What the courts have decided on section MSMED s.18, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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NBCC (India) Ltd v State of West Bengal
Supreme CourtCuts both waysNo later treatment found
You are told the Supreme Court has settled that a supplier must be registered before the contract. Is that safe to rely on?
Not without qualification. A two-Judge Bench set out the proposition as it appears in Mahakali Foods, held that the question had never been formulated, discussed or decided in the earlier cases, and read s.18 as speaking of 'any party to a dispute' rather than of a supplier. It said it was open to it to hold that Silpi Industries and Mahakali Foods are not binding precedents on the point, but chose not to decide that and referred to a three-Judge Bench whether an enterprise can invoke the s.18 remedy without prior registration under s.8.
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Gujarat State Civil Supplies Corporation Ltd v Mahakali Foods Pvt Ltd
Supreme CourtCuts both waysUnder appeal
Your supplier registered on Udyam after the goods were supplied. Does the MSMED Act still apply to those supplies?
On this judgment, no. The Supreme Court held that a party who was not a 'supplier' within s.2(n) of the MSMED Act on the date of entering into the contract cannot claim any benefit as a supplier under the Act. It also held that Chapter V of the MSMED Act overrides the Arbitration and Conciliation Act 1996 and that an independent arbitration agreement does not bar a reference to the Facilitation Council.
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Silpi Industries v Kerala State Road Transport Corporation
Supreme CourtCuts both waysUnder appeal
The supplier registered under the MSMED Act part-way through the relationship. Which supplies does the Act protect?
Those made after registration. The Supreme Court refused the appellant the benefit of the Act because there was no acceptable material to show that any supply of goods or rendering of services had taken place after it was registered as a unit under the MSMED Act. The Court also held that a counter-claim is maintainable before the statutory authorities under the Act.
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Anupam Industries Ltd v State Level Industry Facilitation Council
High CourtCuts both waysNo later treatment found
How does s.15 actually work - fifteen days, or forty-five, and what if the supplier registered after the invoices?
Section 15 obliges the buyer to pay by the date agreed in writing and, where there is no such agreement, before the appointed day, which is fifteen days from acceptance or deemed acceptance; the proviso caps any agreed period at forty-five days. On the facts, the supplier's registration post-dated the invoices by a wide margin, the invoices running from 17 May 2013 to 15 July 2015 against registration with effect from 31 December 2016.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
