MSE Facilitation Council Cannot Reject Supplier Claims Without Allowing Evidence: Calcutta High Court

ENA MSME 2025-04-15 15:50:36 New Delhi, Apr 15 (KNN) The Calcutta High Court, through Justice Shampa Sarkar, has held that the MSE Facilitation Council acted in violation of natural justice by rejecting the suppliers claim without allowing an opportunity to present evidence. The court ruled that the Council, upon failure of mediation under Section 18 of the MSMED Act, must either adjudicate the dispute or refer it to arbitration, but cannot summarily dismiss arbitrable claims. In UMC Technologies Pvt Ltd vs Assistant Director of Postal Services (Recruitment) [AP-COM/39/2024], the supplier challenged the Councils rejection of its claim for 10 per cent of the contractual payment. The Council had held that the supplier failed to complete the job satisfactorily and had not submitted a job satisfaction certificate. The petitioner contended that it fulfilled its contractual obligations and submitted all required documents, and that non-payment was unjustified. It also argued that the Council was bound to arbitrate or refer the matter after failed mediation. The respondent argued that the petitioner breached the agreement by failing to conduct the recruitment process fairly, and therefore the final payment was not due. It emphasised that satisfactory performance was a contractual prerequisite for full payment. The court observed that the Council ignored key claims—such as the withholding of the 2016 completion certificate—and failed to evaluate the petitioners evidence or permit a proper hearing. Citing precedents, the court emphasised that arbitral decisions without evidence or reason are liable to be set aside. Accordingly, the impugned award was declared perverse and violative of natural justice, and was set aside under Section 34 of the Arbitration and Conciliation Act. (KNN Bureau) 41748 https://knnindia.co.in/news/newsdetails/msme/mse-facilitation-council-cannot-reject-supplier-claims-without-allowing-evidence-calcutta-high-court 2025-04-15 15:50:36 knnindia.co.in MSE Facilitation Council Cannot Reject Supplier Claims Without Allowing Evidence: Calcutta High Court