Micro, Small and Medium Enterprises Development Act, 2006 – s.18 – MSME seeks to refer the dispute that it has with the buyer regarding payment of its dues to the Facilitation Council for arbitration u/s. 18 of the Act – The appellant opposes this prayer by contending that ‘any party’ can only be a ‘supplier’ and that supplier should have been registered u/s. 8 of the Act even before execution of the contract, if not, the reference is impermissible:
Held: After examining the text, context, and purpose of the Act, this Court arrives at the decision that s.18 is not restrictive and is a remedy for the resolution of disputes, and as such, it is kept open-ended to enable ‘any party’ to refer the dispute to seek redressal – The submission that ‘any party to a dispute’ is confined to a ‘supplier’ who has filed a memorandum u/s. 8 of the Act is rejected – The issue(s) that have arisen in the decisions of this Court in Silpi Industries v. Kerala State Road Transport Corporation and Gujarat State Civil Supplies Corporation Limited v. Mahakali Foods Private Limited were very different from the issue that has arisen for consideration in the instant case – Though it is possible for this Court to follow the precedents to arrive at the conclusion that the judgments in the case of Silpi Industries and Mahakali Foods coupled with the subsequent orders in Vaishno Enterprises and M/s Nitesh Estates cannot be considered to be binding precedents on the issue that has arisen for consideration, taking into account the compelling need to ensure clarity and certainty about the applicable precedents on the subject, it is deemed appropriate to refer this appeal to a three Judge Bench. [Paras 1.1, 29]
Interpretation of Statutes – Interpretation of Statutory Remedies by Constitutional Courts:
Held: When a statutory remedy falls for consideration, it is the duty of the Constitutional Court to adopt an interpretation which would not only reduce the hiatus between a right and a remedy, but also to ensure that the remedy is effective – If rights are recognition of a claim, remedies are their actualization – While the rights regime receives broad recognition under constitutional framework, it is imperative that remedies must keep pace and be strengthened – One of the core functions of the higher judiciary is to bridge the gap between rights and remedies, and this would immediately give rise to the legislative, executive and judicial obligations for their provision, implementation, and declaration, respectively. [Para 10] Justice – Access to justice – Right to an effective judicial remedy:
Held: The right to an effective judicial remedy is an integral part of access to justice – An effective judicial remedy under a constitutional scheme must be (i) accessible, (ii) affordable, (iii) expeditious and (iv) cohesive – Accessibility requires the remedy to be easily available, physically and informationally – Affordability is an aspect that is related to the cost of availing the remedy, it must be at a reasonable price with a provision for legal aid, if need be – The expeditious nature of a remedy is concerned with the quick disposal of the case and abhors unreasonable delays – Yet another facet of effective judicial remedy is its cohesiveness – The cohesiveness of a remedy simply means that a person must have one specified forum for the redressal of grievances. [Para 10.1]
Micro, Small and Medium Enterprises Development Act, 2006 – s.18 – Words employed “any party to a dispute” – Golden Rule of Interpretation:
Held: The text of Section 18 is clear and categoric – The words employed herein are “any party to a dispute” – The age-old principle, referred to as the Golden Rule of Interpretation, is that “words of a statute have to be read and understood in their natural, ordinary and popular sense” – The choice of the words ‘any party to a dispute’ in Section 18 of the Act is deliberate – If the Parliament had intended that ‘any party’ must be confined only to a “supplier”, or even a buyer, which expression is also defined, it would as well have used that or those very expressions – The Court cannot substitute the expression “any party” with “supplier” and change the text and, consequently, the scope and ambit of Section 18 altogether. [Para 14.1]
Micro, Small and Medium Enterprises Development Act, 2006 – s.18 – Purpose and Object:
Held: Apart from the text and context in which Section 18 of the Act employs the expression “any party to the dispute”, it is also to be seen that the section is provisioning a remedy for resolution of disputes – This remedy is provided by the statute, not by an agreement between the parties – It is therefore, necessary to keep it unrestricted and open-ended, enabling any party to a dispute to access the remedy – When statutory provision incorporation remedies for resolution of disputes fall for consideration, constitutional courts must interpret such remedies in a manner that would effectuate access to justice. [Para 14.3] Micro, Small and Medium Enterprises Development Act, 2006 – s.18 – Whether filing of memorandum u/s.8 is mandatory:
Held: Section 8(1)(a) provides that, “a micro or a small enterprise may, at his discretion” and even a medium enterprise engaged in providing or rendering services, also “may at his discretion” file a memorandum with the authority as may be specified by the Government – Further, sub-section (4) of Section 8 relates to micro or small enterprises, the State Government shall by notification, specify the authority with which such micro or small enterprise may file a memorandum – Considering the choice and discretion specifically provided to these enterprises, it becomes very clear that there is no mandatory prescription of filing a memorandum. [Para 14.5]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Ankit Gyan Union of India v. All Gujarat Federation of Tax Consultants (2006) 13 SCC 473; Francis Stanly v. Intelligence Officer, Narcotic Control Bureau, Thiruvananthapuram (2006) 13 SCC 210; Bharat Petroleum Corporation Ltd. v. P.. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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