JK High Court Clarity on MSME Registration & Arbitration Validity
Order dated 30.9.2026 uploaded on 5.10.2026 of the JK High Court at Jammu in CR No.36 of 2026 of M/s Kashmir Confectionary Store and others
three different transactions with the petitioners with regard to supply of goods. For recovery of unpaid amount in respect of these three transactions, the respondent concern applied for relief before the Himachal Pradesh Micro and Small Enterprises Facilitation Council (MSEFC), Shimla established under section 20 of the Micro Small and Medium Enterprises Development Act, 2006(for short the MSME Act). The Facilitation Council in exercise of its power under section 18(2) of the MSME Act after taking up the reference of the respondent 2026:JKLHC-JMU:3151 concern for conciliation of disputes between the parties, observed that conciliation was not possible. Accordingly, the disputes in respect of all three transactions were referred to the arbitration in terms of section 18(3) of the MSME Act.
The learned Arbitrator passed three separate awards. Two awards have been passed on 19.10.2023, whereas the third award is dated 22.04.2023. It seems that three separate execution petitions came to be filed by the respondent concern against the petitioners before the court of learned District Judge Solan, Himachal Pradesh for execution of the three awards. The said execution petitions were transferred to the court of District Judge Jammu for their disposal.
During the pendency of the execution petitions before the learned District Judge, Jammu, the petitioners filed three separate applications under section 47 read with section 151 Code of Civil Procedure(CPC) thereby objecting to the execution of the decrees passed in terms of the awards of the learned Arbitrator. The learned District Judge, Jammu, vide three separate orders passed on 20.07.2026, has dismissed the said applications of the petitioners.
the only contention raised by the petitioners for assailing the impugned orders passed by the learned Principal District Judge, Jammu is that the said court has not taken into consideration the legal position that Act. the awards sought to be executed are nullity in the eyes of law for the reason that the respondent concern being an unregistered firm under the MSME Act, It should not have taken resort to the mechanism as provided under the MSME
The fact of the matter remains that the respondent was registered in the year 2010 and pursuant to the notification dated 26.06.2020, it was re-registered in the year 2020. Thus, the very basis of the contention of the petitioners is misconceived. 10. Even if, it is assumed that the respondent concern was not registered under MSME Act at the relevant time, still then for this reason only, the awards passed by the learned Arbitrator under the MSME Act would not become a nullity. The Supreme Court in the case of NBCC (India) Ltd. v. The State of West Bengal and others, 2025 INSC 54 has, after noticing the ratio laid down by the Apex Court in all the three judgments relied upon by the petitioners as noted hereinabove, recorded an opinion that having regard to the definition of expression ‘supplier’ and the ‘classification’ of enterprises into Micro Small and Medium with respect to each of which, there is a separate legal regime to be suggested by the Advisory Committee and notified by the Central and State Governments and in view of the discretion specifically vested with the Micro Small and Medium Enterprises for filing a memorandum under section 8 of the MSME Act, the contention that the Facilitation Council cannot entertain a reference under section 18(3) of the Page 4 of 5 CR Nos. 36/2026, 34/2026 &35/2026 2026:JKLHC-JMU:3151 MSME Act, if the enterprise is not registered, under section 8 of the MSME Act, must be rejected. 11. 12. Jammu In the face of aforesaid legal position, even if, it is assumed that the respondent concern was not registered under the MSME Act, still then reference of dispute between the respondent concern and the petitioners to the Facilitation Council and its subsequent reference by the Facilitation Council to the Arbitrator is perfectly in accordance with law. Therefore, on this ground, the awards passed by the learned Arbitrator would not become a nullity.
