Supreme Court

Silpi Industries and Ors. Vs. Kerala State Road Transport Corporation and Ors.

MANU/SC/0390/2021

29.06.2021

Arbitration

Limitation Act is applicable to arbitration proceedings initiated under Section 18(3) MSMED Act

Appeals are against impugned judgment by which the High Court, while referring to various provisions of the Arbitration and Conciliation Act, 1996 (1996 Act) and the provisions of the Limitation Act, 1963, has answered the issue of limitation and held that, Limitation Act, 1963 is applicable to the proceedings under the 1996 Act arising out of Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act).

The question for consideration before present Court are whether the provisions of Indian Limitation Act, 1963 is applicable to arbitration proceedings initiated under Section 18(3) of MSMED Act and Whether counter claim is maintainable in such arbitration proceedings.

A reading of Section 43 of 1996 Act itself makes it clear that the Limitation Act, 1963 shall apply to the arbitrations, as it applies to proceedings in court. When the settlement with regard to a dispute between the parties is not arrived at under Section 18 of the MSMED Act, necessarily, the Micro and Small Enterprises Facilitation Council shall take up the dispute for arbitration under Section 18(3) of the MSMED Act or it may refer to institution or centre to provide alternate dispute resolution services and provisions of Arbitration and Conciliation Act 1996 are made applicable as if there was an agreement between the parties under Sub-section (1) of Section 7 of the 1996 Act.

In view of the express provision applying the provisions of the Limitation Act, 1963 to arbitrations as per Section 43 of the 1996 Act, present Court is of the view that the High Court has rightly relied on the judgment in the case of Andhra Pradesh Power Coordination Committee vs. Lanco Kondapalli Power Ltd. and Ors. and held that, Limitation Act, 1963 is applicable to the arbitration proceedings under Section 18(3) of the MSMED Act.

Further, when there is a provision for filing counter-claim and set-off which is expressly inserted in Section 23 of the 1996 Act, there is no reason for curtailing the right of the Respondent for making counter-claim or set-off in proceedings before the Facilitation Council. The High Court has rightly allowed the application filed by the Respondent under Section 11(6) of the 1996 Act. Appeals dismissed.

Tags : Limitation Act Provisions Applicability

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