Delhi High Court Orders Deutsche Bank To Refund Rs 3.45 Crore To MSME Exporter

The Delhi High Court has ordered Deutsche Bank to refund Rs 3.45 crore to an MSME exporter, M D Overseas Private Limited. The court held that the bank wrongly recovered interest subvention benefits that had already been given upfront under the Interest Equalization Scheme. A single-judge bench of Justice Amit Bansal said the bank's move defeated the purpose of the scheme. The scheme, the court noted, was meant to "enhance the global competitiveness of Indian exports by lowering the cost of...

Pendency Of Conciliation Proceedings Under MSME Act Does Not Bar Interim Relief U/S 9 Of A&C Act To Preserve Subject Matter: Calcutta HC

The Calcutta High Court has held that pendency of conciliation proceedings does not bar the grant of limited interim relief under section 9 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act"), where such relief is essential to preserve the subject matter of the dispute. Justice Gaurang Kanth held while allowing a Section 9 application filed by Rishi Chemical Works Pvt. Ltd. (“Petitioner”), appointing a Special Officer to inspect, measure, and document the existing status...

Writ Petition Filed To Bypass Pre-Deposit Requirement Under MSMED Act Is Not Maintainable: Calcutta High Court

The Calcutta High Court dismissed a petition filed under Article 227 of the Constitution challenging an award passed by the West Bengal Micro & Small Enterprises Facilitation Council (MSEFC), holding that the petition was not maintainable and was filed to evade pre-deposit requirement under section 19 of the MSMED Act, 2006. Justice Hiranmay Bhattacharyya held that the Facilitation Council had jurisdiction to entertain the reference under section 18 and the buyer (Kommoners Club...

Banks Cannot Penalise Borrowers For Switching Lenders, Prepaying Loans: Orissa High Court

The Orissa High Court recently held that banks cannot impose charges that restrict a borrower's freedom to switch lenders, ruling that such practices undermine fair banking standards and violate binding directions of the Reserve Bank of India. A bench of Justice Sanjeeb K Panigrahi said banks must operate within regulatory limits set by the RBI and cannot create barriers that penalize borrowers for exercising their right to repay or refinance loans. The bank cannot "cannot convert a...

Proceedings For Conciliation & Arbitration Under MSME Act Cannot Be Clubbed: Bombay High Court

The Bombay High Court has set set aside two ex-parte orders passed by the Micro and Small Enterprises Facilitation Council (MSEFC), Daman holding that the council acted in breach of mandatory two stage procedures under the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”). The court remitted the matter for fresh arbitration in accordance with law. A bench led by Justice N.J. Jamadar held that “If the appellant had not submitted its reply at the conciliation...

Bar Against Even Number Of Arbitrators Is Not Attracted In Case Of Statutory Arbitration U/S 18(3) Of MSMED Act: Calcutta HC

A division bench of Calcutta High Court comprising Justices Uday Kumar and Sabyasachi Bhattacharya in a notable judgment has observed that the bar restricting the number of arbitrators to even numbers, which is applicable when the parties themselves appoint arbitrators under the Arbitration and Conciliation Act (“ACA”), is not attracted to a statutory arbitration under Section 18(3), Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”). Thus, even if the number of...

Benefits To Registered Retail Traders Under MSMED Act Limited To Priority Sector Lending, Not Eligible For QCO Exemption: Kerala High Court

The Kerala High Court held that the benefits to registered retail traders under MSMED Act, 2006 (Micro, Small and Medium Enterprises Development Act, 2006) limited to priority sector lending only, and are not eligible for QCO [Plywood and Wooden flush door shutters (Quality Control) Order, 2024] exemption. Justice Ziyad Rahman A.A. stated that “the entire category of wholesale and retail trades were excluded completely from the purview of MSMED Act and later, they were re-included...

MSME Council's Order Declaring Jurisdiction To Decide Dispute Between Parties Can Be Challenged Only U/S 34 Of A&C Act: Orissa High Court

The Orissa High Court bench of Justice K.R. Mohapatra has held that once the MSME Council initiates arbitration following the termination of conciliation proceedings, any order passed by the Council regarding its jurisdiction to adjudicate the dispute can only be challenged under Section 34 of the Arbitration and Conciliation Act. The aggrieved party cannot invoke Article 227 of the Constitution to seek setting aside of an award passed under the MSMED Act. Brief Facts: M/s Odisha...

Once Arbitration Commences After Failure Of Conciliation Under MSME Act, It Cannot Be Reinitiated By Halting Arbitration: Calcutta High Court

The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that once arbitral proceedings commenced under Section 18(3) under the MSME Act, the process could not be reversed to reinitiate pre-arbitral conciliation. The Council did not do so either. It was only at the petitioner's request that additional avenues for mutual settlement were explored alongside the arbitration. Upon the failure of these efforts, the Council proceeded to decide the matter on merits. Brief...

Whether A Particular Contract Is A Works Contract Under MSME Can't Be Decided Under Writ Jurisdiction: Telangana High Court

The Telangana High Court bench of Justice K. Lakshman has held that the question of whether a particular contract is a works contract or not is for the MSME Council to decide, and the dispute cannot be decided under writ jurisdiction. Brief Facts: This writ petition challenges the order dated 21.12.2024 in Case No. 1292/MSEFC/2021 passed by Respondent No. 2, seeking a declaration that the order is non-arbitrable and illegal. The petitioner prays for a direction to Respondent No. 2 to...

Interim Measures U/S 9 Of Arbitration Can't Be Sought By MSME During Conciliation Proceedings: Calcutta High Court

The Calcutta High Court bench of Justice Shampa Sarkar has held that interim measures under Section 9 of the Arbitration Act can be sought by the MSME only after mandatory conciliation before the MSME Council fails and the dispute proceeds to arbitration—either conducted by the Council or referred to an arbitral institution. Only then do the provisions of the Arbitration Act apply. Consequently, seeking relief under the Arbitration Act during conciliation is clearly prohibited under...

Mandate Of MSME Council Not Automatically Terminated For Failure To Refer Dispute To Arbitration Within 90 Days: Delhi High Court

The Delhi High Court bench of Justice Manoj Kumar Ohri has held that the mandate of the MSME Facilitation Council to refer a dispute to arbitration under Section 18(3) of the Micro, Small and Medium Enterprises Development (MSMED) Act, following the failure of conciliation under Section 18(2), is not automatically terminated if the referral is not made within 90 days as prescribed under Section 18(5). Unlike Section 29A of the Arbitration and Conciliation Act, 1996 (Arbitration Act)...