TMI Blog2018 (7) TMI 1910X X X X Extracts X X X X X X X X Extracts X X X X ..... en it had executed the contract with RIL. GCIL is a company and the services provided by GCIL are clearly services rendered by a micro/small enterprise and, therefore, GCIL, being engaged in supply of services rendered by a micro/small enterprise, would fall within the fourth category of entities that are included as a ‘supplier’: that is, a company, co-operative society, trust or a body engaged in selling goods produced by micro or small enterprises or rendering services provided by such enterprises. It is not necessary for such entities to have filed the Memorandum under Section 8(1) of the Act. The contention that the entities falling under Section 2(n)(iii) of the Act are only those entities that source goods/services from other micro/small enterprises, is not persuasive as it is difficult to accept that an entity sourcing goods/services from a third party micro/small enterprise would be ‘supplier’ but would cease to be one if it sources the same from its undertaking. The contention that the impugned reference is without jurisdiction is unmerited - petition dismissed. - W.P.(C) 5004/2017 And CM No. 21615/2017 - - - Dated:- 4-7-2018 - MR VIBHU BAKHRU, J. For The Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by RIL awarded civil work relating to Anoxic Tank and Pipe Line etc at RIL s project at Delhi International Airport, to GCIL. RIL issued two work orders in the later part of the year 2009 (the date of the one Work Order is not legible and the other Work Order is dated 10.10.2009). GCIL claims that it completed the civil works as awarded to it on 10.12.2010. Further, GCIL claims that besides the initial work, it also carried out further work of the value of ₹ 6,09,61,727/- against which ₹ 5,85,26,685/- was paid by RIL. 3.4 GCIL claims that despite several reminders, RIL failed to pay the balance amounts due to it. 3.5 On 04.07.2015, the Commissioner of Industries, Govt of NCT of Delhi issued Entrepreneurs Memorandum Part-II Acknowledgement indicating GCIL s registration as a Service Enterprise for Civil Construction. 3.6 On 04.08.2015, GCIL made a reference to the Council under Section 18 of the Act, claiming a sum of ₹ 1,91,71,260/- including interest, as due and payable by RIL. The amounts claimed by GCIL are disputed by RIL. 3.7 On receipt of reference, the Council issued a notice dated 31.08.2015 scheduling a hearing on 08.09.2015. On that date, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tings before the Council without any reservations, RIL had waived its right to object to the jurisdiction of the Council to entertain a reference under Section 18 of the Act or to make a reference under Section 18(3) of the Act. Next, he submitted that there was no dispute that GCIL had filed the Memorandum as required under Section 8(1) of the Act and, therefore, was a supplier as defined Section 2(n) of the Act. He further stated that on the date of making a reference under Section 18 of the Act, GCIL was registered with the Industries Department, Government of NCT of Delhi and, therefore, the jurisdiction of the Council to make a reference could not be questioned. He also referred to the decision of a Coordinate Bench of this Court in GE T D India Limited v. Reliable Engineering Projects and Marketing: (2017) 238 DLT 79 ; the decision of the Division Bench of the Allahabad High Court in M/s Hameed Leather Finishers v. M/s Associated Chemical Industries Kanpur Pvt. Ltd. Another: (2013) SCC OnLine All 9058 ; and the decision of the High Court of the State of Telangana and the State of Andhra Pradesh in The Indur District Cooperative Marketing Society Ltd. v. Microplex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Act. Section 15 of the Act provides that where a supplier supplies any goods or renders any services, the buyer would be obliged to make payment for the same on or before the date agreed between him and the supplier and if there is no such agreement, then on or before the appointed day. The appointed day is defined under Section 2(b) of the Act to mean the day following immediately after expiry of the period of 15 days from the day of acceptance or deemed acceptance of any goods or services by a buyer from a supplier. 10. Section 16 of the Act mandates that in the event, the buyer fails to pay the amount due as specified under Section 15 of the Act, the buyer would be liable to pay compound interest with monthly rests to the supplier at the rate equivalent to three times the bank rate as notified by the Reserve Bank of India. Section 17 of the Act provides that the buyer would be liable to pay the amounts with interest as provided under Section 16 of the Act. 11. Sub-section 1 of Section 18 of the Act enables any party to the dispute with regard to the amounts due under Section 17 of the Act, to make a reference to the Council. Sections 15, 16, 17 and 18 are rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of section 7 of that Act. ( 4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India. ( 5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference. 12. As is apparent form the above, the reference as contemplated under Section 18(1) of the Act is a reference of a dispute with regard to any amount due under Section 17 of the Act. Thus, the first and foremost question to be considered is whether the disputes referred to by the Council are with regard to the amount due under Section 17 of the Act. A plain reading o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) any company, co-operative society, trust or a body, by whatever name called, registered or constituted under any law for the time being in force and engaged in selling goods produced by micro or small enterprises and rendering services which are provided by such enterprises; 17. A plain reading of the definition of the term supplier Section 2(n) of the Act indicates that it is not an expansive definition but an exhaustive one. A supplier is defined to mean a micro or small enterprise, which has filed a Memorandum with the authority and includes three other types of entities as indicated in the three clauses of Section 2(n) of the Act. It is settled law that the definition, which uses the expression means and includes to define a term, is exhaustive. (See: Thalappalam Service Cooperative Bank Limited and Others v. State of Kerala and Others: (2013) 16 SCC 82 ). 18. A micro enterprise is defined under Section 2(h) of the Act to mean an enterprise as classified as such under Section 7(1)(a)(i) or Section 7(1)(b)(i) of the Act and a small enterprise is defined under Section 2(m) of the Act to mean an enterprise classified as such under sub-clause (ii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, and has filed the Memorandum under Section 8(1) of the Act, it would plainly fall within the definition of a supplier. 23. There is no dispute in the present case that CGIL falls within the definition of the micro/small enterprise and would be classified as such even at the time of execution of the contract awarded by RIL. The only controversy raised is that at the material time (at the time of execution of the contract), GCIL had not filed a Memorandum as required under Section 8(1) of the Act. This brings us to the central question whether it was mandatory for a small/medium enterprise to file the Memorandum under Section 8(1) of the Act in order to fall within the definition of a supplier under Section 2(n) of the Act. 24. An examination of Section 2(n) of the Act indicates that it is in two parts. The first limb defines a supplier to mean a micro or small enterprise which has filed a memorandum with the authority referred to in sub-section (1) of Section 8 of the Act and the second limb refers to (i) National Small Industries Corporation; (ii) the Small Industries Development Corporation of a State or a Union territory; and (iii) a company, co-operative society, trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as follows: 2. Definitions . In this Act, unless the context otherwise requires: * * * * ( h) public authority means any authority or body or institution of self-government established or constituted ( a) by or under the Constitution; ( b) by any other law made by Parliament; ( c) by any other law made by State Legislature; (d)by notification issued or order made by the appropriate Government, and includes any- ( i) body owned, controlled or substantially financed; ( ii) non-Government organisation substantially financed, directly or indirectly by funds provided by the appropriate Government XXXX XXXX XXXX 31. Section 2(h) exhausts the categories mentioned therein. The former part of 2(h) deals with: ( 1) an authority or body or institution of self-government established by or under the Constitution, ( 2) an authority or body or institution of selfgovernment established or constituted by any other law made by the Parliament, ( 3) an authority or body or institution of self- ..... 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