Supreme Court refers question of whether MSME registration must predate arbitration under Section 18 to a three-judge bench.
The Supreme Court has referred to a three-judge bench the legal question of whether Micro, Small and Medium Enterprises (MSMEs) must be registered under the MSME Development Act, 2006 prior to the initiation of arbitration proceedings under Section 18 of the Act.
The issue arises from conflicting interpretations on whether post-initiation registration suffices to invoke mandatory conciliation and special priority in arbitration. The referral underscores the ambiguity in statutory interpretation affecting procedural rights and timelines in commercial disputes.
The Court observed that a consistent interpretation is vital for preserving the legislative intent of protecting smaller enterprises.
For practitioners, this highlights the need to ensure timely MSME registration before initiating dispute resolution. Final resolution by a larger bench may redefine eligibility for procedural benefits under the MSME Act.
Citations
- MSME Development Act, 2006, Section 18
