Holding

Section 18 of the MSMED Act allows any party to a dispute, irrespective of registration under Section 8, to refer the matter to the Facilitation Council.

Summary

NBCC (India) Ltd., a micro‑small enterprise, entered into several construction contracts with the State of West Bengal and later filed a memorandum under Section 8 of the MSMED Act, 2006 after the contracts were executed. The enterprise then referred a payment dispute to the Micro and Small Enterprises Facilitation Council under Section 18 of the Act. The State opposed, arguing that only a ‘supplier’ who had registered under Section 8 before contract execution could invoke Section 18. The Supreme Court examined the language of Section 18, the definition of ‘supplier’ in Section 2(n), and the discretionary nature of Section 8, concluding that the provision “any party to a dispute” is open‑ended and not limited to a pre‑registered supplier. The Court rejected the contention that registration is a pre‑condition, held that the remedy must be accessible to ensure effective judicial redress, and noted that earlier precedents (Silpi Industries and Mahakali Foods) did not address this specific issue. Consequently, the appeal was referred to a three‑Judge Bench for a definitive ruling.

Issues considered

Whether an MSME must be registered under Section 8 of the MSMED Act before the execution of a contract to invoke Section 18 for dispute resolution.
Whether the phrase ‘any party to a dispute’ in Section 18 is limited to the statutory definition of ‘supplier’ under Section 2(n).
Whether the discretionary nature of Section 8 makes filing a memorandum mandatory for accessing the Facilitation Council’s remedy.

Legislation cited

Arbitration and Conciliation Act, 1996s. 16, s. 65-81, s. 80
Constitution of India
Limitation Act, 1963
Micro, Small and Medium Enterprises Development Act, 2006s. 15, s. 16, s. 17, s. 18, s. 2(n), s. 8
Small Scale and Ancillary Industrial Undertakings Act, 1993

Subjects

Micro, Small and Medium Enterprises Development Act, 2006MSMEFacilitation CouncilGolden Rule of InterpretationInterpretation of StatutesPrecedent makingDecision-makingSection 18 of the Micro, Small and Medium Enterprises Development Act, 2006Article 141 of the Constitution

Judgment

[2025] 1 S.C.R. 610 : 2025 INSC 54

NBCC (India) Ltd.
v.
The State of West Bengal & Ors.
(Civil Appeal No. 3705 of 2024)
10 January 2025
[Pamidighantam Sri Narasimha* and
Pankaj Mithal, JJ.]

Issue for Consideration
Whether an MSME cannot make a reference to the Facilitation
Council for dispute resolution under Section 18 of the Micro,
Small and Medium Enterprises Development Act, 2006 if it is not
registered under Section 8 of the 2006 Act before the execution
of the contract with the buyer.

Headnotes†
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

* Author
[2025] 1 S.C.R. 611

NBCC (India) Ltd. v. The State of West Bengal & Ors.

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]
612 [2025] 1 S.C.R.

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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
[2025] 1 S.C.R. 613

NBCC (India) Ltd. v. The State of West Bengal & Ors.

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]

Case Law Cited
Silpi Industries v. Kerala State Road Transport Corporation [2021]
3 SCR 1044 : (2021) 18 SCC 790; Gujarat State Civil Supplies
Corporation Limited v. Mahakali Foods Private Limited [2022] 19
SCR 1094 : (2023) 6 SCC 401 – distinguished.
Kone Elevator India Private Limited v. State of Tamil Nadu
[2014] 5 SCR 912 : (2014) 7 SCC 1; Shanti Conductors Private
Ltd. v. Assam State Electricity Board [2019] 1 SCR 489 : (2019)
19 SCC 529; Anita Kushwaha v. Pushap Sudan [2016] 9 SCR
560 : (2016) 8 SCC 509; State of Andhra Pradesh v. Linde
(India) Ltd. [2020] 5 SCR 838 : (2020) 16 SCC 335; Grid Corpn.
of Orissa Ltd. v. Eastern Metals & Ferro Alloys [2010] 10 SCR
779 : (2011) 11 SCC 334; GE T&D India Ltd. v. Reliable Engg.
Projects & Mktg., 2017 SCC OnLine Del 6978; Re: Gujarat
State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd.
[2022] 19 SCR 1094 : (2023) 6 SCC 401; Shanti Conductors
(P) Ltd. v. Assam SEB [2019] 1 SCR 489 : (2019) 19 SCC 529 :
(2020) 4 SCC (Civ) 409; Vaishno Enterprises v. Hamilton Medical
AG and Anr. [2022] 1 SCR 771 : 2022 SCC OnLine SC 355;
M/s Nitesh Estates Ltd. v. Micro and Small Enterprises Facilitation
Council of Haryana & Ors., C.A. No. 5276/2022@ SLP (C) No.
26682/2018; State of U.P. v. Synthetics and Chemicals Ltd.
[1991] 3 SCR 64 : (1991) 4 SCC 139; Municipal Corporation
of Delhi v. Gurnam Kaur [1988] Supp. 2 SCR 929 : (1989) 1
SCC 101; Arnit Das v. State of Bihar [2000] Supp. 1 SCR 69 :
(2000) 5 SCC 488; Union of India v. All Gujarat Federation of Tax
Consultants (2006) 13 SCC 473; Francis Stanly v. Intelligence
Officer, Narcotic Control Bureau, Thiruvananthapuram [2006]
Supp. 10 SCR 977 : (2006) 13 SCC 210; Bharat Petroleum
Corporation Ltd. v. P. Kesavan [2004] 3 SCR 811 : (2004) 9
SCC 772; Vishnu Dutt Sharma v. Manju Sharma [2009] 3 SCR
891 : (2009) 6 SCC 379; Chandigarh Housing Board v. Narinder
Kaur Makol [2000] Supp. 1 SCR 487 : (2000) 6 SCC 415;
Allen v. Flood (1893) AC 1 – referred to.
614 [2025] 1 S.C.R.

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Books and Periodicals Cited
‘2024 Theme: MSMEs and the SDGs’ (United Nations) (2024);
‘A microscope on small businesses: The productivity opportunity by
country’ (McKinsey Global Institute) (July 22, 2024); ‘The MSME
Revolution: Transforming India’s Economic Landscape’ (Press
Information Bureau) (Dec 23, 2024); ‘MSMEs: The Backbone of
India’s Economic Future’ (Invest India); ‘Women-led Enterprises’
(Lok Sabha Digital Library) (June 28, 2024); ‘Participation of
Females in MSMEs’ (Lok Sabha Digital Library) (Feb 8, 2024);
‘Economic Survey 2023-24’; Report of the Expert Committee on
Micro, Small and Medium Enterprises (June, 2019); ‘Commentary
on Constitution of India’ (9th Edition, Vol. IX).

List of Acts
Small Scale and Ancillary Industrial Undertakings Act, 1993; Micro,
Small and Medium Enterprises Development Act, 2006; Small
Scale and Ancillary Industrial Undertakings Act, 1993; Arbitration
and Conciliation Act, 1996; Limitation Act, 1963; Constitution of
India.

List of Keywords
Micro, Small and Medium Enterprises Development Act, 2006;
MSME; Facilitation Council; Golden Rule of Interpretation;
Interpretation of Statutes; Precedent making; Decision-making;
Section 18 of the Micro, Small and Medium Enterprises Development
Act, 2006; Article 141 of the Constitution.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3705 of 2024
From the Judgment and Order dated 18.05.2022 of the High Court
at Calcutta in APO No. 11 of 2022

Appearances for Parties
Gopal Sankaranarayanan, Sr. Adv., Nagarkatti Kartik Uday,
Ms. Shivani Vij, Advs. for the Appellant.
Ms. Madhumita Bhattacharjee, Ms. Debarati Sadhu, Ms. Srija
Choudhury, Anant, Sudarshan Rajan, Satyam Dwivedi, Mahesh
Kumar, Roshan Santhalia, Advs. for the Respondents.
[2025] 1 S.C.R. 615

NBCC (India) Ltd. v. The State of West Bengal & Ors.

Judgment / Order of the Supreme Court

Judgment

Pamidighantam Sri Narasimha, J.

Table of Contents*

1. Introduction ......................................................................... 2

2. Facts ................................................................................... 4

3. Decisions of the Single Judge and the Division
Bench .................................................................................. 6

4. Submissions ......................................................................... 7

5. Issue for our consideration ............................................. 8

6. The repealed Interest on Delayed Payments to Small
Scale and Ancillary Industrial Undertakings Act, 1993
and the judgment in Shanti Conductors v. Assam State
Electricity Board ................................................................ 8

7. The Micro, Small and Medium Industry in our
Country ................................................................................ 12

8. Interpretation of Statutory Remedies by Constitutional
Courts .................................................................................. 15

9. Statutory Scheme of the MSMED Act, 2006 ................... 17

10. Whether registration is a necessary precondition to
referring a dispute under Section 18 of the Act ............ 20

11. Re: Silpi Industries v. Kerala State Road Transport
Corporation ......................................................................... 31

12. Re: Gujarat State Civil Supplies Corporation Ltd. v.
Mahakali Foods Pvt. Ltd. ................................................ 35

13. Conclusion and reference to larger Bench .................... 42

* Ed. Note: Pagination as per the original Judgment.
616 [2025] 1 S.C.R.

