S. 18(5) MSMED Act | Supreme Court To Examine Whether Time Limit For Deciding Reference By Facilitation Council Is Mandatory

The Supreme Court has agreed to examine the issue of whether the 90-day time limit prescribed under Section 18(5) of the MSMED Act for resolving disputes by the Micro and Small Enterprises Facilitation Council (“Council”) is mandatory or merely directory.

The bench comprising Justices Sanjay Kumar and SC Sharma issued a notice in a plea filed by one M/s Vast India Pvt. Ltd. challenging Bombay High Court's Division Bench's order which quashed the award passed by the Council in its favour stating that the award was passed beyond the statutory time limit of 90 days' making the Council 'functus officio'.

The dispute arose when the Respondent, Maharashtra State Public Service Commission, filed a counterclaim before the statutory Council constituted under the Micro, Small and Medium Enterprises Development Act, 2006, despite the fact that the 90-day period stipulated for completing conciliation proceedings had lapsed.

Challenging the arbitral award passed thereafter, the Respondent filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 before the Single Judge of the Bombay High Court, arguing that the award was rendered without jurisdiction. The Single Judge, however, dismissed the application, holding that the filing of the counterclaim by the Respondent had effectively extended the time limit for rendering the award.

Aggrieved by this decision, the Respondent preferred an appeal before the Division Bench, which allowed the appeal, set aside the award, and remitted the matter to the Council to determine in the first instance whether it retained jurisdiction to proceed beyond the statutory period.

Challenging the Division Bench's ruling, the Petitioner approached the Supreme Court.

Taking note of the important question of law involved, the Supreme Court issued notice returnable on Sep. 23, 2025, limited to the interpretation of Section 18(5) of the MSMED Act specifically, whether the time stipulation prescribed therein is to be construed as mandatory or directory in nature.

“The issue for consideration in this special leave petition is the interpretation of Section 18(5) of the Micro, Small and Medium Enterprises Development Act, 2006, and as to whether the time stipulation therein is to be considered directory or mandatory.”, the court said.

Cause Title: M/S. VAST INDIA PRIVATE LTD VERSUS MAHARASHTRA PUBLIC SERVICE COMMISSION

Click here to read/download the order

Appearance:

For Petitioner(s) Mr. Suresh Shole, Adv. Ms. Pushpa Shinde, Adv. Dr. Sushil Balwada, AOR Mr. Nandlal Kumar Mishra, Adv. Mr. Srilok Nath Rath, Adv.

For Respondent(s) Ms. Rohini Wagh, AOR Mr. Ashutosh Kulkarni, Adv. Mr. Amar Shankar, Adv. Ms. Savitri Pandey, Adv.