioners had valid MSME Registration Certificate, though in the MoUs dated 14.05.2019, it were duly admitted by the respondent Department that the petitioners were registered under the Act of Page No.# 30/55 2006. The third reason so assigned also is contrary to the settled principles of law, inasmuch as, the respondent authorities have arrived at a conclusion that the petitioners did not disclose their status as entities under the Act of 2006, whilst the work orders were allotted. The learned Senior Counsel submitted that the Act of 2006 provides benefits to the Micro, Small and Medium Enterprises for the purpose of encouragement of these Enterprises. The learned Senior Counsel further submitted that when the tenders as well as the work orders did not debar the participation of Micro, Small and Medium Enterprises and the work orders have been issued thereupon, the extant law i.e. the Act of 2006 would automatically apply. Sections 15 and 16 of the Act of 2006 stipulates as to when such payment is required to be made. The learned Senior Counsel further submitted that in terms with the Assam Preferential Stores Purchase Act, 1989 as well as the Assam Procurement Policy 2015 it was the very policy of the Government to encourage and give contracts to the MSMEs and, therefore, the respondents now cannot question the same.
44. Additionally, the learned Senior Counsel further submitted that from the various pleadings in the accompanying contempt applications as well as in the present proceedings also the respondents have duly admitted that the petitioners come within the ambit of the Act of 2006 and just for the purpose of depriving the petitioners of the benefits Page No.# 31/55 under the Act of 2006, the respondents cannot be permitted to take such a stand in the impugned orders. The learned Senior Counsel submitted that details have been given in the writ petition that the respondent authorities have picked and chosen some contractors and given benefits under the Act of 2006, but similarly situated contractors like the petitioners have been deprived for reasons best known. The learned Senior Counsel further submitted that during the pendency of the present proceedings the admitted amount have been paid, that too, when orders have been passed by this Court, but as those orders passed by this Court did not specify as regards how the apportionment is to be carried out, the said amount so paid has to be adjusted against the entitled interest first thereupon if any cost factor is involved and then the principal can be touched. In that regard, the learned Senior Counsel referred to the judgments of the Privy Council in the case of Meka Venkatadri Appa Row Bahadur Zemindar Garu and Others Vs. Raja Parthasarathy Appa Row Bahadur Zemindar Garu reported in XIV Law Weekly 25, Meghraj & Ors Vs. Mst. Bayabai & Ors reported in (1969) 2 SCC 274, and the Constitution Bench Judgment of the Supreme Court in the case of Gurpreet Singh Vs. Union of India, reported in (2006) 8 SSC
457.
45. In addition to that the learned Senior Counsel also submitted Page No.# 32/55 that in the affidavits-in-opposition so filed by the respondents they have taken a categorical stand that the present proceedings ought not to be entertained, taking into account that there is an alternative and efficacious remedy available before the MSME Facilitation Council in terms with Section 18 of the Act of 2006.
46. The learned Senior Counsel also submitted that on one hand, the respondents state that the dispute be resolved through MSME Facilitation Council and on the other hand have questioned the status of the petitioners as MSME. This contradictory stand cannot be permitted to be taken.
47. Mr. RR Gogoi, the learned Standing Counsel appearing on behalf of the PHED submitted that the MoUs were entered into by and between the petitioners and the respondent Department. In view of the said MoUs, the respondent Department cannot be saddled with any further liability than what has been agreed upon by and between the parties therein. He, therefore, submitted that the impugned orders by which the liability of interest in terms with the Act of 2006 was rejected, therefore, do not call for any interference. The learned Standing Counsel further submitted that whether the petitioners were MSMEs at that relevant point of time could not be ascertained during the verification and, therefore, the question of making payment of interest for the period when the work orders were issued at the rate Page No.# 33/55 stipulated as per the Act of 2006 was rightly rejected. Additionally, the learned Standing Counsel submitted that another very important aspect is as to whether the respondent PHED can be saddled with any liability if the petitioners do not inform that they are MSEs coming under the Act of 2006. It is only from the date such information were provided, the respondents could at best be held liable. The learned Standing Counsel, therefore, submitted that the reasons so assigned in the impugned orders dated 27.04.2023 do not call for any interference.