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1. Introduction: The old value of ‘Small is beautiful’ 1 has not lost
its relevance. Recognising the contribution of micro, small and
medium enterprises towards economic development, the United
Nations declared June 27th as MSME day. MSMEs are said to be
the backbone of many economies, including India. This resonates
with the statement of the father of our nation, Mahatma Gandhi,
declaring that the ‘salvation of India lies in cottage and small scale
industries’. The Parliament enacted the Micro, Small and Medium
Enterprises Development Act, 20062 for facilitating the promotion
and development of the enterprises by creating certain rights and
duties and establishing a Board, Advisory Committee, and Facilitation
Council. Importantly, the Act provided a mechanism for dispute
resolution.
1.1 The MSME before us has a simple prayer. It seeks to refer the
dispute that it has with the buyer regarding payment of its dues
to the Facilitation Council for arbitration under Section 18 of
the Act, which provides that “any party to a dispute may, with
regard to any amount due under section 17, make a reference
to the Micro and Small Enterprises Facilitation Council”. The
appellant opposes this prayer by contending that ‘any party’
can only be a ‘supplier’ and that supplier should have been
registered under Section 8 of the Act even before execution
of the contract, if not, the reference is impermissible. The High
Court did not answer this question. Instead, it permitted the
parties to raise such objections before the Arbitral Tribunal.
The buyer is in appeal before us, raising the same question
as a jurisdictional issue.
1.2 We have examined the text, context, and purpose of the Act to
arrive at the decision that Section 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

1 E.F. Schumacher, ‘Small Is Beautiful: A Study of Economics as if People Mattered’ (1973) “We need
the freedom of lots and lots of small, autonomous units, and, at the same time, the orderliness of large-
scale, possibly global, unity and co-ordination. When it comes to action, we obviously need small units,
because action is a highly personal affair, and one cannot be in touch with more than a very limited
number of persons at any one time.”
2 Hereinafter referred to as ‘the Act’.
[2025] 1 S.C.R. 617

NBCC (India) Ltd. v. The State of West Bengal & Ors.

redressal. For the reasons to follow, we rejected the submission
that ‘any party to a dispute’ is confined to a ‘supplier’ who has
filed a memorandum under Section 8 of the Act. We have also
explained that the issue(s) that have arisen in the decisions
of this Court in Silpi Industries v. Kerala State Road Transport
Corporation3 and Gujarat State Civil Supplies Corporation
Limited v. Mahakali Foods Private Limited 4 were very different
from the issue that has arisen for our consideration. However,
for clarity and legal certainty, we have directed the appeal be
placed before the Hon’ble Chief Justice of India for referring
the matter to a bench of three Judges for an authoritative
pronouncement.
1.3 We will first state the necessary facts before considering the
submissions, followed by our reasons and conclusions.
2. Facts: The appellant, National Buildings Construction Corporation,
granted four work orders between July 2015 to August 2016 to
M/s Saket Infra Developers Private Limited, respondent No. 4 5 for
undertaking construction work at different places in West Bengal.
Pursuant to the work orders, contracts were executed on 27.08.2015,
17.11.2015, 28.07.2016 and 20.08.2016. The Enterprise filed a
memorandum under Section 8 of the Act on 19.11.2016 as a ‘small
enterprise’. Thereafter, on 15.09.2017, the appellant also executed
a fifth contract in favour of the Enterprise.
2.1 Work is said to have commenced on various dates, supplies
continued, and bills were raised from time to time by the
Enterprise, even after filing of the memorandum under Section 8
of the Act. The Table showing dates of the work orders, contract
and particulars of the work awarded and details of bills raised
after registration is as under:

3 [2021] 3 SCR 1044 : (2021) 18 SCC 790, hereinafter referred to, in short as Silpi Industries.
4 [2022] 19 SCR 1094 : (2023) 6 SCC 401, hereinafter referred to, in short as Mahakali Foods.
5 Hereinafter referred to as the ‘Enterprise’.
618 [2025] 1 S.C.R.

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S. Dates Dates of Bills raised
No. of Work Construction after
Orders Contracts Registration on
19.11.2016
1. Contract-I 27.08.2015 10 Bills for 34.71
crores
30.07.2015 Office Building
for National Jute
Board, Rajarhat,
Kolkata
2. Contract-II 17.11.2015 8 Bills for 14.18
crores
26.10.2015 Residential
Quarters for ISI,
Kolkata
3. Contract-III 28.07.2016 10 Bills for 10.49
crores
19.01.2016 ITI Campus,
Darjeeling
4. Contract-IV 20.08.2016 8 Bills for 12.46
crores
19.08.2016 Regional Centre for
Lalit Kala Academy,
Kolkata
19.11.2016 Registration of Respondent No. 4 as
Small Undertaking
5. Contract-V 11.10.2017 5 Bills for 15.72
crores
15.09.2017 MSTC Office,
Rajarhat, Kolkata

2.2 During the subsistence of the contract, disputes arose between
the parties in connection with all five contracts. It may be
mentioned here itself that, with respect to the fifth contract,
the Enterprise instituted a commercial suit [(Comm.) No. 229
of 2021] before the High Court of Delhi, which is said to be
pending consideration. However, this fact does not have any
bearing on the issues before this Court.
2.3 Seeking resolution of disputes, on 28.03.2019, the Enterprise
made a reference under Section 18 of the Act for recovery of
[2025] 1 S.C.R. 619

NBCC (India) Ltd. v. The State of West Bengal & Ors.

the amounts due to it to the West Bengal State Micro and Small
Enterprises Facilitation Council6. The Facilitation Council initiated
action, and with the failure of the conciliation proceedings under
Section 18(2) of the Act, the dispute was referred to arbitration
under Section 18(3) on 19.01.2021. A further notice of the
arbitral proceedings was also issued, and it was received by
the appellant on 30.09.2021.
2.4 The appellant objected to the Facilitation Council entertaining
the reference, firstly on the ground that the Enterprise was
not registered before the execution of the contracts and, as
such, the Facilitation Council does not have jurisdiction under
Section 18. Secondly, it was also argued that the subject matter
of the contract relates to the execution of the works contracts,
which falls outside the scope and ambit of the Act. Carrying
these objections further, the appellant filed a Writ Petition under
Article 226 of the Constitution of India before the High Court
of Calcutta, raising the jurisdictional question of the Facilitation
Council entertaining the reference.
3. Decisions of the Single Judge and the Division Bench: The
learned Single Judge dismissed the Writ Petition on 16.12.2021 by
simply holding that “the question of jurisdiction can be raised before
the Arbitral Tribunal, which shall decide the same before entering into
other questions.” The decision of the Single Judge was challenged
unsuccessfully before the Division Bench of the High Court by the
order impugned before us. The Division Bench also referred the
decision of this Court in Kone Elevator India Private Limited v. State
of Tamil Nadu 7 to hold that a works contract is an indivisible contract
and also that the Act, being a special legislation, overrides other
statutes. The Division Bench agreed with the finding of the Single
Judge that all objections, including those relating to maintainability,
can be raised and contested before the arbitrator. Thus, the appellant
is in appeal before us.
4. Submissions: Mr. Gopal Sankaranarayanan, learned senior counsel,
appearing for the appellant, challenged the jurisdiction of the
Facilitation Council in entertaining the reference under Section 18 of

