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The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.
Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.
By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.
Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?
  • a)
    The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.
  • b)
    The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.
  • c)
    The pleadings would be maintainable as the MSME Act is a special statute.
  • d)
    None of the above.
Correct answer is option 'D'. Can you explain this answer?
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The primary objective of the Micro Small and Medium Enterprises Devel...
The author, in the second paragraph of the passage has distinguished two different situations associated to the initiation of the arbitration proceedings and has made it clear on the basis of the judgment of the court that, in scenario where the Buyer invoked arbitration under the agreement before the proceedings under section 18 has been initiated by the supplier, then the MSME Act would not override the arbitration proceedings agreed upon by the parties in the agreement. This is because, had it been the case, the legislation would have made it clear as it has explicitly mentioned about the situation where the supplier initiates a proceeding under the Act.
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The primary objective of the Micro Small and Medium Enterprises Devel...
Understanding the Context
The dispute involves Porwal Sales (the Buyer) and Flame Control Industries (the Supplier) concerning the applicability of the MSME Act and the Arbitration Act. The Supplier contends that the court lacks jurisdiction to appoint an arbitrator due to the provisions in the MSME Act.
Key Points from the Case
- Special Statute: The MSME Act is indeed a special statute aimed at protecting the interests of micro, small, and medium enterprises.
- Section 18(4) Interpretation: The interpretation of Section 18(4) is crucial. It holds that the Council has jurisdiction in disputes only when a reference is made to it under Section 18(1). The use of "may" indicates that referring to the Council is not mandatory for the Buyer.
- Court's Jurisdiction: If no reference has been made to the Council, the court retains the jurisdiction to appoint an arbitrator based on the existing arbitration agreement between the parties.
- Circumventing MSME Provisions: By asserting the right to approach the court, Buyers can circumvent the provisions of the MSME Act, provided they have not invoked the Council's jurisdiction first.
Conclusion
Given these points, the pleading of Flame Control Industries (Supplier) would not be entertained because:
- The court's jurisdiction is not ousted by the MSME Act if no dispute has been referred to the Council.
- The Buyer is free to invoke arbitration under the agreement, making the Supplier's objection invalid.
Thus, the correct answer is option 'D': None of the above.
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The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Viru Sahastrabuddhi entered into an agreement with Ranchordas Chachand for supply of laboratory equipment. The agreement document had an arbitration clause stating that in a situation of dispute arising during the transaction, the parties would resort to arbitral proceedings before initiating an action in the court of law. The dispute arose between the parties regarding the untimely supply of the equipment and delayed payment made by Viru Sahastrabuddhi. Ranchordas filed a petition under the MSME Act stating that the facilitation council should adjudicate over the matter before proceeding to the arbitration. On the basis of reading of the passage, determine the maintainability of the pleadings made by Mr. Chachand.

The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Which of the following is true regarding the provision for dispute resolution under the MSME Act? 1. MSME facilitation council deals with the dispute involving suppliers 2. MSME facilitation council is the body which would be handling the arbitration for the parties in dispute 3. The supplier should mandatorily be located in India.

The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Which among the following is true regarding the author’s view with respect to the provision of dispute resolution under the MSME Act? 1. The author is supportive of the inclusion of a dispute resolution provision under the act. 2. The author feels that there exists loophole in the dispute resolution provision. 3. The author is of the opinion that the MSME Act could not ameliorate the competitiveness of the micro, small and medium enterprises.

The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Which among the following is consistent with the objective of the MSME Act?

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The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer?
Question Description
The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer? for CLAT 2024 is part of CLAT preparation. The Question and answers have been prepared according to the CLAT exam syllabus. Information about The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CLAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer?.
Solutions for The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CLAT. Download more important topics, notes, lectures and mock test series for CLAT Exam by signing up for free.
Here you can find the meaning of The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer?, a detailed solution for The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?a)The pleading is maintainable as the MSME Act has a special forum to deal with the dispute between the supplier and the buyer.b)The pleading would be maintainable provided the supplier is located within the jurisdiction of the facilitation council.c)The pleadings would be maintainable as the MSME Act is a special statute.d)None of the above.Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CLAT tests.
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