48. Additionally, the learned Standing Counsel submitted that the aforesaid aspects can be very well decided by the MSME Facilitation Council in terms with Section 18, wherein not only such disputes can be adjudicated through arbitration, but prior to that there is also a scope for mediation. The learned Standing Counsel submitted that by mediation the respondents can mediate with the petitioners so that the amount can be reduced. The learned counsel further submitted that the Facilitation Council could have been very well approached by the petitioners, rather than approaching this Court under Article 226 of the Constitution. The learned Standing Counsel for the PHED further referring to the work orders enclosed to the writ petitions submits that these work orders do not mention that the work orders are to be only issued to the MSME.
Page No.# 34/55 ANALYSIS & DETERMINATION:
49. Upon hearing the learned counsels appearing on behalf of the parties, the primary question which arises is as to whether the petitioners herein in the batch of the writ petitions in the present facts would be entitled to claim benefits under Sections 15, 16 and 17 of the Act of 2006. A perusal of the impugned orders dated 27.04.2023 in all the three writ petitions provide three reasons as to why the petitioners' request for interest claimed has been denied. The three reasons are: (i). the petitioners in the present batch of writ petitions have entered into MoU's dated 14.05.2019 and as such, not entitled to any additional interest; (ii). it could not be ascertained as to whether the petitioners in each of the writ petitions were in possession of a valid MSME Registration Certificate as required under the Act of 2006 at the time when the work orders were awarded and executed by them; (iii) it could not be ascertained if the petitioners in the instant batch of writ petitions have duly disclosed their status as MSME entities whilst the said works were allotted.
50. This Court, therefore, would be taking each of the grounds assigned on the basis of the materials available on the record as well as the respective submissions so made by the learned counsels appearing on behalf of the parties as to whether such grounds are justified to deny the petitioners the benefit under Sections 15, 16 and Page No.# 35/55 17 of the Act of 2006.
51. Let this Court now take up the first ground for rejecting the interest claimed by entering into the MoU's dated 14.05.2019. In the previous segments of the present judgment, this Court had quoted the MoU's which have been entered into on 14.05.2019 against each of the petitioners in the present batch of writ petitions.
52. Before taking up each of the MoU's entered with the petitioners, it is relevant to take note of the schemes under which the work orders were issued in favour of the petitioners. It is an admitted fact that some work orders were PHED, Government of Assam own Schmes and some were under Centrally sponsored Schemes wherein payment are to be made by both the Centre and the State as per the ratio mentioned in the Scheme. It is apposite to mention that in the Centrally sponsored Schemes, one part is paid under the NRDWP Head and the remaining is to be paid by the PHED, Government of Assam which is mentioned as the State Sector.
53. In the affidavit filed by the Chief Engineer, Public Health Engineering Department in Cont.Cas(C)No.101/2019, a statement was enclosed as Annexure-A to the said affidavit. A perusal of the statement reveals that Rs.44,42,703.00/- has been earmarked as the amount payable under the Head of NRDWP (National Rural Drinking Page No.# 36/55 Water Program) and Rs.62,33,618.00/- is shown as the principal amount payable from the State Sector/fund.
54. In the background of the above, if this Court now takes the MoU's dated 14.05.2019, insofar as the case of the petitioners in WP(C)No.4631/2023 is concerned, it would show that the Mou's in question is in respect to an amount of Rs.42,56,645/- under the NRDWP Head and there is no mention whatsoever in the said MoU in respect to the payment to be made from the State Sector/fund i.e. 62,33,618/-.
55. Under such circumstances, it is difficult for this Court to even conceive as to how the MoU dated 14.05.2019 could have any application towards the claim of the petitioners in respect to the amounts due from the State sector/fund.
