In Shri Krishan Grit Co. v. Continental Engineering Corporation, ARB. A. (COMM) 30/2024 (decided 8 September 2026), Justice Tushar Rao Gedela of the Delhi High Court dismissed a supplier's appeal against an arbitral tribunal's ruling that it lacked jurisdiction over claims routed through the MSME Facilitation Council. Two strands decided the matter: the supplier's MSME registration post-dated the supplies by years, so the statutory arbitration machinery under Section 18 of the MSMED Act, 2006 was never validly engaged for those transactions; and an earlier arbitration over the same dues, abandoned when the supplier failed to file its statement of claim, could not be re-litigated through a second forum.
The transactions and the two arbitrations
The appellant supplied aggregates and TMT steel bars to the respondent contractor under a memorandum of understanding of 9 February 2016. Disputes over unpaid dues arose in respect of supplies made in 2016 and 2017. The supplier first went down the conventional route: an arbitration was set in motion, but the reference collapsed when the supplier never filed its statement of claim, and the proceedings stood abandoned.
On 26 February 2019 — long after the supplies — the firm obtained MSME registration in Delhi. Armed with that registration, it approached the MSME Facilitation Council under Section 18 of the MSMED Act, 2006, and the dispute travelled to arbitration under the statutory mechanism. The respondent objected to jurisdiction under Section 16 of the Arbitration and Conciliation Act, 1996. The arbitrator upheld the objection, and the supplier appealed to the Delhi High Court under Section 37(2)(a).
What the High Court held
Where this fits in the MSMED framework
| Stage | Provision | What it does |
|---|---|---|
| Registration | Section 8, MSMED Act (Udyam registration) | Files the memorandum that marks the enterprise's entry into the statutory scheme |
| Reference | Section 18(1) | Any party to a dispute over dues under Section 17 may refer it to the Facilitation Council |
| Conciliation | Section 18(2) | The Council first attempts conciliation, itself or through an institution |
| Arbitration | Section 18(3) | On failure, the dispute goes to arbitration as if under an agreement, importing the 1996 Act — including Section 16 jurisdictional pleas |
| Challenge | Section 19 / Section 34 | An award can be challenged only on 75% pre-deposit; jurisdictional rulings travel under Section 37(2)(a) |
Practical significance
The decision is a caution against treating MSME registration as a retrospective key to the Samadhaan corridor. Suppliers frequently register only when payments sour, then route stale dues through the Council in the hope of compound interest and the buyer's pre-deposit burden. This judgment confirms that the Delhi High Court will test the registration date against the supply dates at the jurisdictional threshold — and that the arbitrator is entitled to do so under Section 16 without waiting for the merits.
Equally important is the discipline point about forum conduct. A claimant who initiates arbitration and lets it die by default does not get a clean slate before a new forum. Businesses should therefore choose their recovery route deliberately and prosecute it to a conclusion, because an abandoned reference can permanently contaminate the claim.
For enterprises supplying goods or services on credit, the operative lesson is administrative: obtain Udyam registration before the contract is performed, not after the default. For buyers resisting Council references, the supply-versus-registration chronology is the first document to assemble.
Frequently Asked Questions
Does an MSME have to be registered before the contract to use the Samadhaan route?
The Supreme Court held in Silpi Industries v. Kerala SRTC (2021) that the benefits of the MSMED Act attach to supplies made after the supplier files its memorandum of registration. A unit that registers after the goods have been supplied cannot retrospectively convert those older transactions into MSMED claims before the Facilitation Council.
What is an ARB.A.(COMM) appeal?
It is a statutory appeal under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996 against an arbitral tribunal's order accepting a plea under Section 16 that it lacks jurisdiction. The appeal is heard by the Commercial Division of the High Court, and its scope is confined to the correctness of the jurisdictional ruling.
Can a claimant who abandons one arbitration start another over the same claims?
Ordinarily no. Where a claimant participates in constituting a tribunal and then allows the reference to lapse by never filing a statement of claim, courts treat a fresh attempt to arbitrate the identical dues — through the Facilitation Council or otherwise — as an impermissible second bite at the same dispute.
Does this mean unregistered suppliers have no remedy for old dues?
No. The ruling only closes the special MSMED corridor for pre-registration supplies. Ordinary remedies — a civil or commercial suit for recovery, or arbitration under a contractual clause invoked within limitation — remain available on their own terms.