Skip to content

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

Ratan Textiles referred a delayed payment dispute to the Facilitation Council. Conciliation by the Council ended without any settlement between the parties. What does the MSMED Act, 2006 require the Council to do next?

If conciliation fails, the Council must either itself take up the dispute for arbitration 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.

  1. AClose the reference, leaving the supplier to file a civil suit
  2. BEither take up the dispute for arbitration itself or refer it to an ADR institution or centre for arbitrationCorrect
  3. CRefer the dispute to the High Court for decision
  4. DOrder the buyer to pay the amount claimed without further process

Explanation

Under Section 18(3), when conciliation is unsuccessful and terminates without settlement, the Council shall itself take up arbitration or refer it to an institution or centre providing ADR services. The Arbitration and Conciliation Act, 1996 then applies as if there were an arbitration agreement under its section 7(1). It is not closed and not sent to the High Court.

Did you get it right without looking?

One question tells you little. A timed set on Micro, Small and Medium Enterprises shows your real accuracy, how long you take and where you lose marks.

Practise Micro, Small and Medium EnterprisesFree diagnostic mock

More Micro, Small and Medium Enterprises questions