56. In respect to the writ petition pertaining to WP(C)No.5273/2023, the MoU was also entered into on 14.05.2019, the details of which have been already quoted in the previous segments of the judgment. In the affidavit filed by the Chief Engineer, Public Health Engineering Department in Cont.Cas(C)No.517/2018, it was mentioned that the dues in respect to the petitioner were under two heads: an amount of Rs.58,63,470/- was on account of funds under the NRDWP Head and in respect to the State sector/fund the amount payable was Page No.# 37/55 Rs.32,44,879/-. It is also seen that an amount of Rs.1,54,53,588/- was shown as interest already paid which was calculated up to 31.03.2019 under the NRDWP Head and an amount of Rs.2,25,24,232/- was the interest payable which will be under the Head of the State sector/fund.
57. Let this Court now take note of the MoU's dated 14.05.2019 entered into with the petitioner in WP(C)No.5273/2023, wherein it is duly mentioned that the final principal amount payable to the petitioners was Rs.48,58,246/- as on 14.05.2019 under the NRDWP Head and further there would be an amount paid calculated up to 31.03.2019 towards the interest. A perusal of the contents of said MoU's do not show that the MoU's have any nexus or relation in respect to the dues payable from the State sector/fund which is Rs.32,44,879/- along with the interest. Clause B of the said MoU's further stipulates that the payment which was agreed to be made of the principal due and as well as the interest was only in respect to the NRDWP Head and there was also mention that there shall be no interest under the NRDWP Head beyond 31.03.2019.
58. In respect to WP(C)No.5966/2023, the MoU dated 14.05.2019 had also been quoted in the previous segments of the instant judgment. A perusal of the said MoU stipulates that the final principal amount under the NRDWP Head which covers O & M Head of Rs.1,42,124.37P Page No.# 38/55 was due for payment as on 14.05.2019 under the NRDWP Head and it was agreed to that the said amount principal along with interest up to 31.03.2019 would be paid. Now coming to the affidavit, which was filed by the Chief Engineer in Cont.Cas(C)No.103/2019, it was categorically mentioned that the principal amount payable under the NRDWP Head was Rs.1,42,31,062/- and from the State sector/fund was Rs.24,53,013/- and the interest to be payable was Rs.7,88,87,069/-, calculated up to 30.11.2020.
59. The above analysis of the MoU's, vis-à-vis, the stand of the respondents would show that it is totally misconceived on the part of the respondent authorities to reject the claim of the petitioners, vide the impugned orders all dated 27.04.2023 on the ground that the petitioners have entered into MoU's on 14.05.2019. At the cost of repetition, this Court further observes that those MoUs' dated 14.05.2019 entered into by the respondents with the petitioners in the present batch of writ petitions were only in respect to NRDWP and not in respect to the State sector/fund.
60. Before proceeding to the next ground, this Court further finds it very relevant to take note of an important aspect of the matter i.e. that in all the three MoUs' the respondent authorities categorically admitted that the petitioners were duly registered under the Micro, Small and Medium Enterprises Development Act, 2006.
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61. Let this Court now proceed to the second ground. The second ground so assigned is that it could not be ascertained as to whether the petitioners in the present batch of writ petitions were in possession of a valid MSME Registration Certificate. It is surprising to note that on one hand the respondents have all along duly admitted that the petitioners are registered under the Act of 2006 and entitled to interest, as would be seen from the pleadings of the Officials of the respondents in the various contempt cases. Even in the MoUs' dated 14.05.2019 on which, reliance have been placed by the respondent authorities for passing the impugned orders dated 27.04.2023, there are clear acknowledgments that the petitioners are registered under the Act of 2006.
62. Be that as it may, this Court while detailing out the facts in each of the writ petitions hereinabove, mentioned the various dates, on which, the petitioners were registered under the Assam Preferential Store Purchase Act 1989 as well as when the petitioners were issued Entrepreneur Memorandum Part II.
