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

Nair Components, a small supplier in Kochi, makes a reference to the Micro and Small Enterprises Facilitation Council under Section 18 of the MSMED Act, 2006 for an unpaid amount from a Delhi buyer. The Council itself conducts conciliation. Which statement is correct?

Sections 65 to 81 of the Arbitration and Conciliation Act apply as if conciliation began under Part III, and the Council has jurisdiction because the supplier is within its area while the buyer may be anywhere in India, as Section 18(2) and 18(4) provide.

  1. ASections 65 to 81 of the Arbitration and Conciliation Act, 1996 apply as if the conciliation was initiated under Part III, and the Council has jurisdiction although the buyer is outside KeralaCorrect
  2. BThe Council cannot act because the buyer is located outside the supplier's State
  3. CThe Act's conciliation provisions do not apply, since the process is under the MSMED Act
  4. DThe Council must always refer the matter to a Civil Court if conciliation fails

Explanation

Section 18(2) applies Sections 65 to 81 of the 1996 Act as if conciliation was initiated under Part III. Section 18(4) gives the Council jurisdiction over a supplier within its jurisdiction and a buyer located anywhere in India. If conciliation fails, Section 18(3) has the Council itself arbitrate or refer to an institution, not a Civil Court.

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