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

Sharma Textiles, a small supplier in Surat, supplied goods to a buyer in Chennai under a written contract. The buyer has not paid the amount due. Sharma Textiles wants to approach the Micro and Small Enterprises Facilitation Council located in Surat. The buyer objects that it is located outside the Council's jurisdiction. Under the MSMED Act, 2006, what is the position?

The Surat Council has jurisdiction. Under section 18(4) of the MSMED Act, 2006, the Council may act as arbitrator or conciliator in a dispute between a supplier located within its jurisdiction and a buyer located anywhere in India, so the buyer's location is irrelevant.

  1. AThe Surat Council has no jurisdiction because the buyer is located in Chennai
  2. BThe Surat Council has jurisdiction because the supplier is located within its jurisdiction, and the buyer may be located anywhere in IndiaCorrect
  3. COnly the Council in Chennai can act, because jurisdiction follows the buyer's location
  4. DOnly a civil court can hear the dispute, because the parties are in different States

Explanation

Section 18(4) gives the Council, or the centre providing ADR services, jurisdiction to act as arbitrator or conciliator in a dispute between a supplier located within its jurisdiction and a buyer located anywhere in India. Jurisdiction therefore follows the supplier's location, so the buyer's objection fails. The Chennai Council option wrongly uses the buyer's location.

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