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

Rao Fasteners, a small enterprise supplier, makes a reference to the MSE Facilitation Council for an unpaid amount due under section 17 of the MSMED Act. The Council receives the reference. Which course is permitted by Section 18(2)?

On receiving a reference, the Council must either conduct conciliation itself or refer the dispute to an ADR institution or centre for conciliation. Arbitration is not the first step; it arises only if conciliation fails and terminates without settlement.

  1. AThe Council must straight away appoint a sole arbitrator without any conciliation
  2. BThe Council must refuse the reference unless the buyer also files one
  3. CThe Council may conduct conciliation itself or refer the matter to an ADR institution or centre for conducting conciliationCorrect
  4. DThe Council must transfer the dispute to the civil court having jurisdiction

Explanation

On receipt of a reference, Section 18(2) says the Council shall either itself conduct conciliation or seek the assistance of an ADR institution or centre by making a reference for conciliation. Arbitration comes only under Section 18(3), after conciliation fails. A one-sided reference is valid because 'any party' may refer.

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