Kerala High Court Rules MSME Facilitation Act 2019 Is Not Applicable to Pre-Existing Units
The Kerala High Court has recently ruled that the Kerala Micro Small and Medium Enterprises (MSME) Facilitation Act, 2019, applies exclusively to new enterprises and does not extend to pre-existing units. The ruling came in a case concerning the hot mix plant “N & T Hotmix,” operated by petitioners Thajudheen A and Sudheer S in Nellad village [Thajudheen A & anr v State Police Chief & ors].
Justice VG Arun clarified that the MSME Facilitation Act, 2019, was designed to support and facilitate the establishment of new enterprises, as indicated by the Act’s provisions and preamble. The Act aims to assist in “starting” or “facilitating” enterprises, and Section 4, which outlines the functions of the nodal agency, emphasizes support for new ventures. Consequently, the Court found that pre-existing units cannot claim exemptions under this Act.
The petitioners, who had obtained an acknowledgment certificate under the MSME Facilitation Act, argued that this certificate exempted them from requiring a Panchayat licence. They contended that their plant operated with all necessary permissions and claimed that the Panchayat’s stop memos were unjustified. They sought police protection to resume operations after facing obstructions from local protestors, the Samara Samithi.
Senior Counsel Ranjith Thampan argued that the acknowledgment certificate served as approval, and the hot mix plant was functioning based on a deemed licence under Section 236(3) of the Kerala Panchayat Raj Act, 1994. This section provides that if a license application is not decided within 30 days, it is deemed granted.
In response, Advocate Kaleeswaram Raj, representing the Samara Samithi members, argued that the petitioners’ failure to secure a valid Panchayat licence amounted to a fraud on the Court. He also highlighted health and environmental concerns raised by local residents and stated that the Panchayat’s stop memos were issued in response to these complaints.
The Court determined that since the hot mix plant was established before the enactment of the MSME Facilitation Act, it did not benefit from the Act’s provisions. The acknowledgment certificate did not exempt the plant from obtaining necessary permits under Panchayat Building Rules. The Court dismissed the writ petition, noting that the petitioners could not bypass the Panchayat’s regulations, which are critical for ensuring proper governance at the local level.
The Court also acknowledged local grievances about environmental and health issues but ruled that the petitioners were not entitled to police protection. The Court clarified that police intervention would be limited to maintaining law and order in the dispute.
The petitioners were represented by Senior Advocate Ranjith Thampan, assisted by Advocate Ajith Krishnan. Advocate Kaleeswaram Raj represented the Samara Samithi, while Advocate Hanil Kumar appeared for the Nellanad Grama Panchayat.
(With inputs from agency)
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