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CS Executive · Setting Up of Business, Industrial and Labour Laws · Micro, Small and Medium Enterprises

A micro enterprise makes a reference to the Micro and Small Enterprises Facilitation Council over an unpaid amount. Conciliation under the Council fails and stands terminated without settlement. What does the MSMED Act, 2006 require next?

The Council must itself arbitrate the dispute or refer it to an institution or centre providing alternate dispute resolution services for arbitration. The Arbitration and Conciliation Act, 1996 then applies as if there were an arbitration agreement. The matter does not go to a civil court.

  1. AThe Council must itself take up the dispute for arbitration or refer it to an alternate dispute resolution institution for arbitrationCorrect
  2. BThe dispute must be sent to the civil court for trial
  3. CThe reference lapses and the supplier must file a fresh reference
  4. DThe State Government must appoint a new conciliator

Explanation

Section 18(3) says that where conciliation is unsuccessful and terminates without settlement, the Council either takes up arbitration itself or refers it to an institution or centre providing ADR services for arbitration. The Arbitration and Conciliation Act, 1996 then applies. There is no provision for sending the matter to a civil court.

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