6 Hereinafter referred to as the ‘Facilitation Council’.
7 [2014] 5 SCR 912 : (2014) 7 SCC 1
620 [2025] 1 S.C.R.

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the Act by the Enterprise for the simple reason that it registered itself
after the contracts were executed and not before. His submission
is based on the decision of this Court in Silpi Industries (supra) and
Mahakali Foods (supra). Though the impugned decision of the High
Court was on 18.05.2022, almost a year after the judgment of this
Court in Silpi Industries (supra), it has not taken note of the judgment
of this Court. Mr. Gopal Sankaranarayanan also referred to certain
subsequent orders of this Court, which we will be examining while
considering the issue.
4.1 Ms. Madhumita Bhattacharjee and Mr. Roshan Santhalia,
learned counsels for respondents, opposed the appellant’s
arguments and contended that these questions can always be
raised before the Arbitral Tribunal as directed by the Single as
well as the Division Bench of the High Court.
5. Issue for our consideration: The question of law for our consideration
is whether an MSME cannot make a reference to the Facilitation
Council for dispute resolution under Section 18 of the Act if it is not
registered under Section 8 of the Act before the execution of the
contract with the buyer.
6. Before we examine the provisions of the Act and the ratio of the
judgment of this Court in Silpi Industries (supra) and Mahakali Foods
(supra), it is necessary to take note of the statute (repealed Act) that
preceded the Act and also the important judgment of this Court in
Shanti Conductors Private Ltd. v. Assam State Electricity Board,8
which also has a direct bearing on the decision in Silpi Industries
(supra) and for interpreting the provisions of the Act.
7. The repealed Interest on Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act, 1993 9 and the judgment in
Shanti Conductors v. Assam State Electricity Board : The decision
of this Court in Shanti Conductors (supra), a three-Judge Bench
Judgment, was necessitated because of the difference of opinion
between two Judges. The relevant facts of Shanti Conductors (supra)
are that the Small-Scale Industry therein entered into a contract for
supply of goods and services to the buyer before the said 1993

8 [2019] 1 SCR 489 : (2019) 19 SCC 529, hereinafter referred to, in short as Shanti Conductors.
9 Hereinafter referred to as the repealed statute.
[2025] 1 S.C.R. 621

NBCC (India) Ltd. v. The State of West Bengal & Ors.

repealed statute came into force. However, the supplies under the
contract were rendered after the said statute came into force. Of
the seven questions of law that were formulated by the three-judge
bench, the first two questions, relevant to our purpose, are extracted
for ready reference. It is necessary to mention here that filing of a
memorandum by any MSME was never an issue there, as, in fact,
there was no such requirement under the repealed statute. The
issues in Shanti Conductors (supra) are as follows:
“34.1.(1) Whether the 1993 Act is not applicable when the
contract for supply was entered into between the parties
prior to the enforcement of the Act i.e., 23-9-1992?
34.2. (2) Whether in the event it is found that the Act is
applicable also with regard to contract entered prior to the
1993 Act in pursuance of which contract, supplies were
made after the enforcement of the 1993 Act, the 1993 Act
can be said to have retrospective operation?”
7.1 The repealed statute comprised of 11 provisions, of which Section
3 related to the liability of the buyer to make payment, Section 4
related to the date and rate of interest payable, Section 5 related
to the liability to pay compound interest, and Section 6 related
to the right of recovery of the amount payable to the supplier.
7.2 Having considered the statutory scheme, the Court came to
the conclusion that the incidence of applicability of the liability
under that statute is supply of goods or rendering of services.
The Court categorically held that the liability of the buyer for
payment under the Act arises even if the agreement of sale is
prior to the Act (repealed) but if the supplies were made after
the Act.
7.3 Answering the first question, this Court held as under: -
“61. We have noticed above that the incidence of
applicability of the liability under the Act is supply of goods
or rendering of service. In event the supply of goods
and rendering of services is subsequent to the Act, can
liability to pay interest on delayed payment be denied
on the ground that agreement in pursuance of which
supplies were made were entered prior to enforcement of
the Act? Entering into an agreement being not expressly
622 [2025] 1 S.C.R.

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or impliedly referred to in the statutory scheme as an
incident for fastening of the liability, making the date of
agreement as date for imposition of liability does not
conform to the statutory scheme. This can be illustrated
by taking an example. There are two small scale industries
which received orders for supply of materials. ‘A’ received
such orders prior to the enforcement of the Act and ‘B’
received the order after the enforcement of the Act. Both
supplied the goods subsequent to enforcement of the Act
and became entitled to receive payment after the supply,
on or before the day agreed upon between the supplier
and buyer or before the appointed day. Payments were
not made both to ‘A’ and ‘B’ as required by Section 3.
Can the buyer who has received supplies from supplier
‘A’ escape from his statutory liability to make payment of
interest under Section 3 read with Section 4? The answer
has to be No. Two suppliers who supply goods after the
enforcement of the Act, become entitled to receive payment
after the enforcement of the Act one supplier cannot
be denied the benefit of the statutory protection on the
pretext that the agreement in his case was entered prior
to enforcement of the Act. When the date of agreement
is not referred as material or incidence for fastening the
liability, by no judicial interpretation the said date can be
treated as a date for fastening of the liability. The 1993 Act
being beneficial legislation enacted to protect small scale
industries and statutorily ensure by mandatory provision for
payment of interest on the outstanding money, accepting
the interpretation as put by the learned counsel for the
Board that the day of agreement has to be subsequent to
the enforcement of the Act, the entire beneficial protection
of the Act shall be defeated. The existence of statutory
liability depends on the statutory factors as enumerated
in Section 3 and Section 4 of the 1993 Act. Factor for
liability to make payment under Section 3 being the supplier
supplies any goods or renders services to the buyer, the
liability of buyer cannot be denied on the ground that the
agreement entered into between the parties for supply
was prior to the 1993 Act. To hold that liability of buyer
for payment shall arise only when agreement for supply
[2025] 1 S.C.R. 623

NBCC (India) Ltd. v. The State of West Bengal & Ors.

was entered into subsequent to enforcement of the Act, it
shall be adding words to Section 3 which is not permissible
under the principles of statutory construction.
62. We, thus, are of the view that the judgments in
Purbanchal Cables & Conductors,10 Assam Small Scale
Industries11 and Shakti Tubes Ltd.12 which held that the
1993 Act shall be applicable only when the agreement
to sale/contract was entered into prior/subsequent to the
enforcement of the Act, does not lay down the correct law.
We accept the submission of the learned counsel for the
appellants that even if agreement of sale is entered into
prior to enforcement of the Act, liability to make payment
under Section 3 and liability to make payment of interest
under Section 4 shall arise if supplies are made subsequent
to the enforcement of the Act.”
(emphasis supplied)
7.4 The ratio of the decision in Shanti Conductors can be formulated
as follows:
i) Even if contracts are entered into before the commencement
of the repealed statute, the liability to make payment under
Section 3, and to pay interest thereon under Sections 4
and 5 and to recover the amount under Section 6 will arise
if the supplies are made subsequent to the enforcement
of the statute. The incidence of liability under the repealed
statute is ‘supply of goods or rendering of services’,
ii) when the date of contract is neither referred to nor made
an incident for fastening the liability under the statute, by
way of judicial interpretation, courts cannot treat the said
date as the date for fastening the liability. The existence of
the statutory liability depends on the language employed
in Sections 3 to 6 of the statute,
iii) to hold that the liability of the buyer to make payment shall
arise only when the contract for supply was entered into

10 Purbanchal Cables & Conductors (P) Ltd. v. Assam SEB (2012) 7 SCC 462
11 Assam Small Scale Industries Development Corpn. Ltd. v. J.D. Pharmaceuticals (2005) 13 SCC 19
12 Shakti Tubes Ltd. v. State of Bihar (2009) 7 SCC 673
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subsequent to the enforcement of the Act will defeat the
purpose and object of the beneficial legislation intended
to protect small-scale and ancillary industrial undertakings.
8. The Micro, Small and Medium Industry in our Country: After
the repeal of the 1993 Act, the present Act came into force with
effect from 02.10.2006. The Act is a comprehensive legislation that
recognises and seeks to rejuvenate the importance of MSMEs, whose
importance and contribution is accepted in contemporary economies
across the globe, and accredited by the United Nations13. United
Nations, commenting on the significance of MSMEs observes that:
“MSMEs help reduce levels of poverty through job creation
and economic growth; they are key drivers of employment,
decent jobs and entrepreneurship for women, youth and
groups in vulnerable situations. They are the majority of
the world’s food producers and play critical roles in closing
the gender gap as they ensure women’s full and effective
participation in the economy and in society”.
8.1 In the statement of object and reasons of the Act, it is mentioned
that “many Expert Groups and Committees appointed by the
Government from time to time as well as small scale industry
sector itself has emphasised the need for a comprehensive
central enactment to provide an appropriate framework for the
sector to facilitate its growth and development, emergence
of a large service sector assisting the small scale industry in
the last two decades also warrants a composite view of the
sector encompassing both industrial units and related service
entities. The world over, the emphasis has now been shifted
from industries to Enterprises.”
8.2 The rights, incentives and remedies provisioned under the
Act are the backbone of our economy. Statistics indicate that
MSMEs provide employment to 62% of the country’s workforce,
contribute 30% to India’s GDP,14 and account for around 45% of

13 ‘2024 Theme: MSMEs and the SDGs’ (United Nations) <https://www.un.org/en/observances/micro-
small-medium-businesses-day> (2024).
14 ‘A microscope on small businesses: The productivity opportunity by country’ (McKinsey Global Institute)
<https://www.mckinsey.com/mgi/our-research/a-microscope-on-small-businesses-the-productivity-
opportunity-by-country#/> (May 29, 2024); ‘Contribution Of MSMEs to the GDP’ (Press Information
Bureau) <https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2035073> (July 22, 2024).
[2025] 1 S.C.R. 625

NBCC (India) Ltd. v. The State of West Bengal & Ors.

