Quick Summary: Chennai Petroleum Corporation Limited tried to have a claim by M.Govindaraj Contractor and Earth Movers thrown out, but the Madras High Court said no. The court decided that the claim made under the Micro, Small and Medium Enterprises Development (MSMED) Act was valid.
On February 3, 2026, Justice S. Sounthar of the Madras High Court made a decision on a request from Chennai Petroleum Corporation Limited. The company was trying to overturn a decision by the Micro and Small Enterprises Facilitation Council in Chennai, which had rejected their request under a certain section of the Arbitration and Conciliation Act, 1996.
Chennai Petroleum had hired M.Govindaraj Contractor and Earth Movers to do some construction work for a coke handling system. They were supposed to finish by September 30, 2020, but the contract was ended on May 11, 2022, because the work was taking too long.
The big question was whether the MSMED Act applied to this contract. Chennai Petroleum argued that the contract was about construction work and not about supplying goods, so the council shouldn't be involved.
Justice S. Sounthar looked at the MSMED Act and pointed out that it covers both goods and services. The court decided that the work done by M.Govindaraj Contractor was indeed covered by the MSMED Act.
"The supplier is not only entitled to recover the amount due for the goods supplied by him, but he is also entitled to recover the amount due to him for the service rendered by him to the buyer," the judgment stated.
The court rejected Chennai Petroleum's request, confirming that M.Govindaraj Contractor's claim was valid under the MSMED Act. This decision shows that the MSMED Act can apply to contracts involving services as well as goods.
