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MSMED Act – Section 18 – Claim for recovery of loan – Registration for financial activity under the MSMED Act is necessary for Felicitation Council to entertain and decide the claim –

March 3, 2024 legaldeli

The petitioner Company is in the business of cold storage. It is registered under the Micro, Small and Medium Enterprises Development Act, 2006.

The farmers use the storage of the petitioner for their potatoes / other crops on payment of charges / rent / fees for the provided services.

Some times the farmers take financial assistance from the petitioners for input cost for fresh sowing.

The respondent nos.2 and 3 – farmers had taken loan of Rs.4,09,022/- from the petitioner company.

Since the respondent nos.2 and 3 did not pay back the loan, on 4.12.2020 the petitioner filed claim before the UP Facilitation Council.

The Council held that it has no jurisdiction to decide the recovery of loan / financial services.

HELD that the petitioner was registered for the services of warehousing, storage, cold storage and support activities for transportation. On the date of loan given by the petitioner, it has no registration under the required Code. It was not registered in the financial services category when loan was disbursed in 2018. The Registration of the petitioner for the business of cold storage does not cover the financial services. Thus, even if Section 22 of the UP Cold Storage Regulation 1976 provides for finance service, it is not applicable unless there is registration and loan advanced to the hirer / farmers was not in terms of said section. Moreover, the cold storage services do not include financial services. Thus, once the services provided by the petitioner is not registered under the MSMED Act, the Facilitation Council has no jurisdiction under Section 18 of the Act. In any case, the High Court has no jurisdiction to entertain writ petition against award passed by the Facilitation Council under the MSMED Act.

Division Bench Judgment dated 21.2.2024 in Writ C No.35190 of 2023 of M/s. Neeraj Potato Presarvation and Food Products Pvt Ltd Vs. U.P. Micro Small and Medium Enterprises Facilitation Council and 2 others

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