The Karnataka High Court held that the MSME Council had no jurisdiction to conciliate a matter since the dispute arose long before the party applied for registration as an MSME.

When the companies had entered into an agreement, the respondent company had not submitted an application seeking registration of the firm as a Micro, Small or Medium Enterprise (MSME), when the disputed transactions took place. The Court noted, “For consideration of a Unit as MSME, registration under the Act is imperative.”

The petitioner company had preferred an application before the Micro and Small Enterprises Facilitation Council (Council) seeking jurisdiction of the Council to entertain the dispute between the two companies, post which the matter was referred to Arbitration.

A Single Bench of Justice M. Nagaprasanna observed, “If the first respondent was not even registered as a Micro, Small or Medium Enterprise, on the dates between which the transactions taken place, the Council did not have jurisdiction to adjudicate upon the dispute between the two. Therefore, the application before the Council, and the Council entertaining the application, are all acts without jurisdiction.

Advocate Vikram Unni Rajagopal represented the petitioner, while Advocate Akash R. Rao appeared for the respondents.

The Court considered the question as to whether the Council had the jurisdiction to refer the matter to the Arbitral Tribunal.

Section 8 of the Act mandates that any person who intends to come within the ambit of the Act should file a memorandum of micro, small or medium enterprise.

The Court stated that “the Council would not get jurisdiction to entertain the application” since the application was filed before seeking the registration as a Micro, Small or Medium Enterprise.

The Court remarked, “It is trite that no amount of consent of the parties can confer jurisdiction on any fora. Therefore, merely because the petitioner has not objected to it, would not mean it would clothe jurisdiction upon the Council, which under the statute did not have one.

The Court held that if the Council did not have jurisdiction to conciliate, it could not have referred the matter to the arbitral Tribunal and hence, the reference made was null in law.

Accordingly, the High Court allowed the writ petition.

Cause Title: M/S. Northroof Ventures Private Limited v. M/S. Xync Structural Solutions Pvt. Ltd. & Anr. (2024:KHC:3959)


Petitioner: Advocate Vikram Unni Rajagopal

Respondents: Advocate Akash R. Rao

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