63. In the additional affidavits which were filed in all the three writ petitions by the petitioners, the Notification dated 29.09.2006 issued by the Ministry of Small Scale Industries was enclosed. This Notification was issued in exercise of the powers under Section 8(2) of Page No.# 40/55 the Act of 2006. Schedule II to the said Notification stipulates the procedure of filing the Entrepreneurs' Memorandum and other matters incidental there to. An application can be filed by any person, who intends to establish a Micro or a Small Enterprise at his discretion or a Medium Enterprise engaged in providing or rendering of service may at his discretion or a Medium Enterprise engaged in manufacture or production of goods shall file the Memorandum of Micro, Small or, as the case may be, of Medium Enterprise with the District Industries Centre of the area.
64. It is further mandated that the District Industries Centre shall fill all the codes in the form of Memorandum and issue an acknowledgment after allotting an Entrepreneur Memorandum number, date of issue, and the category of the unit within five days of the receipt of the form of Memorandum by post or same day, if the form of Memorandum is submitted in person as well as online. It is further stipulated that the District Industries Centre shall maintain records of all the Entrepreneur Memorandum so filed in respect of Micro, Small and Medium Enterprises engaged in providing and rendering service and the District Industries Centre shall also forward a copy of the Entrepreneur Memorandum so filed with the Entrepreneur Memorandum number allotted to the Small Industries Institutes of the State or their jurisdiction. Clauses 6, 7 and 8 of Page No.# 41/55 Schedule II of the said Notification is relevant and the same are reproduced hereinunder:
"6. District Industries Centre shall maintain record of all the Entrepreneurs Memorandum so filed in respect of medium enterprises engaged in production or manufacturing of products and forward one copy each of the Entrepreneurs Memorandum with Entrepreneur Memorandum number allotted to Small Industries Service Institutes of their State or their Jurisdiction and to Joint Development Commissioner (Micro, Small and Medium Enterprise Policy) in the Office of the Development Commissioner (Small Scale Industries).
7. The form of Memorandum is in two parts. Any person who intends to establish a micro, small or medium enterprise engaged in providing or rendering of services may file or those who want to establish medium enterprise engaged in the production or manufacture of production shall file Part I of the Entrepreneur Memorandum to District Industries Centre.
8. Once the above enterprises start production or start providing or rendering services, they shall file Part II of the Entrepreneurs Memorandum to District Industries Centre."
65. From a perusal of the above three quoted Clauses, it is apparent that the Memorandum shall be in two parts: the first part pertains to any person or Enterprise which shall file Part I of the Entrepreneurs Memorandum before the District Industries Centre and once the said Enterprise starts production or starts providing or rendering services, they shall file Part II of the Entrepreneur Memorandum to the District Industries Centre.
66. In the case of the writ petitioners in WP(C)No.4631/2023, the said petitioners initially filed the Part-I and thereupon the Page No.# 42/55 Entrepreneur Memorandum Part-II was issued on 01.03.2014. A perusal of Annexure-4 to the instant writ petition would show that the Entrepreneur Memorandum Part II issued by the General Manager, District Industry Centre categorizing the petitioners as Small Enterprise. Additionally, the Entrepreneur Memorandum number was also provided i.e. 18061201986.
67. It is also relevant to take note of that a Notification bearing No.S.O.2119(E) dated 26.06.2020 was issued by the Government of India, Ministry of Micro, Small, Medium Enterprises in exercise of the powers under sub-section (1) read with sub-section (9) of Section 7 and sub-section (2) read with sub-section (3) of Section 8 of the Act of 2006, whereby in supersession of all other Notifications, including the Notification referred to hereinabove dated 05.10.2006, certain criterias for classifying the Enterprise as Micro, Small, Medium Enterprises and specify the form and procedure for filling the Memorandum with effect from the 1st day of July 2020. Clause 7 of the said Notification refers to the registration of the existing Enterprises. The said Clause 7 being relevant is reproduced hereinunder:
"Clause 7:
(1) All existing enterprises registered under EM-Part-II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July, 2020. (2) All enterprises registered till 30th June, 2020 shall be re-classified in accordance Page No.# 43/55 with this notification.
