Bombay High Court Affirms MSE Facilitation Council's Authority Over Jurisdictional Disputes

New Delhi, Jul 22 (KNN) In a significant ruling, the Bombay High Court has clarified that the Micro and Small Enterprises (MSE) Facilitation Council has the authority to determine its jurisdiction over disputes under the Micro, Small Medium Enterprises Development (MSMED) Act, 2006.

Justice Bharat P. Deshpande, presiding over the Single Judge Bench, emphasised that the Council is duty-bound to give its verdict on jurisdictional challenges. The Court noted, "The power of the Facilitation Council clearly runs under the provisions of Section 18 of the said act."

Explaining the process, the Court stated that the MSMED Act outlines a procedure where both parties are called before the Council for conciliation. It distinguished between conciliation, which requires mutual consent, and arbitration, which involves adjudication by an appointed arbitrator.

The Court observed that the Council must "at least prima facie give its verdict about the jurisdiction even to refer the matter to Arbitrator, so that the aggrieved party could take proper recourse."

In its ruling, the High Court set aside the Notice issued by the Nodal Officer, directing them to determine whether the Council has jurisdiction to entertain conciliation proceedings and subsequently, whether it has the power to refer the dispute to arbitration.

This decision underscores the importance of procedural clarity in resolving disputes under the MSMED Act and reinforces the Council's responsibility to address jurisdictional questions before proceeding with dispute resolution mechanisms.

The judgment came in response to a petition challenging a notice issued by the Nodal Officer for the MSE Facilitation Council. The notice, dated January 4, 2024, stated that as conciliation between the parties was not possible, the Council would refer the matter to arbitration under Section 18(3) of the MSMED Act.

The case arose when the petitioner, M/S Bharat Kolkata Container Terminals Pvt. Ltd., objected to the Council's jurisdiction. They argued that the respondent was not registered under the MSMED Act at the time of the contract, thus questioning the Council's authority to entertain conciliation proceedings or refer the matter to arbitration.

(KNN Bureau)