New Delhi, Mar 30 (KNN) The Delhi High Court has held that a service provider who registers as a Micro, Small and Medium Enterprise (MSME) during an ongoing contract is eligible to claim benefits under the MSME Development (MSMED) Act for services rendered after registration.

The case involved a dispute between NBCC India Ltd, a government construction company, and an electrical contractor over non-payment of dues related to a hospital project in Delhi. The contractor had subcontracted the electrical works from the main contractor Pratibha Industries.

Though NBCC argued that the contractor was not entitled to MSMED Act benefits since it registered after the subcontract date, a single judge bench of Justice Subramonium Prasad relied on a recent Supreme Court judgment to rule that registration during the contract period enables claiming benefits for post-registration services.

Crucially, the High Court left it to the arbitrator to decide this issue, even as a preliminary matter, paving the way for MSME service providers to seek legal recourse on delayed payments through arbitration.

The ruling comes as a major relief for MSMEs in the services sector who often face payment delays from larger clients.

The case has been referred back to the Delhi International Arbitration Centre to proceed with arbitration by appointing an arbitrator to adjudicate the payment dispute.

(KNN Bureau)