M/S Larsen And Toubro Ltd vs M/S Navnirman Highway Projects Pvt. Ltd on 13 April, 2026

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    Delhi High Court – Orders

    M/S Larsen And Toubro Ltd vs M/S Navnirman Highway Projects Pvt. Ltd on 13 April, 2026

                                   $~36
                                   *        IN THE HIGH COURT OF DELHI AT NEW DELHI
                                   +        O.M.P. (COMM) 182/2026 & I.A. 9963/2026, I.A. 9964/2026, I.A.
                                            9965/2026
                                            M/S LARSEN AND TOUBRO LTD.                                                         .....Petitioner
                                                                         Through:          Dr. Amit George, Mr. K.G.
                                                                                           Gopalakrishnan, Ms. Medhavi Bhatia
                                                                                           and Mr. Kartikay Puneesh, Advs.
                                                                                           M: 9717752282
    
                                                                         versus
    
                                            M/S NAVNIRMAN HIGHWAY PROJECTS PVT.
                                            LTD.                                    .....Respondent
                                                        Through: Mr. Pardeep Dahiya, Ms. Mahima
                                                                 and Mr. Rakshit, Advs.
    
                                            CORAM:
                                            HON'BLE MS. JUSTICE MINI PUSHKARNA
                                                                         ORDER
    

    % 13.04.2026
    I.A. 9964/2026 (For Exemption)

    1. Exemption allowed, subject to all just exceptions.

    SPONSORED

    2. Application stands disposed of.

    I.A. 9965/2026

    3. The present application has been filed under Section 151 of Code of
    Civil Procedure (“CPC“), seeking permission to file long and lengthy list of
    dates and synopsis.

    4. Considering the submissions made in the present application, the
    present application is allowed and the same is disposed of.

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    O.M.P. (COMM) 182/2026 & I.A. 9963/2026

    5. The present petition has been filed under Section 34 of the Arbitration
    and Conciliation Act, 1996 (“Arbitration Act“), challenging the Arbitral
    Award dated 13th January, 2026, and order dated 24th March, 2025, passed
    by the Arbitral Tribunal.

    6. Learned counsel appearing for the petitioner submits that vide the
    impugned order dated 24th March, 2025, the learned Arbitrator erroneously
    dismissed the application under Section 16 of the Arbitration Act filed by
    the petitioner. Thus, it is submitted that by way of the impugned Award
    dated 13th January, 2026, the Arbitral Tribunal has erroneously allowed the
    claims of the respondent and has directed the petitioner to pay sum of Rs.
    10,78,13,204/- together with interest @18% per annum, from 28th
    November, 2023, till realization, as well as cost.

    7. Learned counsel appearing for the petitioner submits that the work
    was completed by the respondent in May, 2018, and that the registration
    under the Micro Small and Medium Enterprises Development Act, 2006
    (“MSME Act“), was obtained by the respondent only on 01st September,
    2020, which is post the completion of the work.

    8. Further, he submits that vide the impugned order dated 24th March,
    2025, the learned Arbitrator has rejected the application under Section 16 of
    the Arbitration Act filed on behalf of the petitioner on the basis of the
    judgment of the Supreme Court in the case of NBCC (India) Limited
    Versus State of West Bengal and Others, (2025) 3 SCC 440.

    9. He submits that however, the learned Arbitrator failed to take into
    account of the fact that the issue whether the registration under the MSME
    Act
    would have retrospective effect, has now been referred to a three judge

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    bench of the Supreme Court.

    10. Learned counsel appearing for the petitioner draws the attention of
    this Court to Paras 48 to 53, 55 and 56 of the said judgment, which are
    reproduced as under:

    “xxx xxx xxx

    48. In view of the above submission, the Court proceeded to rely on Silpi
    Industries [Silpi Industries v. Kerala SRTC
    , (2021) 18 SCC 790] , and
    allowed the prayer.
    The relevant portion is as under : (Mahakali Foods
    case [Gujarat State Civil Supplies Corpn. Ltd. v. Mahakali Foods (P)
    Ltd.
    , (2023) 6 SCC 401 : (2023) 3 SCC (Civ) 7] , SCC pp. 432-33, paras
    50-51)

    “50. At this juncture, very pertinent observations made by this
    Court in Silpi Industries case 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.”

