Dispute Settlement Mechanism Under MSME Act, 2006 and Micro and Small Enterprises Facilitation Council

Abstract

“Micro Small and Medium Enterprises Development Act,2006 has envisaged setting up of Micro and Small Enterprises Facilitation Councils in each of the States for settlement of the disputes of the MSEs so that the Suppliers recover their payments timely. The Councils are required to first conciliate between the parties and to adjudicate the dispute by arbitration if the conciliation fails. The Councils have been mandated to resolve the disputes within 90 days of the reference made and as such the Councils importance cannot be overemphasized. This dispute settlement mechanism is speedy and inexpensive. The award of the Council can be executed like a decree of the Civil Court. Therefore, there is a need to further strengthen these Councils by providing adequate infrastructure to deal with the reference made to them. The Councils should also be empowered to enforce the awards by themselves instead of relegating the Supplier to Civil Court. Presently, Medium Enterprises cannot make a reference to the Council for resolution of their disputes. The jurisdiction of the Councils, therefore, need to be expanded to include the disputes referred by the Medium Enterprises too. Therefore, the Councils can be said to be the heart of the Act as the mechanism devised helps the MSEs to recover their dues expeditiously.”