India’s total exports15. The Indian MSME sector is projected to
grow to $1 trillion by 202816. Moreover, MSMEs play a crucial
role in promoting rural development, women’s employment,
and inclusive growth. 19.5% of total MSMEs17 and 70% of
informal micro-enterprises are owned by women18. There is
undoubtedly a global consensus regarding the indispensable
importance of MSMEs.
8.3 However, while the United Nations and even the Expert Groups
and Committees appointed by the Government from time to time
have underscored the importance of MSMEs, and that has led
to the Parliament enacting the present legislation, MSMEs in
India have been facing many challenges which are reflected
in their performance. A recent report records that, “MSMEs in
India contribute 30% to value-addition and 62% to employment”,
as against “49% and 77%, in other emerging economies”.19
The 2023-2024 Economic Survey also recorded the concerns
faced by MSME’s.20
9. It is in the above-referenced context that we need to comprehend,
interpret and construct the remedies contemplated under the Act.
10. Interpretation of Statutory Remedies by Constitutional Courts:
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,

15 ‘The MSME Revolution: Transforming India’s Economic Landscape’ (Press Information Bureau) <https://
pib.gov.in/PressReleasePage.aspx?PRID=2087361> (Dec 23, 2024).
16 ‘MSMEs: The Backbone of India’s Economic Future’ (Invest India) <https://www.investindia.gov.in/team-
india-blogs/msmes-backbone-indias-economic-future> (June 28, 2024).
17 ‘Women-led Enterprises’ (Lok Sabha Digital Library) <https://eparlib.nic.in/bitstream/123456789/2502792/
1/AU3648.pdf> (Aug 10, 2023).
18 ‘’Participation of Females in MSMEs’ (Lok Sabha Digital Library) <https://eparlib.nic.in/bitstream/
123456789/2974207/1/AU1128.pdf> (Feb 8, 2024).
19 ‘A microscope on small businesses: The productivity opportunity by country’ (McKinsey Global Institute)
<https://www.mckinsey.com/mgi/our-research/a-microscope-on-small-businesses-the-productivity-
opportunity-by-country#/> (May 29, 2024).
20 ‘Economic Survey 2023-24’ <https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf> (2024)
“Licensing, Inspection, and Compliance requirements that MSMEs have to deal with, imposed particularly
by sub-national governments, hold them back from growing to their potential and being job creators of
substance…Further, many MSMEs struggle to secure the necessary funds to start, operate, or expand
their business due to a variety of reasons including lack of collateral or credit history, high interest rates,
complex documentation requirements, and long processing times, etc.” (emphasis supplied).
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remedies are their actualization. While the rights regime receives
broad recognition under our 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.
10.1 The right to an effective judicial remedy is an integral part
of access to justice.21 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. This
requirement must be understood as an antithesis of fragmentation
of remedies, i.e., a litigant ought not to be forced to approach
multiple forums for the same cause of action. When a statute
provisioning a judicial remedy falls for construction, the choice
of interpretative outcome is not governed so much by the power
or privileges under the Constitution, but by the constitutional
duties to create effective judicial remedies in furtherance of the
right to access to justice. A meaningful interpretation that furthers
effective judicial access is a constitutional imperative and it is this
duty that must inform the interpretative criteria. It is in the above
referred context that we will now examine Section 18 of the Act.
11. Statutory Scheme of the MSMED Act, 2006: Sections 2(a), (c),
(e), (n), 7, 8, 17, 18, 20 and 21, to the extent that they are relevant,
are reproduced hereinbelow for ready reference.

21 See, generally, Anita Kushwaha v. Pushap Sudan, (2016) 8 SCC 509 “…Four main facets that, in our
opinion, constitute the essence of access to justice are: (i) the State must provide an effective adjudicatory
mechanism; (ii) the mechanism so provided must be reasonably accessible in terms of distance; (iii) the
process of adjudication must be speedy; and (iv) the litigant’s access to the adjudicatory process must be
affordable…In order that the right of a citizen to access justice is protected, the mechanism so provided
must not only be effective but must also be just, fair and objective in its approach...”
[2025] 1 S.C.R. 627

NBCC (India) Ltd. v. The State of West Bengal & Ors.

“2. Definitions- In this Act, unless the context otherwise
requires, -
(a) “Advisory Committee” means the committee constituted
by the Central Government under sub-section (2) of
section 7.
(b) …
(c) “Board” means the National Board for Micro, Small and
Medium Enterprises established under Section 3;
(e) “Enterprise” means an industrial undertaking or a
business concern or any other establishment, by whatever
name called, engaged in the manufacture or production of
goods, in any manner, pertaining to any industry specified
in the First Schedule to the Industries (Development and
Regulation) Act, 1951 (65 of 1951) or engaged in providing
or rendering of any service or services;
7. Classification of enterprises-(1) Notwithstanding
anything contained in section 11B of the Industries
(Development and Regulation) Act, 1951 (65 of 1951),
the Central Government may, for the purposes of this
Act, by notification and having regard to the provisions
of sub-sections (4) and (5), classify any class or classes
of enterprises, whether proprietorship, Hindu undivided
family, association of persons, co-operative society,
partnership firm, company or undertaking, by whatever
name called,--
(a) in the case of the enterprises engaged in the
manufacture or production of goods pertaining to any
industry specified in the First Schedule to the Industries
(Development and Regulation) Act, 1951 (65 of 1951),
as--
(i) a micro enterprise, where the investment in plant
and machinery does not exceed twenty five lakh
rupees;
(ii) a small enterprise, where the investment in plant
and machinery is more than twenty-five lakh rupees
but does not exceed five crore rupees; or
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(iii) a medium enterprise, where the investment in
plant and machinery is more than five crore rupees
but does not exceed ten crore rupees;
(b) in the case of the enterprises engaged in providing or
rendering of services, as--
(i) a micro enterprise, where the investment in
equipment does not exceed ten lakh rupees;
(ii) a small enterprise, where the investment in
equipment is more than ten lakh rupees but does
not exceed two crore rupees; or
(iii) a medium enterprise, where the investment in
equipment is more than two crore rupees but does
not exceed five crore rupees.
(2) The Central Government shall, by notification, constitute
an Advisory Committee consisting of the following
members, namely:--
(3) …
(4) The Central Government shall, prior to classifying any
class or classes of enterprises under sub-section (1),
obtain the recommendations of the Advisory Committee.
15. Liability of buyer to make payment.— Where any
supplier, supplies any goods or renders any services to
any buyer, the buyer shall make payment therefor on or
before the date agreed upon between him and the supplier
in writing or, where there is no agreement in this behalf,
before the appointed day:
Provided that in no case the period agreed upon between
the supplier and the buyer in writing shall exceed forty-five
days from the day of acceptance or the day of deemed
acceptance.
16. Date from which and rate at which interest is
payable.—Where any buyer fails to make payment of the
amount to the supplier, as required under section 15, the
buyer shall, notwithstanding anything contained in any
agreement between the buyer and the supplier or in any
law for the time being in force, be liable to pay compound
[2025] 1 S.C.R. 629

NBCC (India) Ltd. v. The State of West Bengal & Ors.

