"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well."

-Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Thursday, July 4, 2013

Bombay High Court's View on Retrospective Operation of the MSMED Act, 2006

Faridabad Metal Udyog Pvt. Ltd. v. BPCL & Anr. (Bombay HC: 17.06.2013) is perhaps one of the first, if not the first, judgement to rule on the restrospective applicability of the MSMED Act, 2006. According to the Single Judge of the High Court:

 "On perusal of the facts of this case and on conjoint reading of definition of Section 2(b) and (n) of the MSME Act, it is clear that dispute between the parties to these proceedings arose much prior to the said Act having came into force. In my view, remedy under Section 18 to refer the dispute to Micro and Small Scale Enterprises Facilitation Council would not apply to the dispute arising out of existing arbitration agreement between the parties. Similarly, the said provisions also cannot be invoked in respect of the dispute having arisen between the parties prior to the said Act having came into force and prior to the "Supplier" having filed the memorandum and is registered under Section 8 of the said Act. Admittedly these first four petitioners were registered as micro small enterprises much after the dispute had arisen between the parties. In my view, the said provisions would not apply with retrospective effect to the past transaction and thus provisions of the said MSME Act have no applicability to the facts of this case." (para 13)

The relevant portions (virtually all of the above para) are underlined. But the observation of the judge in the last line seem to present a view that the MSMED Act, 2006 would not affect past agreements. Comments, anyone?

See previous posts (here and here) in this blog on the subject.


rajesh said...

Any idea whether this decision has been challenged in a higher forum .... It has practical implications for several SSI units as bulk of the cases now coming up before MSEFC were originally filed before IFC .... pls advise if there is some clarity in the repeal/savings clause u/s 32 of MSMED Act,2006


below inquiry in to facts may ADD TO THOUGHT PROCESS

1) Are the parties SSI before they filed EM -Part II?

2) Do they hold permanent SSI certificate issued by DIC at time of supply?

3) What is the statutory bar or prohibition for not becoming or not filing EM part -II now??

4) The lis / dispute being saved under law of limitation what is wrong in going before IFC?

Subhash Sood said...

I want to know whether a party which has obtained UAN online can seek arbitration by the Council for a dispute which occurred prior to the date of obtaining the Udyog Aadhaar Memorandum.