    49. It is evident from the above that even in Mahakali Foods [Gujarat
    State Civil Supplies Corpn. Ltd. v. Mahakali Foods (P) Ltd.
    , (2023) 6
    SCC 401 : (2023) 3 SCC (Civ) 7] , 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 [Gujarat State
    Civil Supplies Corpn. Ltd. v. Mahakali Foods (P) Ltd.
    , (2023) 6 SCC 401
    : (2023) 3 SCC (Civ) 7] is certainly an authority on the issues that were

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    formulated in para 11 of the said judgment, which have already been
    extracted hereinabove.
    Even the concluding paragraph in Mahakali
    Foods [Gujarat State Civil Supplies Corpn. Ltd. v. Mahakali Foods (P)
    Ltd.
    , (2023) 6 SCC 401 : (2023) 3 SCC (Civ) 7] clearly establishes the
    fact that the Court was only considering the issue of whether the
    MSMED Act, being a special legislation, overrides the Arbitration and
    Conciliation Act, 1996
    or not.
    The relevant portion of the judgment is as
    under : (Mahakali Foods case [Gujarat State Civil Supplies Corpn. Ltd.
    v. Mahakali Foods (P) Ltd.
    , (2023) 6 SCC 401 : (2023) 3 SCC (Civ) 7] ,
    SCC pp. 439-40, para 77)

    “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.”

    50. Apart from Silpi Industries [Silpi Industries v. Kerala SRTC, (2021)
    18 SCC 790] , Mahakali Foods [Gujarat State Civil Supplies Corpn. Ltd.
    v. Mahakali Foods (P) Ltd.
    , (2023) 6 SCC 401 : (2023) 3 SCC (Civ) 7] ,
    Mr Sankaranarayanan also relied on two orders of this Court in Vaishno
    Enterprises v. Hamilton Medical AG [Vaishno Enterprises
    v. Hamilton
    Medical AG, (2024) 12 SCC 214 : 2022 SCC OnLine SC 355] and Nitesh
    Estates Ltd. v. Outsourcing Xperts [Nitesh Estates Ltd. v. Outsourcing
    Xperts, (2024) 12 SCC 221 : 2022 SCC OnLine SC 1198] .
    These short
    orders do not lay down the law but follow the decision of this Court in
    Silpi Industries [Silpi Industries v. Kerala SRTC, (2021) 18 SCC 790].

    51. In Vaishno Enterprises [Vaishno Enterprises v. Hamilton Medical
    AG
    , (2024) 12 SCC 214 : 2022 SCC OnLine SC 355] , the contract was
    entered into on 24-8-2020, but as the registration was made on 28-8-

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    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 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.

    52. The order in Nitesh Estates [Nitesh Estates Ltd. v. Outsourcing
    Xperts, (2024) 12 SCC 221 : 2022 SCC OnLine SC 1198] , also relied
    on, observed that the issue involved is squarely covered against the
    respondents in view of the decision in Silpi Industries [Silpi Industries v.
    Kerala SRTC
    , (2021) 18 SCC 790] holding that filing of a memorandum
    is mandatory for initiation of proceedings under Section 18.

    53. A decision where the issue was neither raised nor preceded by any
    consideration, in State of U.P. v. Synthetics & Chemicals Ltd. [State of
    U.P.
    v. Synthetics & Chemicals Ltd., (1991) 4 SCC 139 : (1992) 87 STC
    289] this Court held : (SCC p. 163, para 41)

    “41. … 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 MCD v. Gurnam Kaur
    [MCD
    v. Gurnam Kaur, (1989) 1 SCC 101] which held that “precedents
    sub silentio and without argument are of no moment” this Court held
    [State of U.P. v. Synthetics & Chemicals Ltd., (1991) 4 SCC 139 : (1992)
    87 STC 289] that : (Synthetics & Chemicals case [State of U.P. v.
    Synthetics & Chemicals Ltd.
    , (1991) 4 SCC 139 : (1992) 87 STC 289] ,
    SCC p. 163, para 41)

    “41. … 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.”

    xxx xxx xxx

    55. 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

    Page 5 of 10

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    decision-making or precedent-making is at the same tarmac, every
    judgment or order which departs from this Court lands at the doorstep of
    the High Courts and the subordinate courts as a binding precedent. We
    are aware of the difficulties that the 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.
    [Union of India v. All Gujarat Federation of Tax Consultants, (2006) 13
    SCC 473 : (2008) 2 SCC (L&S) 457; Francis Stanly v. Narcotic Control
    Bureau
    , (2006) 13 SCC 210 : (2007) 2 SCC (Cri) 618; Bharat Petroleum
    Corpn. Ltd. v. P. Kesavan
    , (2004) 9 SCC 772; Vishnu Dutt Sharma v.
    Manju Sharma
    , (2009) 6 SCC 379 : (2009) 2 SCC (Civ) 897; Chandigarh
    Housing Board v. Narinder Kaur Makol
    , (2000) 6 SCC 415; Also refer to
    the commentary citing catena of judgments 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 Edn., Vol.
    IX), p. 9858; See also, Allen v. Flood, 1898 AC 1 (HL):”a
    case is only an authority for what it actually decides” [Ed. : Quoted from
    Quinn v. Leathem, 1901 AC 495 (HL).].] 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.