interest with monthly rests to the supplier on that amount
from the appointed day or, as the case may be, from the
date immediately following the date agreed upon, at three
times of the bank rate notified by the Reserve Bank.
“17. Recovery of amount due.- For any goods supplied
or services rendered by the supplier, the buyer shall be
liable to pay the amount with interest thereon as provided
under section 16.
18. Reference to Micro and Small Enterprises
Facilitation Council- (1) Notwithstanding anything
contained in any other law for the time being in force,
any party to a dispute may, with regard to any amount
due under section 17, make a reference to the Micro and
Small Enterprises Facilitation Council.
(2) On receipt of a reference under sub-section (1),
the Council shall either itself conduct conciliation in the
matter or seek the assistance of any institution or centre
providing alternate dispute resolution services by making
a reference to such an institution or centre, for conducting
conciliation and the provisions of sections 65 to 81 of the
Arbitration and Conciliation Act, 1996 (26 of 1996) shall
apply to such a dispute as if the conciliation was initiated
under Part III of that Act.
(3) Where the conciliation initiated under sub-section
(2) is not successful and stands terminated without any
settlement between the parties, the Council shall either
itself take up the dispute for arbitration or refer to it any
institution or centre providing alternate dispute resolution
services for such arbitration and the provisions of the
Arbitration and Conciliation Act, 1996 (26 of 1996) shall then
apply to the dispute as if the arbitration was in pursuance
of an arbitration agreement referred to in sub-section (1)
of section 7 of that Act.
(4) Notwithstanding anything contained in any other law for
the time being in force, the Micro and Small Enterprises
Facilitation Council or the centre providing alternate dispute
resolution services shall have jurisdiction to act as an
Arbitrator or Conciliator under this section in a dispute
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between the supplier located within its jurisdiction and a
buyer located anywhere in India.
(5) Every reference made under this section shall be
decided within a period of ninety days from the date of
making such a reference.”
20. Establishment of Micro and Small Enterprises
Facilitation Council.- The State Government shall,
by notification, establish one or more Micro and Small
Enterprises Facilitation Councils, at such places, exercising
such jurisdiction and for such areas, as may be specified
in the notification.
21. Composition of Micro and Small Enterprises
Facilitation Council.—
(1) The Micro and Small Enterprise Facilitation Council
shall consist of not less than three but not more than
five members to be appointed from among the following
categories, namely: —…
11.1 First and foremost, Chapter V of the Act deals with delayed
payments to micro and small enterprises and specifies the rights,
liabilities, recovery, and remedies in favour of micro and small
enterprises. The rights and liabilities are based on the incidence
of supply made by the micro and small enterprise. To this extent,
the Act continues the statutory scheme contemplated under the
repealed statute and, therefore, the principle laid down in Shanti
Conductors (supra) that the liability of a buyer commences
from the date of supply and not from the date of execution of
the agreement or contract, even though the contract was prior
to coming into force of the Act, continues to apply. Up to this
point, there seems to be no difficulty. The issue in the present
case takes a different turn, as explained in the following part.
12. Whether registration is a necessary precondition to referring a
dispute under Section 18 of the Act : The question that we are called
upon to answer is whether the reference to the Facilitation Council
under Section 18 of the Act is impermissible if the Enterprise is not
registered by filing a memorandum under Section 8 of the Act before
the contract is executed. This issue was not formulated, discussed
and decided in any other judgment of this Court, including the two
[2025] 1 S.C.R. 631

NBCC (India) Ltd. v. The State of West Bengal & Ors.

substantive judgments under the Act, i.e. Silpi Industries (supra)
or Mahakali Foods (supra). In these two judgements, it is worth
mentioning, such an issue was neither formulated, nor discussed.
We will explain this in detail while discussing the facts and the ratios
of these judgements. Apart from the submission of the appellant that
the issue arising for our consideration is covered by the decision
in Silpi Industries (supra), as approved in Mahakali Foods (supra),
on our specific enquiry as to under which provision of the Act an
Enterprise, which has not filed a memorandum under Section 8
would be barred from invoking remedies under Section 18 of the
Act, Mr. Gopal Sankaranarayanan made the following submission.
13. According to him, though Section 18 provides that ‘any party to a
dispute’ may make a reference to the Facilitation Council, the said
‘dispute’ must be “with regard to any amount due under Section 17”.
This requirement, he would submit, takes us to Section 17, which
provides that, “for any goods supplied or services rendered by the
supplier, the buyer shall be liable to pay the amount with interest
thereon under Section 16”. Section 16 is the liability of the buyer
to pay interest to the ‘supplier’ on the amounts payable to it under
Section 15 for the supply of goods and rendering of any services.
The expression ‘supplier’ mentioned in Sections 15, 16 and 17 is
defined in Section 2(n), as “a micro or small enterprise which has
filed a memorandum with the authority referred to in sub-section (1)
of Section 8 and includes,…”. Thus, it was submitted that a ‘supplier’
can only be an Enterprise that has filed a memorandum under Section
8 of the Act. He would conclude by submitting that for supplies made
prior to such registration, Enterprise cannot avail the remedies under
Section 18 of the Act.
14. We will now examine the submission in detail, the statutory provisions
have already been extracted hereinabove.
14.1 Simply the Text: The text of Section 18 is clear and categoric.
The words employed herein are “any party to a dispute”. The
text, “any party to a dispute”, cannot be read as a ‘supplier’ by
adopting a process of interpretation, by first referring to Section
17, then to Sections 15 and 16 and thereafter, in search of the
definition of supplier, to Section 2(n) and finally stopping at
Section 8 to hold that ‘any party to a dispute’ will only be an
Enterprise which is registered under Section 8 of the Act. This
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meaning-making process to metamorphosise the clear text ‘any
party’ to ‘a supplier’ is not the legal method to understand true
meaning of words employed by the legislature. 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”.22 The choice of the words
‘any party to a dispute’ in Section 18 of the Act is deliberate.
The legislative device of employing different expressions in
successive provisions of the same statute is well known and
intended to effectuate the desired purpose of the Act. 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.
14.2 The context: Mention of Section 17 in Section 18 is only to
provide context for a reference of dispute. The contextual
relevance of locating Section 17 in Section 18 is only
to provide the purpose of reference, not to confine the
remedy to a registered Enterprise. This is to clarify that the
reference shall be to adjudicate the dispute arising out of
a liability of the buyer which is declared under Sections 15
and 16.
14.3 The purpose and object of Section 18: 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.

22 State of Andhra Pradesh v. Linde (India) Ltd. (2020) 16 SCC 335; Grid Corpn. of Orissa Ltd. v. Eastern
Metals & Ferro Alloys (2011) 11 SCC 334.
[2025] 1 S.C.R. 633

NBCC (India) Ltd. v. The State of West Bengal & Ors.

14.4 The definition clause: We will now examine the sheet anchor
of Mr. Gopal Sankaranarayanan’s arguments that a supplier
is defined under Section 2(n) can only be an Enterprise that
has filed a memorandum under Section 8 of the Act. For this
purpose, we will extract the entirety of the definition of supplier
under Section 2(n) of the Act;
2(n). “supplier” means a micro or small enterprise,
which has filed a memorandum with the authority
referred to in sub-section (1) of section 8, and
includes,—
(i) the National Small Industries Corporation,
being a company, registered under the
Companies Act, 1956 (1 of 1956);
(ii) the Small Industries Development Corporation
of a State or a Union territory, by whatever name
called, being a company registered under the
Companies Act, 1956 (1 of 1956);
(iii) any company, co-operative society, trust or
a body, by whatever name called, registered or
constituted under any law for the time being in
force and engaged in selling goods produced
by micro or small enterprises and rendering
services which are provided by such enterprises;
From a plain reading of the Section 2(n), it is clear that the
definition of a supplier is relatable only to a micro or a small
enterprise and does not encompass a medium enterprise.
Supplier not only means a micro or small enterprise, ‘which have
filed a memorandum with the authority referred to under sub-
Section (1) of Section 8’, but also includes (i)NSIC, (ii) SIDC, and
the (iii) company, cooperative society, trust or a body engaged
in selling of goods produced by micro or small enterprise and
rendered services which are produced by such enterprise. In
other words, a supplier will also be an entity engaged in selling
goods or rendering services, produced or provided by a micro
or small enterprise. All such entities, irrespective of filing of the
memorandum will be suppliers. Thus, the definition of a supplier
encompasses not only those who have filed a memorandum,
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but also those who have not filed. The reason for keeping the
definition is not difficult to imagine. This is still an unorganised
industry, growing, evolving and many of them are at start-up
levels. The reason for keeping the definition wide is supported
by an Expert Committee, whose opinion we will refer to in the
next Section.
14.5 Filing of memorandum under Section 8 is discretionary: We will
now examine Section 8 of the Act relied on by the appellants
to contend that filing of a memorandum by micro, small and
medium enterprises is mandatory. Section 8 is extracted herein
for ready reference:
8. Memorandum of micro, small and medium
enterprises. — (1) Any person who intends to
establish, —
(a) a micro or small enterprise, may, at his discretion,
or
(b) a medium enterprise engaged in providing or
rendering of services may, at his discretion; or
(c) a medium enterprise engaged in the manufacture
or production of goods pertaining to any industry
specified in the First Schedule to the Industries
(Development and Regulation) Act, 1951 (65 of
1951), shall
file the memorandum of micro, small or, as the case
may be, of medium enterprise with such authority as
may be specified by the State Government under
sub-section (4) or the Central Government under
sub-section (3):
Provided that any person who, before the
commencement of this Act, established—
(a) a small scale industry and obtained a
registration certificate, may, at his discretion;
and
(b) an industry engaged in the manufacture or
production of goods pertaining to any industry
specified in the First Schedule to the Industries
[2025] 1 S.C.R. 635

NBCC (India) Ltd. v. The State of West Bengal & Ors.

