To Register Or Not To Register? - MSMEs And Arbitration Act

On multiple occasions, the Supreme Court, followed by various High Courts, has emphasised upon registration being a prerequisite for availing benefits under the Micro, Small and Medium Enterprises Development Act, 2006 especially dispute resolution before the Facilitation Council. In Silpi Industries, the central issues before the Supreme Court were, the applicability of the Limitation Act, 1963 to arbitration proceedings initiated under the MSMED Act, 2006 and maintainability of counterclaims. The Supreme Court, applying the well established principles of statutory interpretation, especially, “later laws override earlier contrary ones” and “special laws override general laws” held that the provisions of the MSMED Act, 2006 prevail over the Arbitration Act, given that while Arbitration Act is the general law governing arbitration, the MSMED Act, 2006 is specifically tailored for MSMEs. The Supreme Court's insistence on mandatory registration underscores an inflexible, though arguably necessary, stance to prevent potential misuses or opportunistic invocation of protections under the MSMED Act, 2006 after disputes arise. NBCC - Settling the Unsettled In NBCC India, the Supreme Court pointed out that neither Silpi Industries or Mahakali Foods had addressed the core issue of whether prior registration was essential for invoking Section 18 of the MSMED Act, 2006.