(3) The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31st day of March, 2021.
(4) An enterprise registered with any other organisation under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.
68. From a perusal of the above-quoted Clause, it is seen that all the existing Enterprises registered under the Entrepreneurs' Memorandum Part II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July, 2020 and all Enterprises registered till 30.06.2020 shall be re-classified in accordance with the Notification. In terms with the said Notification, the petitioners in WP(C)No.4631/2023 have registered and have been issued the Udyam Registration Certificate, wherein it is categorically mentioned that the date of incorporation/registration of the enterprise was 07.08.2012 and the date of commencement of commercial production of the business is 08.02.2014.
69. In the case of the writ petitioners in WP(C)No.5273/2023, the petitioner was initially registered under the Assam Preferential Store Purchase Act, 1989 and was issued a Registration Certificate on 17.11.2009. The Entrepreneurs' Memorandum Part II was issued on 29.10.2009, wherein it was duly mentioned that the petitioner had commenced its activity from 22.10.2009 and further the Registration Certificate also mentioned that on 18.10.2009 is the date for Page No.# 44/55 registration of the Enterprise. The Udyam Certificate which was issued in terms with the Notification dated 26.06.2020 also records the date of registration of the petitioner as 18.10.2009 and the date of commencement of production as 22.10.2009.
70. In the case of the writ petitioners in WP(C)No.5966/2023 the petitioners were registered under the Assam Preferential Store Purchase Act 1989, and were issued Registration Certificate on 19.12.2008 and further the Entrepreneur Memorandum Part II was issued on 12.11.2008, acknowledging that the petitioners had commenced activity on and from 06.07.2002 in respect to PVC pipes and on 04.11.2004 in respect to ACP pipes. Further to that, in the Udyog Aadhaar Memorandum, it was duly mentioned about the petitioners' Entrepreneur Memorandum Part II and the date of Registration.
71. In the background of the above, it is relevant to take note of the work orders which were issued to all the three petitioners, the details of which have been given in the charts, detailing out the work orders and the date on which it was issued. The above analysis would show that all the three petitioners were registered under the Act of 2006, at the time, when the work orders were issued and the work or supply were executed. Under such circumstances, it is, therefore, the opinion of this Court that the second ground so assigned that it could not be Page No.# 45/55 ascertained appears to suffer from malice in law and requires interference.
72. Now let this Court take note of the third ground for rejection of the interest claim. The third ground is that it could not be ascertained if the petitioners in the batch of writ petitions disclosed their status as MSME entity, when the work orders were issued to them. Mrs. M Hazarika, the learned Senior Counsel appearing on behalf of the petitioners submitted that it had been the policy of the State of Assam since 1989, which is followed by the Procurement Policy in the year 2015, that special incentives would be given to encourage the enterprises registered under the Act of 2006 as well as the Assam Preferential Act of 1989.
73. The learned Senior Counsel submitted that the petitioners herein claim entitlement on the basis of Sections 15, 16 and 17 of the Act of 2006 and the ignorance of law cannot be an excuse. It is further submitted that there is no stipulation in the work orders that the work orders would not be issued to the Enterprises registered under the Act of 2006 or for that matter the stipulations in the work order would override the Act of 2006, which as per the learned Senior Counsel cannot.
74. On the other hand, Mr. RR Gogoi, the learned counsel appearing Page No.# 46/55 on behalf of the respondents had submitted that issuance of work orders upon the petitioners is one thing, but for payment of interest in terms with Section 16, unless and until such disclosure is not made, the authorities cannot be said to have known that the petitioners were entities registered under the Act of 2006, and, more particularly, when the work orders did not stipulate that the works have been allotted to Enterprises registered under the Act of 2006.
