Conciliation Under MSMED Act Is Mandatory, Cannot Be Waived By Parties: Kerala High Court

The Kerala High Court on 27 February held that the statutory mandate of conciliation under Section 18(2) of the Micro, Small and Medium Enterprises Development Act, 2006 cannot be waived by a party to proceedings before the Micro and Small Enterprises Facilitation Council. A Division Bench of Justice Anil K Narendran and Justice Muralee Krishna S allowed a writ appeal filed by Malabar Social Service and Sanitation (MASSS) and set aside the judgment of the Single Judge which had quashed an award...

MSMEs Need Not Always Approach Facilitation Council; Arbitration Clause Enforceable: Karnataka High Court

The Karnataka High Court has recently held that enterprises are not required in every case to move the Facilitation Council under Chapter V of the Micro, Small and Medium Enterprises Development Act, 2006, which provides a mechanism for referring delayed payment disputes to the Council. Justice Suraj Govindaraj clarified that a contractual arbitration clause remains enforceable unless the statutory process under Section 18 is actually invoked. “It cannot be said, as an absolute proposition,...

New RBI Directions Raise Collateral-Free Loan Limit For MSEs From ₹10 To 20 Lakh

The Reserve Bank of India (RBI) recently doubled the collateral-free loan limit for Micro and Small Enterprises (MSEs) from Rs. 10 lakh to Rs. 20 lakh.This change was made through the Lending to Micro, Small & Medium Enterprises (MSME) Sector (Amendment) Directions, 2026, and the revised limit will take effect from 1 April 2026.The move aims to strengthen last-mile credit delivery to smaller businesses with limited assets. By raising the ceiling to Rs. 20 lakh, the RBI aims to ease access to...

MSME Revival Benefits Depend On Loan Limit, Not Outstanding Dues: Bombay High Court

The Bombay High Court recently held that eligibility for benefits under the Reserve Bank of India's framework for revival and rehabilitation of MSMEs depends on the sanctioned loan limit and not on the outstanding amount. The court, thus, cleared the way for Union Bank of India to continue insolvency proceedings against Vardhan Agro Processing Limited. A Division Bench of Justice Manish Pitale and Justice Shreeram V. Shirsat heard the case. While explaining the scope of the RBI framework, the...

Union Budget 2026-27 Proposes 'Corporate Mitras' To Support MSME Compliance

The Union Budget 2026–27 on Sunday proposed the creation of a cadre of trained paraprofessionals, referred to as “Corporate Mitras”, to support micro, small and medium enterprises in meeting compliance requirements.Presenting the Budget, Finance Minister Nirmala Sitharaman said, “The government will facilitate professional institutions such as the Institute of Chartered Accountants of India, Institute of Company Secretaries of India and Institute of Cost Accountants of India to design short-term...

Banks Must Examine MSME Restructuring Claims Before Proceeding Under SARFAESI: Calcutta High Court

The Calcutta High Court has recently held that once an MSME borrower raises a restructuring claim in reply to a SARFAESI demand notice, the bank cannot carry on with recovery proceedings without first taking a decision under the RBI's revival framework. Justice Krishna Rao said the obligation on the bank is mandatory when such a claim is made with reasons and an affidavit. “It is mandatory on the part of the bank that, in reply, if the borrower claims benefit of the FRAMEWORK with reasons...

Delhi High Court Orders Deutsche Bank To Refund Rs 3.45 Crore To MSME Exporter

The Delhi High Court has ordered Deutsche Bank to refund Rs 3.45 crore to an MSME exporter, M D Overseas Private Limited. The court held that the bank wrongly recovered interest subvention benefits that had already been given upfront under the Interest Equalization Scheme. A single-judge bench of Justice Amit Bansal said the bank's move defeated the purpose of the scheme. The scheme, the court noted, was meant to "enhance the global competitiveness of Indian exports by lowering the cost of...

Pendency Of Conciliation Proceedings Under MSME Act Does Not Bar Interim Relief U/S 9 Of A&C Act To Preserve Subject Matter: Calcutta HC

The Calcutta High Court has held that pendency of conciliation proceedings does not bar the grant of limited interim relief under section 9 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act"), where such relief is essential to preserve the subject matter of the dispute. Justice Gaurang Kanth held while allowing a Section 9 application filed by Rishi Chemical Works Pvt. Ltd. (“Petitioner”), appointing a Special Officer to inspect, measure, and document the existing status...

Writ Petition Filed To Bypass Pre-Deposit Requirement Under MSMED Act Is Not Maintainable: Calcutta High Court

The Calcutta High Court dismissed a petition filed under Article 227 of the Constitution challenging an award passed by the West Bengal Micro & Small Enterprises Facilitation Council (MSEFC), holding that the petition was not maintainable and was filed to evade pre-deposit requirement under section 19 of the MSMED Act, 2006. Justice Hiranmay Bhattacharyya held that the Facilitation Council had jurisdiction to entertain the reference under section 18 and the buyer (Kommoners Club...

Banks Cannot Penalise Borrowers For Switching Lenders, Prepaying Loans: Orissa High Court

The Orissa High Court recently held that banks cannot impose charges that restrict a borrower's freedom to switch lenders, ruling that such practices undermine fair banking standards and violate binding directions of the Reserve Bank of India. A bench of Justice Sanjeeb K Panigrahi said banks must operate within regulatory limits set by the RBI and cannot create barriers that penalize borrowers for exercising their right to repay or refinance loans. The bank cannot "cannot convert a...

Proceedings For Conciliation & Arbitration Under MSME Act Cannot Be Clubbed: Bombay High Court

The Bombay High Court has set set aside two ex-parte orders passed by the Micro and Small Enterprises Facilitation Council (MSEFC), Daman holding that the council acted in breach of mandatory two stage procedures under the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”). The court remitted the matter for fresh arbitration in accordance with law. A bench led by Justice N.J. Jamadar held that “If the appellant had not submitted its reply at the conciliation...

S. 18(5) MSMED Act | Supreme Court To Examine Whether Time Limit For Deciding Reference By Facilitation Council Is Mandatory

The Supreme Court has agreed to examine the issue of whether the 90-day time limit prescribed under Section 18(5) of the MSMED Act for resolving disputes by the Micro and Small Enterprises Facilitation Council (“Council”) is mandatory or merely directory. The bench comprising Justices Sanjay Kumar and SC Sharma issued a notice in a plea filed by one M/s Vast India Pvt. Ltd. challenging Bombay High Court's Division Bench's order which quashed the award passed by the Council in its favour stating...