MSME Act Doesn't Bar Independent Arbitration Under Arbitration And Conciliation Act Based On Agreement Clause: Calcutta High Court

The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that Section 18 of the MSME Act does not create any substantive rights or liabilities but simply offers an alternative method for resolving disputes outside of court proceedings. The bench held that if a party involved in a dispute chooses to pursue arbitration independently under the Arbitration and Conciliation Act, 1996, based on an arbitration clause in the agreement between the parties, the MSME Act does...

MSMED Act Prevail Over Arbitration Act, Seller Can Approach Facilitation Council Even In Presence Of Arbitration Act: Telangana High Court

The Telangana High Court bench of Justice B. Vijaysen Reddy held that the provisions of the MSMED Act, 2006 will prevail over the Arbitration and Conciliation Act, 1996. The bench held that even if parties have an arbitration agreement, if the seller falls under the purview of the MSMED, it has the right to seek resolution through the designated authority for its claims. Brief Facts: The Applicant, engaged in electricity production in Gurha, Bikaner, Rajasthan, sought to purchase...

Court Must Assign Reasons When Releasing Amount Under Section 19 of MSME Act: Telangana High Court

The Telangana High Court bench of Chief Justice Alok Aradhe and Justice Anil Kumar Jukanti has held that the court while dealing with a prayer under Section 19 Micro, Small and Medium Enterprises Development Act, 2006 to release the amount has to assign reasons for releasing such percentage of the amount. Section 19 of the MSME Act provides that the court may permit the release of a portion of the deposited amount to the supplier pending the decision on the application to set aside...

Madras High Court: MSME Corporate Debtor Can't Misuse Clean Slate Theory To Withhold Information When Its Management Had A Duty To Disclose

The Madras High Court bench of Justice N. Seshasayee held that an MSME Corporate Debtor cannot exploit the Clean Slate Theory by withholding information, especially when its management, which remained in control, had a duty to disclose such information. Background Facts: National Sewing Thread Co. Ltd. (Petitioner), a public limited company registered under the MSME Act, 2006, had obtained financial assistance from the Indian Overseas Bank ('IOB'). Due to substantial business...

Allahabad High Court Dismisses Writ Petition Against Facilitation Council Award For Lack Of Mandatory Pre-Deposit U/S 19 MSME Act

The Allahabad High Court has dismissed a writ petition challenging the award passed by the Zonal Micro and Small Enterprises, Facilitation Council (MSEFC), Meerut Zone, Meerut under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 as the petitioners, Tamil Nadu Generation And Distribution Corporation Limited and others, had refused to make the mandatory pre-deposit under Section 19 of the MSME Act.The Court held that even though principles of natural justice have been...

Proper Recourse Against Arbitral Proceeding Under MSMED Act Is Application u/s 18(3) Of MSMED Act Or u/s 16 Of Arbitration Act: Delhi High Court

The Delhi High Court division bench of Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora held that the proper recourse against proceedings under the MSMED Act is to file an application under Section 18(3) of the MSMED Act or Section 16 of the Arbitration Act. Further, the bench held that in case an award has been passed, then the proper recourse is to file objections under Section 34 of the Arbitration Act. Section 18(3) of MSMED Act: “(3) Where the...

Court Under Section 19 Of MSMED Act, 2006 Empowered To Allow Predeposit In Installments: Allahabad High Court

The Allahabad High Court division bench of Chief Justice Arun Bhansali and Justice Jaspreet Singh held that expression “in the manner directed by such court” in Section 19 of the Micro, Small And Medium Enterprises Development Act, 2006 gives the discretion to the court to allow the predeposit to be made, if felt necessary, in installments also. Section 19 of the MSME Act: “Application for setting aside decree, award or order.— No application for setting aside any decree, award or...

Award By MSEF Council Cannot Be Challenged In Writ, Remedy Under Section 34 Of A&C Act Must Be Availed: Gujarat High Court

The bench of Justice Vaibhavi D. Nanavati of Gujarat High Court has held that an award passed by MSEF Council under Section 18 of the MSMED Act cannot be directly challenged in a writ petition and the aggrieved party has to challenge it under Section 34 of the A&C Act. The Court relied upon the judgment of the Supreme Court in India Glycols Ltd., Vs. Micro and Small Enterprises Facilitation Council 2023 LiveLaw (SC) 992 wherein the Apex Court held that a writ against an award by...

Jurisdiction Of MSEF Council Wrongly Invoked, Time Spent Therein Excluded From Limitation: Delhi High Court

The High Court of Delhi has held that when the jurisdiction of the MSEF Council is wrongly invoked due to uncertainty in law, the time spent before the Council would not be counted while calculating limitation. The bench of Justice Pratibha M. Singh held that benefit of Section 14 of Limitation Act, which exempts the bond fide time spent before the wrong forum, would be given in such a situation. Facts The parties entered into an agreement dated 14.10.2011 for execution of work...

Notice Of Dispute To MSEF Council Under Section 18 Of MSMED Act Can Be Considered As Notice Of Arbitration Under Section 21 Of The A&C Act: Delhi High Court

The High Court of Delhi has held that a notice given by a party invoking jurisdiction of MSEF Council under Section 18 of the MSMED Act can be considered to be a notice of arbitration required under Section 21 of the A&C Act. The bench of Justice Pratibha M. Singh held that prior to the judgment of the Supreme Court in Gujarat State Civil Supplies Corporation and M/S Silpi Industries, the position of law with respect to an entity not registered under the MSMED Act at the time of...

MSMED Act | Imposition Of Three Times Bank Interest By MSME Facilitation Council Is Violation Of Principles Of Reasonableness And Fairness: Madras High Court

The Madras High Court single bench of Justice R. N. Manjula held that the imposition of three times of the bank rate of interest on the award amount by the Micro Small and Medium Enterprises, Facilitation Council is violation of fundamental principles of reasonableness and fairness. It held that the Petitioner is indirectly deprived of his appeal remedy in view of such high rate of interest. Brief Facts: The Petitioner had a dispute with M/s Unicon Engineers (“Second respondent”),...

MSMED Act | Service Supplier Registered During Ongoing Contract Can Avail Benefits For Services Provided After Registration: Delhi High Court

The Delhi High Court single bench of Justice Subramonium Prasad held that a service supplier, upon registering during an ongoing contract, is eligible to avail benefits under the MSMED Act for services provided after registration. It held that it is always open to the arbitrator to decide this issue even as a preliminary issue. Brief Facts: A Notice Inviting Tender (NIT) was released by the Petitioner for the construction of a 200 bedded hospital in Ambedkar Nagar, New Delhi....