(Development and Regulation) Act, 1951 (65 of
1951), having investment in plant and machinery
of more than one crore rupees but not exceeding
ten crore rupees and, in pursuance of the
notification of the Government of India in the
erstwhile Ministry of Industry (Department of
Industrial Development) number S.0.477 (E)
dated the 25th July, 1991 filed an Industrial
Entrepreneurs Memorandum, shall
within one hundred and eighty days from the
commencement of this Act, file the memorandum, in
accordance with the provisions of this Act.
(2) The form of the memorandum, the procedure of
its filing and other matters incidental thereto shall be
such as may be notified by the Central Government
after obtaining the recommendations of the Advisory
Committee in this behalf.
(3) The authority with which the memorandum shall be
filed by a medium enterprise shall be such as may be
specified by notification, by the Central Government.
(4) The State Government shall, by notification,
specify the authority with which a micro or small
enterprise may file the memorandum.
(5) The authorities specified under sub-sections (3)
and (4) shall follow, for the purpose of this section,
the procedure notified by the Central Government
under sub-section (2).”
(emphasis supplied)
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. This important feature of the statute recognising
and vesting of the discretion has not been noticed. There is
also a logical follow-up to this choice or discretion vested
in the micro or small enterprise and the medium enterprise
engaged in rendering services for filing a memorandum in sub-
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section (4) of Section 8 and also proviso (a) to Section 8(1). As
the said 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.
Conversely it appears that medium enterprises engaged in
manufacture or production of goods, “shall file a memorandum”
with such authority as may be specified, and this is reflected
in the proviso (b) to Section 8(1). At this stage, it is relevant to
note that the definition of supplier under Section 2(n) is confined
only to micro or small enterprise and does not encompass a
medium enterprise.
14.6 There is a reason for this. The report of the Expert Committee on
Micro, Small and Medium Enterprises clarifies the position that
filing of memorandum by these enterprises is never mandatory.
The relevant portion is as under23:
4.5 Formalization of MSMEs
As per 73rd round of National Sample Survey
(NSS), there are 63.39 million MSMEs in the
country. However, a large number of MSEs exist in
the informal sector and are not registered with any
statutory authority. Reasons for lack of registration
are many and varied. For nano/household type of
enterprises, in their view, not obtaining registration
is an escape from official machinery, paperwork,
costs and rent seeking. For them, it is perhaps “the
art of not being governed”. Registration offers them
little by way of tangible benefits. There are other
MSEs who, upon reaching a minimum size seek
legitimacy and acknowledgement of their existence
to seek benefits or credit for instance, but they too
struggle. While Udyog Aadhaar offers a simple

23 Report of the Expert Committee on Micro, Small and Medium Enterprises (June, 2019) <https://dcmsme.
gov.in/Report%20of%20Expert%20Committee%20on%20MSMEs%20-%20The%20U%20K%20
Sinha%20Committee%20constitutes%20by%20RBI.pdf>
[2025] 1 S.C.R. 637

NBCC (India) Ltd. v. The State of West Bengal & Ors.

mode of registration, it is usually not enough. Often,
more is needed e.g., Shops and Establishments,
PAN, GST, etc. Lack of formalization impacts the
sector in terms of development and also impacts in
availing credit from financial institutions like banks
and in terms of policy making as well as development
interventions. Registration provides information on
nature of business, location, segmentation, etc. In
the absence of a robust system of registration for
capturing information on operational units, new units
and exits, reliance has to be placed on surrogate data
or on national census/ surveys, which are infrequent.
The various avenues available to the MSMEs for
formalization are discussed below:
4.5.1 Registration of Enterprises
i. The Committee deliberated on the lack of
formalization of a large number of MSMEs particularly
in the micro category. The registration requirements
of Indian enterprises is primarily governed by the
First Schedule to the Industrial Development and
Regulation (IDR) Act, 1951. It is mandatory only
for a class of Medium enterprises which are
engaged in the manufacture of goods. The
registration of MSEs and Medium enterprises
engaged in services activities is discretionary.
However, over a period of time, registration has been
an intrinsic part of the development of MSMEs itself.
Having a registration certificate entitles an MSME for
numerous benefits. Particularly after the MSMED Act,
2006, which came into effect from October 2, 2006,
availability of registration certificate has assumed
greater importance.
(emphasis supplied)
14.7 The above-referred extract from the Report of expert committee
clearly indicates that MSME still exists as informal sector
and it is also recognized that “registration offers them little
by way of tangible benefits”. The committee also recognises
that even though simpler modes of registration have been
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introduced, they are usually not enough. It further suggests
that filing of memorandum provides information on the nature
of business, location, and segmentation so that the regulators
can capture “information on operational units”. Paragraph
4.5.1 also recognises the policy of lack of formalisation and it
is expected that over a period of time filing of memorandum
could be an intrinsic part of development of MSME itself. The
above referred committee report as well as other documents
very clearly establish that at no point of time filing of registration
of MSME was ever considered to be precondition for availing
the dispute resolution remedy under Section 18.
14.8 We have noted three clear features in the statutory regime. To
start with, Section 18 does not use the expression supplier,
instead employs the phrase, “any party to a dispute, may”. We
have also noted that the definition of the expression ‘supplier’ is
not confined to a micro or a small enterprise which has filed a
memorandum under Section 8(1) but also includes companies
or other entities engaged in selling goods or rendering services
by an enterprise. Thirdly, Section 8 grants a discretion to a
micro or a small enterprise in filing a memorandum with the
authority.
14.9 Further, it is noteworthy that a “micro” [section 2(h)], “small”
[section 2(m)] or “medium enterprises” [section 2(g)], formation
and existence is simply on the basis of their investment as
provided in Section 7 relating to classification of an Enterprise.
They subsist without any formal “recognition”, “consent”
or “registration”. The Act uses the expression filing of a
“memorandum”. That is all. That too, at the discretion of the
micro and small enterprises. The cumulative account of these
four features is compelling and leads us to the conclusion that
an application by a micro or a small enterprise to the Facilitation
Council under Section 18 cannot be rejected on the ground
that the said enterprise has not registered itself in Section 8.
15. Having considered the definition of the expression ‘supplier’,
and also having considered 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
[2025] 1 S.C.R. 639

NBCC (India) Ltd. v. The State of West Bengal & Ors.

of the discretion specifically vested with the micro and small
enterprises for filing a memorandum under Section 8 of the Act,
the submission that the Facilitation Council cannot entertain a
reference under Section 18 if the enterprise is not registered under
Section 8 must be rejected.
16. We will now discuss the cases relied on by the appellant.
17. Re: Silpi Industries v. Kerala State Road Transport Corporation:
This is the lead judgment which has given the impression that this
Court has laid down the law that Section 18 cannot be invoked by an
Enterprise if it has not filed a memorandum under Section 8 of the
Act before entering into a contract. However, the issues that arose
for consideration in Silpi Industries are in complete contrast with the
present case. In that case, there were two appeals, and they involved
different facts and circumstances. The short facts in the first appeal
was that the appellants referred the matter to the Facilitation Council
which made an award in favour of the appellant under the Arbitration
and Conciliation Act. The award was challenged under Section 34 and
the same was dismissed. During the pendency of the appeal under
Section 37, the High Court decided a preliminary issue as to whether
the Limitation Act would apply to arbitral proceedings under the
MSME. In the other appeal, the issue that arose before the High
Court was whether there is a right to file a counterclaim in arbitral
proceedings under MSME. The High Court answered both issues in
the affirmative, thus the appeal before this Court in Silpi Industries
(supra). Before considering the appeals, the following two issues
were framed.
(i) Whether the provisions of the Limitation Act, 1963 is applicable
to arbitration proceedings initiated under Section 18(3) of the
Micro, Small and Medium Enterprises Development Act, 2006?
(ii) Whether, counterclaim is maintainable in such arbitration
proceedings?
17.1 On the first issue, this Court held that the Limitation Act applies.
The relevant portion of the order is as under;
“27…Thus, we are of the view that no further elaboration
is necessary on this issue and we hold that the provisions
of the Limitation Act, 1963 will apply to the arbitrations
covered by Section 18(3) of the 2006 Act. We make it
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clear that as the judgment of the High Court is an order of
remand, we need not enter into the controversy whether
the claims/counterclaims are within time or not. We keep
it open to the primary authority to go into such issues and
record its own findings on merits.”
17.2 On the second issue also, this Court held that the counterclaim
is maintainable. The relevant portion is as under:
“40. For the aforesaid reasons and on a harmonious
construction of Section 18(3) of the 2006 Act and
Section 7(1) and Section 23(2-A) of the 1996 Act,
we are of the view that counterclaim is maintainable
before the statutory authorities under the MSMED
Act.”
17.3 In view of the finding that the Limitation Act will apply to MSME
arbitration and also that a counterclaim is maintainable in an
MSME arbitration, the Court could have disposed of the appeal
as nothing further remained for adjudication and determination.
However, it appears that the respondent seems to have made
an argument that the appellant in the second set of appeals
is not entitled to any relief whatsoever. This argument led to
the court making the following observation in paragraph 41 of
the judgment.
“41…Though, we are of the view that counterclaim
and set-off is maintainable before the statutory
authorities under the MSMED Act, the appellant in
this set of appeals is not entitled for the relief, for
the reason that on the date of supply of goods and
services the appellant did not have the registration
by submitting the memorandum as per Section 8 of
the Act….”
17.4 This fact led to the Court rejecting the claim of the appellant
therein that there were no supplies after the registration under
Section 8 of the Act. The relevant portion of the order of the
judgment is as under;
“42. Though the appellant claims the benefit of provisions
under the MSMED Act, on the ground that the appellant
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NBCC (India) Ltd. v. The State of West Bengal & Ors.

