The Board Of Major Port Authority For The Shama Prasad Mookerjee Port, Kolkata And Anr. vs. Haryana Micro And Small Eneterprises Facilitation Council (Hmsefc), Panchkula And Ors.

Facts

The petitioners, the Board of Major Port Authority for the Syama Prasad Mookerjee Port, Kolkata, issued an e-tender for architectural services. Respondent No. 4 submitted a bid and was awarded a work order on April 21, 2022, for Rs. 12,50,000 plus applicable GST. Respondent No. 4 submitted a first R.A. Bill for Rs. 2,95,000, which was paid. However, Respondent No. 4 allegedly failed to submit all required deliverables as per the tender document. Despite several communications and a show cause notice, the petitioners found the reply unsatisfactory and issued a termination order on March 25, 2025. Respondent No. 4 did not challenge this termination order but instead filed an application before the Haryana Micro and Small Enterprises Facilitation Council (HMSEFC) under Section 18(1) of the MSMED Act, 2006, claiming Rs. 18,40,800.

Held

The Court held that the Micro and Small Enterprises Facilitation Council (MSMED Council) is not the appropriate forum to decide issues related to the termination of a contract. The petitioners had not challenged the termination order before any court of law. The Court found that the respondent supplier had not completed the work as per the scope, had not supplied any goods to the petitioners, and had not raised any claim or final R.A. bill for dues payable prior to filing the application before the MSMED Council. Consequently, the Court concluded that the proceedings initiated by the respondent before the MSMED Council under Section 18(1) of the MSMED Act, 2006, were not maintainable. The Court set aside and quashed the proceedings before the MSMED Council. The writ petition was allowed.

Key Issues

1. Whether the Haryana Micro and Small Enterprises Facilitation Council (HMSEFC) has the jurisdiction to entertain a reference under Section 18(1) of the MSMED Act, 2006, when the petitioner has terminated the contract and the termination order has not been challenged by the respondent supplier? (Section 18(1) of MSMED Act, 2006). The petitioner argued that the HMSEFC lacks jurisdiction because the contract was terminated and the termination order was not challenged. They contended that there are no amounts due and payable to the respondent, and thus, the application under Section 18(1) is not maintainable. The respondent did not appear to present their arguments. 2. Whether any amount is due and payable by the petitioners to the respondent supplier under the contract or the MSMED Act, 2006, considering the alleged non-completion of work and the termination of the contract? (Sections 15, 17, and 18 of MSMED Act, 2006). The petitioner argued that no amount is due as the respondent failed to complete the work and did not submit any final R.A. bills prior to the show cause notice. The respondent did not appear to present their arguments.