75. This Court had duly perused the work orders which have been issued to the petitioners in the three writ petitions. From a perusal of these work orders, it is apparent that the supply orders were routed through the Assam Small Industries Development Corporation Limited and because of that a 5% commission had been paid to the said Corporation. It is also pertinent to mention that these aspect have been stated in the pleadings of the writ petitioners. However, the same have not been replied to. In that perspective, this Court now finds it relevant to take note of Sections 15 and 16 of the Act of 2006, which imposes an obligation upon the buyer to make payment and statutorily imposes an interest if the buyer fails to make payment within the time-frame stipulated. It being a statutory mandate, the respondents were supposed to be well aware of the said provisions. All the work orders having been routed through the Assam Small Industries Development Corporation also gives a clear indication that Page No.# 47/55 these work orders were meant for small industries only.
76. Considering the above, it is, therefore, the opinion of this Court that the third reason so assigned cannot also be sustained in law.
77. This Court, therefore, is of the opinion that the grounds and reasons assigned in the impugned orders dated 27.04.2023 in all the three writ petitions cannot be sustained in law, the same are required to be interfered.
78. Now, let this Court take up another aspect of the matter as regards availability of alternative and efficacious remedy as taken by the respondent authorities. It is seen from a perusal of the affidavits- in-opposition that the respondent authorities have taken the plea that instead of initiating proceedings under Articles 226 of the Constitution, the petitioners or any aggrieved person having not been paid the amounts in terms with Sections 15 and 16, a reference can be made to the Micro and Small Enterprise Facilitation Council and, therefore, these writ petitions ought not to be entertained. It is the opinion of this Court that the said submission is misconceived, taking into account the orders dated 27.04.2023 question the very entity of the petitioners as MSM Enterprises and the registration under the Act of 2006. In the opinion of this Court, this very aspect could not have been decided by the Micro and Small Enterprises Facilitation Council Page No.# 48/55 and, therefore, the plea that there was an alternative and efficacious remedy cannot be applied.
79. Having opined so it is also very pertinent to take note of Sections 15 and 16 of the Act of 2006, which are reproduced hereinunder:
"15.Liability of buyer to make payment.--Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:
Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.
16. Date from which and rate at which interest is payable.--Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank."
80. A perusal of the above-quoted Section 15 of the Act of 2006 statutorily imposes an obligation upon the buyer to make payment on or before the date agreed upon between the buyer and the supplier in writing or where there is no agreement in that behalf before the appointed day. The term 'appointed day' has been defined in Section 2(b) of the Act of 2006, meaning the day following immediately after the expiry of the period of 15(fifteen) days from the date of acceptance or the day of deemed acceptance of any goods or any Page No.# 49/55 services by a buyer from a supplier. Section 2(b) of the Act of 2006 being relevant is reproduced hereinunder:
"2(b). "appointed day" means the day following immediately after the expiry of the period of fifteen days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier".
81. The proviso to Section 15 further stipulates that under no circumstances, the period agreed upon between the supplier and the buyer in writing shall exceed 45 (forty-five) days from the date of acceptance or the day of deemed acceptance. The proviso is relevant taking into account that irrespective of any agreement/contract between the parties, the statutory injunction holds the field and thereby confines the period not to exceed 45(forty-five) days from the date of acceptance or the day of deemed acceptance.
82. Now let this Court take note of Section 16. There are two aspects of interest in Section 16: first, that it is to be calculated from the appointed day and secondly, the liability to pay compound interest with monthly rests. In this regard, this Court finds it very relevant to take note of a judgment of the learned Calcutta High Court in the case of V.K. Patel and O Vs. Simplex Infrastructure Ltd. reported in 2024 SCC Online Cal.6617, wherein the learned Calcutta High Court explained the very concept as to how the calculation is to be made in terms of Section 16. Paragraph No. 20 to Paragraph No. Page No.# 50/55 31 of the said judgment being relevant are reproduced hereinunder:
"20. To ascertain such issue, the very concept of compound interest versus simple interest is to be explored, since compound interest is the chosen mode in Section 16. Importantly, it has also been stipulated in Section 16 of the MSME Act that the compound interest shall be with "monthly rests". Thus, the interest is to be compounded at the end of each month after the appointed day.