    56. 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 paras 53 and 54 to arrive at the
    conclusion that the judgments in Silpi Industries [Silpi Industries v.
    Kerala SRTC
    , (2021) 18 SCC 790] and Mahakali Foods [Gujarat State
    Civil Supplies Corpn. Ltd. v. Mahakali Foods (P) Ltd.
    , (2023) 6 SCC 401
    : (2023) 3 SCC (Civ) 7] coupled with the subsequent orders in Vaishno
    Enterprises [Vaishno Enterprises v. Hamilton Medical AG
    , (2024) 12
    SCC 214 : 2022 SCC OnLine SC 355] and Nitesh Estates [Nitesh Estates
    Ltd. v. Outsourcing Xperts, (2024) 12 SCC 221 : 2022 SCC OnLine SC
    1198] 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.

    xxx xxx xxx”

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    11. By referring to the aforesaid, it is submitted by learned counsel
    appearing for the petitioner that the learned Arbitrator completely ignored
    the Para 56 of the aforesaid judgment, wherein, the issue in question has
    been referred to a three judge bench. This Court is informed that the three
    judge bench of the Supreme Court is still seized with the matter and there is
    no finality as such to the issue.

    12. By relying upon the aforesaid judgment, he further submits that there
    is a three judge bench judgment of the Supreme Court, which holds to the
    contrary, i.e., Tamil Nadu Cements Corporation Limited Versus Micro and
    Small Enterprises Facilitation Council and Another, (2025) 4 SCC 1,
    which has been taken into account the case of NBCC (Supra), and has also
    made a reference of question before a five judge bench.

    13. Learned counsel appearing for the petitioner further draws the
    attention of this Court to Para 22 of the present petition, wherein, the
    petitioner has stated as follows:

    “xxx xxx xxx

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    xxx xxx xxx”

    14. Learned counsel appearing for the petitioner submits that though the
    petitioner challenges the arbitration having been conducted under the
    MSME Act as not being maintainable, however, as amended by Section 19
    of the MSME Act, the petitioner is ready to deposit 75% of the awarded
    amount, without prejudice to their rights and contentions.

    15. Per contra, learned counsel for the respondent appearing on advance
    notice submits that in the NBCC (Supra) judgment, the Supreme Court
    relied upon two other judgments also, i.e., Silpi Industries and Others
    Versus Kerala State Road Transport Corporation and Another, (2021) 18
    SCC 790 and Gujarat State Civil Supplies Corporation Limited Versus
    Mahakali Foods Private Limited (Unit 2) and Another, (2023) 6 SCC 401,
    which held in similar lines as the NBCC (Supra), which is Coordinate
    Bench judgment, i.e., two judge bench judgment.

    16. He further submits that the petitioner did not appear before the
    MSME Council upon the complaint by the respondent and that even the
    order of the MSME Council for referring the matter to Arbitrator was not

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    challenged by the petitioner.

    17. He submits that it is only before the Arbitrator that for the first time
    an application under Section 16 of the Arbitration Act was filed. He thus,
    submits that the petitioner did not raise the objection with regard to the
    jurisdiction regarding the Arbitration under the MSME Act in the first
    instance, which was available to the petitioner, and such plea by the
    petitioner raised subsequently, under Section 16 of the Arbitration Act,
    would not be maintainable.

    18. Per contra, learned counsel appearing for the petitioner submits that
    the occasion to raise the objection arose only when the matter was referred
    to the Arbitrator, as in Delhi, the MSME Council itself does not hear the
    matter and simply refers the matter to Arbitration.

    19. The matter requires consideration.

    20. Accordingly, issue notice. Notice is accepted by learned counsel
    appearing for the respondent.

    21. Let reply be filed, within a period of four weeks, from today.

    22. Rejoinder thereto, if any, be filed within two weeks, thereafter.

    23. Considering the submissions made before this Court, it is directed that
    the operation of the Arbitral Award dated 13th January, 2026, shall remain
    stayed, till the next date of hearing, subject to the petitioner depositing 75%
    of the awarded amount.

    24. Let the needful be done by the petitioner, within a period of one week,
    from today.

    25. Since the petitioner has already placed on record the photocopy of the
    Demand Draft dated 04th April, 2026, the petitioner is granted liberty to
    deposit the same with the Registry of this Court.

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    26. As and when the said amount is deposited by the petitioner with the
    Registry of this Court, the same shall be kept in an interest bearing account.

    27. Re-notify on 06th August, 2026.

    MINI PUSHKARNA, J
    APRIL 13, 2026/KR

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