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

Meera Engineering, a small supplier, referred an unpaid-dues dispute against Bharat Components Ltd to the MSE Facilitation Council under section 18 of the MSMED Act. How must the Council proceed on receiving the reference?

The Council must first take up conciliation, either itself or through an ADR institution or centre. Sections 65 to 81 of the Arbitration and Conciliation Act, 1996 apply as if the conciliation were under Part III. Arbitration follows only if conciliation is unsuccessful.

  1. AIt must straight away conduct arbitration without conciliation
  2. BIt must either conduct conciliation itself or refer the matter to an ADR institution or centre for conciliation, applying sections 65 to 81 of the Arbitration and Conciliation Act, 1996Correct
  3. CIt must refer the parties to a civil court
  4. DIt must wait for the buyer to file a counter-reference before acting

Explanation

Section 18(2) requires the Council either to conduct conciliation itself or to seek assistance of an ADR institution or centre for conciliation, with sections 65 to 81 of the 1996 Act applying as if conciliation were under Part III. Arbitration comes only if conciliation fails under section 18(3).

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