was also supplying as on the date of making the claim,
as provided under Section 8 of the MSMED Act, but same
is not based on any acceptable material. The appellant,
in support of its case placed reliance on a judgment of
the Delhi High Court in GE T&D India Ltd.,24 but the said
case is clearly distinguishable on facts as much as in the
said case, the supplies continued even after registration
of entity under Section 8 of the Act. In the present case,
undisputed position is that the supplies were concluded
prior to registration of supplier. The said judgment of the
Delhi High Court relied on by the appellant also would
not render any assistance in support of the case of the
appellant. In our view, to seek the benefit of provisions
under the MSMED Act, the seller should have registered
under the provisions of the Act, as on the date of entering
into the contract. In any event, for the supplies pursuant to
the contract made before the registration of the unit under
provisions of the MSMED Act, no benefit can be sought
by such entity, as contemplated under the MSMED Act.
43. While interpreting the provisions of Interest on
Delayed Payments to Small Scale and Ancillary Industrial
Undertakings Act, 1993, this Court, in the judgment in
Shanti Conductors25 has held that date of supply of goods/
services can be taken as the relevant date, as opposed
to date on which contract for supply was entered, for
applicability of the aforesaid Act. Even applying the said
ratio also, the appellant is not entitled to seek the benefit
of the Act. There is no acceptable material to show that,
supply of goods has taken place or any services were
rendered, subsequent to registration of the appellant as
the unit under the MSMED Act, 2006. By taking recourse
to filing memorandum under sub-section (1) of Section 8
of the Act, subsequent to entering into contract and supply
of goods and services, one cannot assume the legal
status of being classified under the MSMED Act, 2006,

24 GE T&D India Ltd. v. Reliable Engg. Projects & Mktg., 2017 SCC OnLine Del 6978.
25 Shanti Conductors (supra).
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as an enterprise, to claim the benefit retrospectively from
the date on which the appellant entered into contract with
the respondent.
44. The appellant cannot become micro or small enterprise
or supplier, to claim the benefits within the meaning of the
MSMED Act, 2006, by submitting a memorandum to obtain
registration subsequent to entering into the contract and
supply of goods and services. If any registration is obtained,
same will be prospective and applies for supply of goods
and services subsequent to registration but cannot operate
retrospectively. Any other interpretation of the provision
would lead to absurdity and confer unwarranted benefit
in favour of a party not intended by legislation.”
18. In the first place, whether an Enterprise is disabled from seeking a
reference before filing a memorandum under Section 8 for registration
never arose for consideration in Silpi (supra). More importantly, the
Court did not examine any provisions of the Act and their implication
on the right to seek a reference under Section 18 of the Act. This
was natural because the Court did not frame an issue of registration.
On the facts, the Court also held that there was no proof whatsoever
that the appellant had made any supplies as contemplated in the
Shanti Conductors (supra) case. Though we are concerned about
the interpretation of the Act, we may mention at this very stage that
it is an admitted fact that the respondent has, in fact, raised 41 out
of 53 bills after its registration on 19.01.2016.26 Be that as it may, in
view of the above referred analysis, we are of the opinion that Silpi
Industries (supra) is not an authority on the issue that a reference
under Section 18 cannot be made by a micro or small enterprise if
supplies were made or contracts were executed before filing of the
memorandum under Section 8 of the Act.
19. Re: Gujarat State Civil Supplies Corporation Ltd. v. Mahakali
Foods Pvt. Ltd.27 This case considered a batch of appeals which
gave rise to the following questions of law, which were formulated
as under:

26 The complete details regarding bills raised after registration are indicated in paragraph no. 25, page 13
of the counter affidavit filed by the enterprise.
27 [2022] 19 SCR 1094 : (2023) 6 SCC 401
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NBCC (India) Ltd. v. The State of West Bengal & Ors.

“(i) Whether the provisions of Chapter V of the MSMED
Act, 2006 would have an effect overriding the provisions
of the Arbitration Act, 1996?
(ii) Whether any party to a dispute with regard to any
amount due under Section 17 of the MSMED Act, 2006
would be precluded from making a reference to the
Micro and Small Enterprises Facilitation Council under
sub-section (1) of Section 18 of the said Act, if an
independent arbitration agreement existed between the
parties as contemplated in Section 7 of the Arbitration
Act, 1996?
(iii) Whether the Micro and Small Enterprises Facilitation
Council, itself could take up the dispute for arbitration
and act as an arbitrator, when the Council itself had
conducted the conciliation proceedings under sub-section
(2) of Section 18 of the MSMED Act, 2006 in view of the
bar contained in Section 80 of the Arbitration Act, 1996?”
20. It is evident from the above that the substantial question for
consideration that arose for consideration in Mahakali Foods (supra)
was whether the MSME Act overrides the Arbitration and Conciliation
Act, 1996, and such other incidental questions. There was no issue
whatsoever, as has arisen in our case, that is, about the right or rather
a disability to seek a reference under Section 18, if the enterprise
has not filed a memorandum. Answering the issues that have arisen
for consideration, the Court returned the findings in paragraph 52.1
to 52.5 which are as follows:
“52. The upshot of the above is that:
52.1. Chapter V of the MSMED Act, 2006 would override
the provisions of the Arbitration Act, 1996.
52.2 No party to a dispute with regard to any amount
due under Section 17 of the MSMED Act, 2006 would be
precluded from making a reference to the Micro and Small
Enterprises Facilitation Council, though an independent
arbitration agreement exists between the parties.
52.3. The Facilitation Council, which had initiated the
conciliation proceedings under Section 18(2) of the MSMED
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Act, 2006 would be entitled to act as an arbitrator despite
the bar contained in Section 80 of the Arbitration Act.
52.4. The proceedings before the Facilitation Council/
institute/centre acting as an arbitrator/Arbitral Tribunal
under Section 18(3) of the MSMED Act, 2006 would be
governed by the Arbitration Act, 1996.
52.5. The Facilitation Council/institute/centre acting as an
Arbitral Tribunal by virtue of Section 18(3) of the MSMED
Act, 2006 would be competent to rule on its own jurisdiction
as also the other issues in view of Section 16 of the
Arbitration Act, 1996.
21. The Court also reached another conclusion in paragraph 52.6, which
is as follows:
52.6. A party who was not the “supplier” as per the definition
contained in Section 2(n) of the MSMED Act, 2006 on the
date of entering into contract cannot seek any benefit as the
“supplier” under the MSMED Act, 2006. If any registration
is obtained subsequently the same would have an effect
prospectively and would apply to the supply of goods and
rendering services subsequent to the registration.”
22. Something similar to the decision in Silpi Industries (supra) transpired
in Mahakali Foods (supra) as well. Even though the issue of
registration did not arise, a submission was made to the following
effect.
“49. One of the submissions made by the learned counsel
for the buyers was that if the party supplier was not the
“supplier” within the meaning of Section 2(n) of the MSMED
Act, 2006 on the date of the contract entered into between
the parties, it could not have made reference of dispute
to Micro and Small Enterprises Facilitation Council under
Section 18(1) of the MSMED Act, 2006 and in such cases,
the Council would not have the jurisdiction to decide the
disputes as an arbitrator.”
23. In view of the above submission, the Court proceeded to rely on
Silpi Industries (supra), and allowed the prayer. The relevant portion
is as under: -
[2025] 1 S.C.R. 645

NBCC (India) Ltd. v. The State of West Bengal & Ors.

