Reference to Micro and small Enterprises Facilitation Council
Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 deals with reference to Micro and small Enterprises Facilitation Council. Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council. The Act came into force on 02 Oct 2006.
(1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council.
(2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of sections 65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if the conciliation was initiated under Part III of that Act.
(3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer ittoany institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section(1) of section 7 of that Act.
(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India.
(5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference.
Section 18, The Micro, Small and Medium Enterprises Development Act, 2006 (Act 27 of 2006).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
-
M.B. Sugars & Pharmaceuticals Pvt. Ltd. v. Micro Small Enterprises Facilitation Council, Nashik & Anr.
Court's Decision & Legal Precedent
Section 18 creates a statutory arbitration agreement between the MSME and its counterparty; MSEFC failure to initiate statutory mediation or appoint an arbitrator engages Arbitration Act s.11(6) jurisdiction for High Court appointment (Microvision and Vallabh followed). Disputed payment with dishonoured cheques fortifies direct appointment without further waiting on a silent Council.
On this section: Applies s.18’s deeming arbitration agreement and holds Council default is the institutional failure contemplated by s.11(6)(c).
-
Vallabh Corporation v. SMS India Pvt. Ltd.
Court's Decision & Legal Precedent
Amended MSMED s.18(2) directs the Facilitation Council to conduct mediation itself or refer to a mediation service provider under the Mediation Act, 2023, with conduct governed by that Act; where the Council neither mediates nor refers to such a provider, the statutory mediation-service-provider pathway fails and court appointment under Arbitration Act s.11(6) is available.
On this section: Applies s.18’s mandatory mediation-then-arbitration track and holds Council inaction unlocks High Court s.11(6) appointment while preserving MSMED benefits.
-
B. Shanthi v. Micro, Small Enterprises Facilitation Council, Madurai Region & Anr.
Court's Decision & Legal Precedent
The Facilitation Council must conduct conciliation/mediation under s.18(2) and, only upon recorded failure/termination of that process, take up or refer arbitration under s.18(3); an award passed without any record of mediation/conciliation and its termination is illegal and liable to be quashed with remittal for fresh consideration following the mandatory s.18 sequence (Jharkhand Urja; Super Steam Boilers).
On this section: Enforces s.18’s staged ADR: no skip from notice/adjournments straight to award without mediation termination.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 18
What have the courts held on Section 18 of the Micro, Small and Medium Enterprises Development Act?
M.B. Sugars & Pharmaceuticals Pvt. Ltd. v. Micro Small Enterprises Facilitation Council, Nashik & Anr. (18 Jun 2025) is the leading judgment on this section among those set out below: Applies s.18’s deeming arbitration agreement and holds Council default is the institutional failure contemplated by s.11(6)(c). Another 2 judgments on this section are set out below.
How do I find court cases under Section 18 of the Micro, Small and Medium Enterprises Development Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Micro, Small and Medium Enterprises Development Act 18, section 18 Micro, Small and Medium Enterprises Development Act, section 18 of the Micro, Small and Medium Enterprises Development Act. People searching for it also type section 18 of micro small and medium enterprises and section 18 1 of the micro small and medium enterprises development act 2006. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with M.B. Sugars & Pharmaceuticals Pvt. Ltd. v. Micro Small Enterprises Facilitation Council, Nashik & Anr. (18 Jun 2025).
What should I read with Section 18 of the Micro, Small and Medium Enterprises Development Act, and has it changed?
Its own text turns on Arbitration and Conciliation Act 65 (Submission of statements to conciliator), Arbitration and Conciliation Act 81 (Admissibility of evidence in other proceedings), section 17 (Recovery of amount due), so none of them can safely be read on its own.
When did Section 18 of the Micro, Small and Medium Enterprises Development Act come into force?
Section 18 of the Micro, Small and Medium Enterprises Development Act, cited as Micro, Small and Medium Enterprises Development Act 18, came into force on 02 Oct 2006, having been enacted on 16 Jun 2006. It is in force as at the date shown on this page.
Other sections of this Act
- 3. Establishment of Board885 words
- 7. Classification of enterprises763 words
- 2. Definitions619 words
- 8. Memorandum of micro, small and medium enterprises349 words
- 29. Power to make rules313 words
- 21. Composition of Micro and Small Enterprises Facilitation Council198 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.