21. The very concept of compound interest is variable progression, as opposed to simple interest which, by its very definition, always has to be at a fixed rate as on the date of commencement of calculation. In case of simple interest, the interest is calculated at the fixed rate which prevailed at the juncture of commencement of calculations till the date of payment, on the principal.
22. As opposed thereto, the premise of compound interest is staggered progression in the sense that the interest has to be calculated at defined intervals, in the present case, at monthly intervals, which are known as "rests". Hence, for example, if the principal is Rs. 100/- and the initial rate of interest on the appointed day is 10%, after the end of the first month, the total amount would be Rs. 100 + 10% thereof that is Rs. 10/-, which equals Rs. 110/-.
23. The said sum of Rs. 110/-, which is the initial principal plus interest for the first month, forms the basis of calculation or principal for the second month. Thus, calculated, the principal for the second month would be Rs. 110/-, which would be the base amount on which further interest would be calculated.
24. Hence, although the commencement of calculation is tied to the appointed day, the point of incidence of the bank rates for calculation of interest becomes the end point of each month, which are also known as monthly "rests" as stipulated in Section 16 itself. Hence, by its very nature, compound interest has to be imposed at staggered intervals.
25. Since the point of incidence of the rate of interest is the rate prevailing at the end of each month, which is the monthly rest, the rate prevailing on such date must be the premise of calculation. For instance, if the initial rate of interest prevailing on the appointed day was "x%", the calculation for the first month would be equal to Principal Page No.# 51/55 (P) + "x% of principal". Again, at the beginning of the second month the rate of interest becomes "y", the second month's calculation would be equal to (P + x% of P) + y% of (P+ x% of P), which would again form the base amount for calculation of the third month. The only difference between a normal calculation of compound interest and that under Section 16 is that the rate will be three times the bank rate as notified by the RBI in case of the latter.
26. Section 16 mentions the appointed day merely as the starting point of calculation but does not provide that the rate of interest should also be inextricably linked to the said date; rather, the language used is "three times the bank rate notified by the Reserve Bank".
27. The argument of the petitioner, that if the rates are variable, the appointed day has to be calculated at the end of each month, is not acceptable, since there is no such possibility if the variable rates are taken into consideration. The appointed day merely provides the starting point of calculation. Thereafter, the calculation will progress at compound rate with monthly rests, meaning thereby that the rate prevailing at each monthly rest should be taken into account for incidence of interest for the said month. In Section 16, the term "rests" has been interchangeably used with "intervals".
28. The very character of compound interest makes it fluid and variable. If the rate of calculation of interest is fixed at the date of inception of calculation, the same would be a counter-intuitive, artificial and arbitrary superimposition on the normal mode of calculation as given in the statute, since Section 16 provides that the compound interest will be calculated with 'monthly rests', at which points the prevailing bank rate of interest is to be taken into account.
29. Just as in the case of the simple interest if suddenly varied rates are imposed it would be arbitrary since the mode of calculation is continuous, similarly, in case of compound interest, which is to be calculated on a staggered basis, fixation of the rate prevailing at the inception would also be arbitrary.
30. The very premise of compound interest with monthly rests is that the calculation of further interest is made at the end of every month at the rates prevailing then. In a Section 16 scenario, the rate at which interest is to be imposed at each Page No.# 52/55 monthly rest is three times the bank rate notified by the RBI prevalent at that juncture.
31. Hence, by its very definition, compound interest at monthly rest is variable and cannot be static, frozen at the appointed day."
83. It is the opinion of this Court that the interpretations so given to Section 16 of the Act of 2006 by the learned Calcutta High Court as quoted hereinabove have lucidly laid down the principles for calculation of the interest and this Court duly agrees to the same.
84. The above analysis shows that the petitioners herein in the batch of three writ petitions would be entitled to the benefits under Sections 15, 16 and 17 of the Act of 2006. Be that as it may, what would be the interest component on the admitted dues has to be worked out as per the principles laid down as discussed above. The materials before this Court only refers to the work orders and the date on which these work orders were issued. Questions of facts arise pertaining to as to when the supplies were made; when the supplies were accepted; whether it was accepted or it was a deemed acceptance; what is the rate declared by the RBI during the relevant period, more particularly, taking into account that the interest payable is to be compounded with monthly rests; cannot be decided by this Court. It would require exercise to be carried out by the petitioners and looked into by the respondent PHED.