“50. At this juncture, very pertinent observations made
by this Court in Silpi Industries case 28 on this issue are
required to be reproduced ….
51. Following the abovestated ratio, it is held that a
party who was not the “supplier” as per Section 2(n) of
the MSMED Act, 2006 on the date of entering into the
contract, could not seek any benefit as a supplier under
the MSMED Act, 2006. A party cannot become a micro or
small enterprise or a supplier to claim the benefit under the
MSMED Act, 2006 by submitting a memorandum to obtain
registration subsequent to entering into the contract and
supply of goods or rendering services. If any registration
is obtained subsequently, the same would have the effect
prospectively and would apply for the supply of goods and
rendering services subsequent to the registration. The
same cannot operate retrospectively. However, such issue
being jurisdictional issue, if raised could also be decided
by the Facilitation Council/Institute/Centre acting as an
Arbitral Tribunal under the MSMED Act, 2006.”
24. It is evident from the above that even in Mahakali Foods (supra),
the issue which has arisen for our consideration never arose. There
was neither an issue, discussion, nor analysis on the applicability
of Section 18 for enterprises that have not filed a memorandum.
The decision in Mahakali Foods (supra) is certainly an authority
on the issues that were formulated in paragraph 11 of the said

28 “42. … In our view, to seek the benefit of provisions under the MSMED Act, the seller should have
registered under the provisions of the Act, as on the date of entering into the contract. In any event, for
the supplies pursuant to the contract made before the registration of the unit under provisions of the
MSMED Act, no benefit can be sought by such entity, as contemplated under MSMED Act.
43. While interpreting the provisions of Interest on Delayed Payments to Small Scale and Ancillary
Industrial Undertakings Act, 1993, this Court, in the judgment in Shanti Conductors (P) Ltd. v. Assam SEB
[Shanti Conductors (P) Ltd. v. Assam SEB, (2019) 19 SCC 529 : (2020) 4 SCC (Civ) 409] has held that date
of supply of goods/services can be taken as the relevant date, as opposed to date on which contract for
supply was entered, for applicability of the aforesaid Act. Even applying the said ratio also, the appellant is
not entitled to seek the benefit of the Act. … By taking recourse to filing memorandum under sub-section (1)
of Section 8 of the Act, subsequent to entering into contract and supply of goods and services, one cannot
assume the legal status of being classified under the MSMED Act, 2006, as an enterprise, to claim the
benefit retrospectively from the date on which appellant entered into contract with the respondent.
44. The appellant cannot become micro or small enterprise or supplier, to claim the benefits within the
meaning of the MSMED Act 2006, by submitting a memorandum to obtain registration subsequent to
entering into the contract and supply of goods and services. If any registration is obtained, same will be
prospective and applies for supply of goods and services subsequent to registration but cannot operate
retrospectively. Any other interpretation of the provision would lead to absurdity and confer unwarranted
benefit in favour of a party not intended by legislation.”
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judgment, which have already been extracted hereinabove. Even the
concluding paragraph in Mahakali Foods (supra) clearly establishes
the fact that the Court was only considering the issue of whether
the MSMED Act, being a special legislation, overrides the Arbitration
Act or not. The relevant portion of the judgement is as under: -
“77. The issues raised and the submissions made by the
learned counsel appearing for the appellant with regard
to the overriding effect of the MSMED Act, 2006 over the
Arbitration Act, 1996, jurisdiction of Facilitation Council,
the parties autonomy to enter into an agreement qua
the statutory provisions, the issue of casus omissus, etc.
have been discussed and decided hereinabove which
need not be reiterated or repeated. Accordingly, it is held
that the reference made to the Facilitation Council would
be maintainable in spite of an independent arbitration
agreement existing between the parties to whom the
MSMED Act, 2006 is applicable, and such Council would be
entitled to proceed under sub-section (2) of Section 18 of
the MSMED Act, 2006 as also to act as an arbitrator or to
refer the disputes to the institution or centre as contemplated
under Section 18(3) of the MSMED Act, 2006. As held
earlier, such Facilitation Council/Institute/Centre acting as
an Arbitral Tribunal would have the jurisdiction to rule over
on its own jurisdiction as per Section 16 of the Arbitration
Act, 1996. In that view of the matter, the present appeal also
deserves to be dismissed and is, accordingly, dismissed.”
25. Apart from Silpi Industries (supra), Mahakali Foods (supra),
Mr. Sankaranarayanan also relied on two orders of this Court in
Vaishno Enterprises v. Hamilton Medical AG and Anr.29 and M/s Nitesh
Estates Ltd. v. Micro and Small Enterprises Facilitation Council of
Haryana & Ors.30. These short orders do not lay down the law but
follow the decision of this Court in Silpi Industries (supra).
26. In Vaishno (supra), the contract was entered into on 24.08.2020, but
as the registration was made on 28.08.2020, the Court held that the
appellant was not an MSME and, therefore, the Act will not apply. The
order seems to have been made in the facts and circumstances of

29 [2022] 1 SCR 771 : 2022 SCC OnLine SC 355
30 C.A. No. 5276/2022@ SLP (C) No. 26682/2018
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NBCC (India) Ltd. v. The State of West Bengal & Ors.

the case. There was neither an issue about the supply of goods nor a
formulation of the question as to whether the filing of a memorandum
is mandatory for invocation of reference under Section 18.
26.1 The order in Nitesh Estates (supra), also relied on, observed that
the issue involved is squarely covered against the respondents in
view of the decision in Silpi Industries (supra) holding that filing of
a memorandum is mandatory for initiation of proceedings under
Section 18.
27. A decision where the issue was neither raised nor preceded by any
consideration, in State of U.P. v. Synthetics and Chemicals Ltd.31 this
Court held, “the Court did not feel bound by earlier decision as it was
rendered without any argument, without reference to the crucial words
of the rule and without any citation of the authority”. Further, approving
the decision of this Court in Municipal Corporation of Delhi v. Gurnam
Kaur 32 which held that “precedents sub-silentio and without argument
are of no moment” this Court held that, “a decision which is not express
and is not founded on reasons nor it proceeds on consideration of
issue cannot be deemed to be a law declared to have a binding effect
as is contemplated by Article 141”. The same approach was adopted
in Arnit Das v. State of Bihar33 where it was held that “a decision not
expressed, not accompanied by reasons and not proceeding on a
conscious consideration of an issue cannot be deemed to be a law
declared to have a binding effect as is contemplated by Article 141.
That which has escaped in the judgment is not the ratio decidendi.
This is the rule of sub-silentio, in the technical sense when a particular
point of law was not consciously determined”.
28. In this context, it is also important to note that, as an institution, our
Supreme Court performs the twin functions of decision-making and
precedent-making. A substantial portion of our jurisdiction under
Article 136 is reflective of regular appellate disposition of decision
making. Every judgment or order made by this Court in disposing
of these appeals is not intended to be a binding precedent under
Article 141. Though the arrival of a dispute for this Court’s
consideration, either for decision-making or precedent-making is at
the same tarmac, every judgment or order which departs from this

31 [1991] 3 SCR 64 : (1991) 4 SCC 139
32 [1988] Supp. 2 SCR 929 : (1989) 1 SCC 101
33 [2000] Supp. 1 SCR 69 : (2000) 5 SCC 488
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Court lands at the doorstep of the High Courts and the subordinate
courts as a binding precedent. We are aware of the difficulties that
High Courts and the subordinate courts face in determining whether
the judgment is in the process of decision-making or precedent-
making, particularly when we have also declared that even an obiter
of this Court must be treated as a binding precedent for the High
Courts and the courts below. In the process of decision making, this
Court takes care to indicate the instances where the decision of the
Supreme Court is not to be treated as precedent.34 It is therefore
necessary to be cautious in our dispensation and state whether a
particular decision is to resolve the dispute between the parties and
provide finality or whether the judgment is intended to and in fact
declares the law under Article 141.
29. Conclusion and reference to larger Bench: On the interpretation
of the provisions of the Act we have arrived at a clear opinion and
have expressed the same. Though it is possible for us to follow the
precedents referred to in para 27 to arrive at the conclusion that the
judgments in the case of Silpi Industries (supra) and Mahakali Foods
(supra) coupled with the subsequent orders in Vaishno Enterprises
(supra) and M/s Nitesh Estates (supra) cannot be considered to be
binding precedents on the issue that has arisen for our consideration,
taking into account the compelling need to ensure clarity and certainty
about the applicable precedents on the subject, we deem it appropriate
to refer this appeal to a three Judge Bench.
30. The Registry is directed to place the appeal paperbooks along with
our detailed judgment before the Hon’ble Chief Justice of India for
constitution of an appropriate Bench.

Result of the case: Referred to three Judges Bench.

†
Headnotes prepared by: Ankit Gyan

34 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. Kesavan (2004) 9 SCC 772; Vishnu Dutt Sharma v. Manju Sharma (2009) 6 SCC
379; Chandigarh Housing Board v. Narinder Kaur Makol (2000) 6 SCC 415; Also refer to the commentary
citing catena of judgements where this Court has enumerated the ‘events when decision-making is not
to be treated as a precedent’ in Durga Das Basu, ‘Commentary on Constitution of India’ (9th Edition,
Vol. IX), page 9858; See also, Allen v. Flood, (1893) AC 1 “a case is only an authority for what it actually
decides”.