Whether A Particular Contract Is A Works Contract Under MSME Can't Be Decided Under Writ Jurisdiction: Telangana High Court

The Telangana High Court bench of Justice K. Lakshman has held that the question of whether a particular contract is a works contract or not is for the MSME Council to decide, and the dispute cannot be decided under writ jurisdiction. Brief Facts: This writ petition challenges the order dated 21.12.2024 in Case No. 1292/MSEFC/2021 passed by Respondent No. 2, seeking a declaration that the order is non-arbitrable and illegal. The petitioner prays for a direction to Respondent No. 2 to...

Interim Measures U/S 9 Of Arbitration Can't Be Sought By MSME During Conciliation Proceedings: Calcutta High Court

The Calcutta High Court bench of Justice Shampa Sarkar has held that interim measures under Section 9 of the Arbitration Act can be sought by the MSME only after mandatory conciliation before the MSME Council fails and the dispute proceeds to arbitration—either conducted by the Council or referred to an arbitral institution. Only then do the provisions of the Arbitration Act apply. Consequently, seeking relief under the Arbitration Act during conciliation is clearly prohibited under...

Mandate Of MSME Council Not Automatically Terminated For Failure To Refer Dispute To Arbitration Within 90 Days: Delhi High Court

The Delhi High Court bench of Justice Manoj Kumar Ohri has held that the mandate of the MSME Facilitation Council to refer a dispute to arbitration under Section 18(3) of the Micro, Small and Medium Enterprises Development (MSMED) Act, following the failure of conciliation under Section 18(2), is not automatically terminated if the referral is not made within 90 days as prescribed under Section 18(5). Unlike Section 29A of the Arbitration and Conciliation Act, 1996 (Arbitration Act)...

Private Arbitration Clauses Cannot Override Statutory Mandates Under MSMED Act : Supreme Court

Reaffirming that the MSMED Act prevails over the Arbitration Act, as held in Gujarat State Civil Supplies v. Mahakali Foods, the Supreme Court set aside the Karnataka High Court's interference with MSMED proceedings in Delhi, despite the contract naming Bengaluru as the arbitration seat. The Court clarified that private contractual clauses cannot override the statutory mandate of the MSMED Act. Since the appellant-supplier was registered in Delhi, the Court noted that the Delhi Arbitration...

Ad-Hoc Arbitrator Can Grant Interest U/S 16 Of MSMED Act, Even If Reference Was Not Made To MSME Council: Delhi High Court

The Delhi High Court bench of Justice Jasmeet Singh held that an ad-hoc arbitrator (appointed under the Arbitration and Conciliation Act, 1996) is empowered to grant interest rate contemplated under Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006, even if the reference was not made to the MSME Facilitation Council for resolving disputes. Brief Facts: Respondent No. 2 (“Owner”) owned a thermal power plant in Haldia, West Bengal. It appointed BF ...

No Interim Relief U/S 9 Of A&C Act Without Exceptional Circumstances After Conciliation Fails & Arbitration Starts Under MSME Act: Calcutta HC

The Calcutta High Court bench of Justice Shampa Sarkar has held that once conciliation fails under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act), the Council may either conduct the arbitration itself or refer the matter to an arbitral institution. As per Section 18(3) of the MSME Act, the provisions of the Arbitration and Conciliation Act, 1996 (Arbitration Act) apply to such arbitration proceedings. It further held that unless exceptional circumstances are...

MSME Council Cannot Reject Arbitrable Claims Without Providing Any Reasons When Meditation U/S 18 Of MSME Act Has Failed: Calcutta HC

The Calcutta High Court bench of Justice Shampa Sarkar has held that the Micro, Small and Medium Enterprises (MSME) Facilitation Council cannot reject the arbitrable claims of the supplier without providing an opportunity to present evidence in support of the same, especially when mediation, as required under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act) has failed. As per law, the Council is then mandated to either adjudicate the arbitrable matter...

MSME Council Cannot Pass Award On Account Of Failure Of Conciliation Proceedings, Has To Refer Matter To Arbitration: Karnataka HC

The Karnataka High Court has held that the Micro and Small Enterprises Facilitation Council cannot pass an award on account of conciliation having failed without referring the matter to arbitration. Justice Suraj Govindaraj held thus while allowing the petition filed by M/s Enmas GB Power Systems Projects Ltd. It said, “The matter is remitted to the Karnataka Micro and Small Enterprises Facilitation Council, to formally terminate the conciliation proceedings and thereafter take a...

Court Can Appoint Arbitrator U/S 11(6) Of Arbitration Act If MSME Council Fails To Initiate Mediation U/S 18 Of MSMED Act: Delhi HC

The Delhi High Court bench of Justice Jasmeet Singh has held that When the Facilitation Council under the Micro, Small, and Medium Enterprises Development Act (MSMED Act) fails to initiate the mediation process under Section 18 of the MSMED Act, the court can appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (Arbitration Act). Brief Facts: The respondent placed a Letter of Intent for execution of civil and associated work for construction of New...

Withdrawal Of MSMED Council Application Does Not Preclude Arbitration U/S 11, Even Without Council's Response: Delhi High Court

The Delhi High Court bench of Justice Subramonium Prasad held that withdrawal of an application before the MSMED Council does not bar a party from seeking the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, even in the absence of any corresponding response from the MSMED Council. Brief Facts: Respondent No. 2 and 3 approached M/s Smartschool Education Private Limited (“Petitioner”) to lease the software. An agreement was entered into...

MSME Act | Procurement Order 2012 Has Force Of Law, Authorities Subject To Judicial Review : Supreme Court

The Supreme Court recently (on February 25) held that the Procurement Order 2012 issued as per the Micro, Small and Medium Enterprises Development Act, 2006, has the force of law and is enforceable.The Court further held that while the MSME Act and the Procurement Order 2012 do not create an 'enforceable right' for an individual MSE, the statutory authorities and administrative bodies created thereunder are impressed with enforceable duties. They are accountable and subject to judicial...

MSMED Act Will Prevail Over Arbitration Act In Disputes Pertaining To A Party Which Is An MSME: Delhi High Court

The Delhi High Court Bench of Justice Manoj Kumar Ohri has reiterated that the Arbitration and Conciliation Act, 1996 is a general law governing the field of arbitration whereas the MSMED Act, 2006 governing a very specific nature of disputes concerning MSMEs, is a specific law and being a specific law would prevail over Arbitration and Conciliation Act, 1996. Background Facts The Petitioner had engaged the Respondent for providing certain IT services in a project awarded to the...