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

Sunrise Packaging, a small supplier in Pune, supplied goods to Vardhan Retail Ltd, a buyer in Chennai. The payment is overdue, and Sunrise wants to approach the Micro and Small Enterprises Facilitation Council (MSEFC) at Pune. Vardhan objects that the Pune Council has no jurisdiction because the buyer is located in Tamil Nadu. Under the MSMED Act, 2006, what is the position?

The Pune Council has jurisdiction. Under the MSMED Act the Council can act as conciliator or arbitrator where the supplier is within its jurisdiction, and the buyer can be located anywhere in India. The buyer's location in Chennai or its objection does not defeat jurisdiction.

  1. AThe Pune Council lacks jurisdiction; only the Council in Chennai can act
  2. BThe Pune Council has jurisdiction because the supplier is located within its jurisdiction and the buyer may be located anywhere in IndiaCorrect
  3. CThe Pune Council has jurisdiction only if Vardhan consents in writing
  4. DOnly the civil court at Chennai can decide the dispute

Explanation

Section 18(4) gives the Council or the ADR centre jurisdiction to act as arbitrator or conciliator in a dispute between a supplier located within its jurisdiction and a buyer located anywhere in India. The Chennai-only option ignores this rule, and no consent is needed because the provision applies notwithstanding any other law.

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