85. Accordingly, this Court, therefore, disposes of the instant batch of writ petitions with the following observations and directions:
(i). The impugned order dated 27.04.2023 assailed in WP(C)No.4631/2023 is set aside and quashed.
(ii). The impugned order dated 27.04.2023 assailed in WP(C)No.5273/2023 is Page No.# 53/55 set aside and quashed.
(iii). The impugned order dated 27.04.2023 assailed in WP(C)No.5966/2023 is set aside and quashed.
(iv). The Mou's dated 14.05.2019 entered into between the petitioners in the three writ petitions with the respondent PHED would have no effect in respect to the claims of the petitioners pertaining to the State sector.
(v).The petitioners in the three writ petitions being Enterprises duly registered under the Act of 2006 would be entitled to the benefits of Sections 15, 16 and 17 of the Act of 2006 in respect to the work orders, which is the subject matter of the present writ petition.
(vi). The above declarations in Sub-Paragraphs (iv) and (v) shall not reopen any claims of the petitioners pertaining to the NRDWP Head.
(vii). The petitioners in the three writ petitions are given the liberty to carry out the exercise of calculating the interest component in terms with Section 16 of the Act of 2006 keeping in mind the interpretation so given by the learned Calcutta High Court in the above-quoted paragraphs and submit such claims before the Special Chief Secretary to the Government of Assam PHED. The said exercise be carried out within 30(thirty) days from today.
(viii). The Special Chief Secretary to the Government of Assam PHED shall carry out necessary verification on the claims submitted by the petitioners and thereupon make payments to the petitioners, their dues as per the verification carried out by the respondents. The said exercise be carried out by the PHED within 90(ninety) days from the date of submission of the respective claims by the petitioners in the three writ petitions.
(ix). It is observed that in the circumstance the parties to the instant writ petitions are not in agreement with the claims raised by the petitioners, Page No.# 54/55 dispute(s) would arise, then the party/parties aggrieved would be at liberty to approach the MSME Facilitation Council for resolution of the dispute(s) as per the Act of 2006.
(x). This Court had duly noticed that during the pendency of the writ petitions certain payments were made to the petitioners. In view of the settled principles of law as laid down by the Constitution Bench of the Supreme Court in the case of Gurpreet Singh (supra), the apportionment of the amounts already paid have to be first applied towards the interest, then if any amount remains towards costs and finally to the principal amount. It is the opinion of this Court that the payments made by the respondents during the pendency of the writ petition shall, therefore, be first applied to the interest payable to the petitioners. Thereupon, if any amount remains, it shall be applied towards costs (if any), and thereafter to the principal amount. As in the three writ petitions, this Court had observed and opined that the petitioners would be entitled to interest in terms with Section 16 of the Act of 2006, therefore, while computing the entitlement of the petitioners, the amounts so paid during the pendency of the present writ petitions shall be first applied towards liquidation of interest amount payable to the petitioners. After exhaustion of the interest payable, if any amount remains then it shall be applied for liquidation of the costs and then only towards the principal amount which is due to the petitioners.
(xi). This Court further observes and directs that during the period from the date of submission of the claims as per the liberty granted hereinabove in sub- paragraph (vii) till the expiry of the period of 90 (ninety) days from the date of submission of the claims, the interest for this period shall remain freezed. If, however, the parties do not agree on the inter-se claims resulting into Page No.# 55/55 dispute(s), the above observation as regards freezing of interest for the period of 90(ninety) days shall have no application.
(xii). There shall be no order as to costs.
Digitally signed Shivani by Shivani
Gautam
JUDGE
Gautam Date: 2025.11.27
19:24:58 +05'30'
Comparing Assistant