Limitation law would apply on arbitration proceedings under MSMED Act: SC
The law on limitation sets time limits for initiating legal cases and intends to ensure timely resolution of disputes and prevent old claims.
'We have upheld the decision of the High Court to the extent of the Limitation Act being applicable to arbitration proceedings under the MSMED Act…,"a bench comprising justices P S Narasimha and Joymalya Bagchi said.
It, however, held that the Limitation Act, 1963 will not apply to conciliation proceedings between parties under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
The bench further held 'there is no legal bar in the Limitation Act, the MSMED Act…, or the legal precedents laid down by this court that proscribes conciliation with respect to time-barred debts." Justice Narasimha penning the 51-page verdict for the bench said, 'The Limitation Act does not apply to conciliation proceedings under Section 18(2) of the MSMED Act. A time-barred claim can be referred to conciliation as the expiry of the limitation period does not extinguish the right to recover the amount, including through a settlement agreement that can be arrived at through the conciliatory process." The verdict came on pleas including the one filed by M/s Sonali Power Equipments Pvt Ltd.
The bench partly allowed the appeals and set aside a 2023 decision of the Bombay High Court to the extent it held that the Limitation Act applies to both conciliation and arbitration proceedings under the MSMED Act. PTI SJK SJK AMK AMK
First Published:
July 17, 2025, 19:30 IST
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