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CS Professional · Arbitration, Mediation and Conciliation · Introduction to Conciliation and its Importance for MSMEs

A micro enterprise, Mehta Fasteners, located in Pune, makes a reference to the Micro and Small Enterprises Facilitation Council about unpaid dues from a buyer in Chennai. The Council conducts conciliation, which ends without settlement. Which statement is correct under the MSMED Act, 2006?

The Council may itself take up arbitration or refer the dispute to an ADR institution or centre, and the 1996 Act applies as if there were an arbitration agreement under section 7(1). Jurisdiction exists because the supplier is local and the buyer may be anywhere in India.

  1. AThe Council lacks jurisdiction because the buyer is outside its area
  2. BThe Council may itself take up arbitration or refer the dispute to an ADR institution or centre, and the 1996 Act then applies as if under an arbitration agreement under section 7(1)Correct
  3. CThe dispute must now go to a civil court, as conciliation failed
  4. DThe Council may arbitrate only if the buyer gives fresh written consent

Explanation

Section 18(4) gives the Council jurisdiction where the supplier is within its jurisdiction and the buyer is located anywhere in India. Under section 18(3), on unsuccessful conciliation the Council may itself arbitrate or refer to an ADR institution, with the 1996 Act applying as if under a section 7(1) arbitration agreement. No fresh consent is needed.

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