MSME Council Directed to Conclude Arbitration Proceedings Fast-Tracked Under Statutory Timeframes of Section 18(5)

The petitioner, a recognized small enterprise, filed a complaint before the MSE Facilitation Council (Respondent No. 2) against Respondent No. 3 for non-payment of bills

Conciliation failed on August 10, 2021, leading to the commencement of arbitration proceedings under Section 18(3) of the MSMED Act

Despite the petitioner filing a statement of claim and issues being framed, the proceedings remained pending at the evidence stage for approximately four years

The petitioner approached the High Court seeking a writ of mandamus to either transfer the case to the Gujarat Chamber of Commerce and Industry or direct Respondent No. 2 to conclude the arbitration within the statutory timeframe

Whether the respondent authorities are obligated to conclude the arbitration proceedings within the statutory period prescribed under Section 18(5) of the MSMED Act.

Section 18(3) mandates that where conciliation is unsuccessful, the Council shall either take up the dispute for arbitration or refer it to an institution

Section 18(5) expressly requires that every reference made under this section shall be decided within a period of ninety days from the date of making such reference

The court also exercised its discretionary jurisdiction under Article 226 of the Constitution of India to ensure the timely fulfillment of statutory duties

The court observed that while the arbitration proceedings were initiated following the failure of conciliation in 2021, the matter had remained stagnant at the stage of leading evidence for four years

The court noted the petitioner's grievance regarding the delay, which far exceeded the 90-day mandate stipulated in Section 18(5) of the Act, as well as the timelines generally expected under the Arbitration and Conciliation Act

The Bench reasoned that in the interest of justice and to uphold the legislative intent of the MSMED Act—which aims for the speedy resolution of recovery disputes for small enterprises—it was necessary to issue a time-bound direction to the Facilitation Council to complete the adjudication

The court ordered that the proceedings be conducted in accordance with the law after providing a proper opportunity to the parties and noted the expectation that all parties cooperate and refrain from seeking undue adjournments. Rule was made absolute to this extent.