As of late, the Central government vide Notification S.O. 2119(E), which came into power on July 1, gave another composite measure for characterizing MSMEs, which includes both 'investment in plant and apparatus' and 'turnover'. Likewise, huge changes have been presented in the registration method, with the mean to work with straightforwardness and to remove the undue advantage of the MSME mechanism.

In any case, because of specific ambiguities in the Act, a portion of these ventures can't profit from the advantages under the Act. As of late, the Indian courts have articulated various decisions to give lucidity to the Act and to ensure that the Act is executed in its actual sense. The following are some milestone decisions made by the Indian Courts-

Section 2(n)- Regardless of whether a Micro/Small Enterprise, which has not enrolled itself under Section 8, can be brought under the meaning of ‘Supplier' stated under Section 2(n)?

Uttar Haryana Bijli Vitran Nigam Ltd v. PM Electronics Ltd, 26th Feb, 2020

The Allahabad High Court maintained the judgment of the lower court, which had put confidence on a 2007 circular published by Government of India to hold that it isn't required for an enterprise to document the notice under Section 8. This circular stated that documenting of memorandum is optional and there is no limitation of 180 days for such recording.

GE T&D India Limited v. Reliable Engineering Projects and Marketing, 15th Feb, 2017

The Delhi High Court held that any enterprise which has not got registered as a supplier doesn't stop to be one, as the motivation behind registration under Section 8 is just to make it more straightforward for the MSMEs to infer the advantages of the Act. Further, it held that since the enterprise kept on providing supply to the purchaser after registration under Section 8, it would be qualified for availing profit under the advantages under the Act.

Section 18- Regardless of whether the dispute resolution system under Section 18 of the Act abrogates the arbitration agreement prevailing between the parties to the dispute

Principal Chief Engineer v. M/S Manibhai And Bros (Sleeper), 5th July, 2017

The Supreme Court maintained the Gujarat High Court's judgment made on the explanation of Section 18. The High Court held that since the Act is a unique regulation and has an abrogating impact, the parties regulated by it will undoubtedly follow the component given under Section 18 of the Act.

M/s Steel Authority of India and Anr. v. MSEFC, 27th August, 2010

The Court held that there is no irregularity between an arbitration attempted according to Section 18 and the one directed under the arbitration clause, as both are administered by the arrangements of Arbitration Act. Consequently, the non-obstante condition under Section 24 is not applicable as it just abrogates the things which are conflicting with Sections 15 to 23. Further, it was held despite the fact that Section 18 provides for an arbitration forum, it won't consider the arbitration agreement as ineffective.

Section 18- Whether the Facilitation Council can act both as a councellor and an arbitrator under Section 18?

Gujarat State Petronet Ltd v. MSEFC, 6th August, 2018

The Court held that by righteousness of sub-sec (2) and (3) of Section 18, Section 80 of the Arbitration Act, which bans a conciliator from going about as an arbitrator in a similar dispute, is applicable to the procedures started under Section 18. Based on a harmonious perusing of both these sections, the Court held that the Council can't go about as both and it might refer the dispute to any other institution which offers substitute dispute resolution services.

Reliance Communications Limited v. State of Bihar, 19th June, 2018

The Court held that there is no irregularity between Section 80 of the Arbitration Act and Section 18(3) and the superseding section is just applicable in the event that there occurs any irregularity. Likewise, considering fiction under Section 18(3) doesn't suggest that the parties to the dispute have concurred that a conciliator will likewise be equipped to go about as arbitrator. Subsequently, when the Council conducts conciliation, it is precluded to go about as an arbitrator in the same dispute being considered.

Section18(4)- Whether the Facilitation Council decides the seat/ venue for arbitration under Section 18(4)?Indian Oil Corporation Ltd. v. FEPL Engineering (P) Ltd.26th Sep,2019

The Court held that the Facilitation Council under Section 18(4), which is settled based on the supplier’s location, just decides on the venue but cannot decide the seat of arbitration. Subsequently, assuming that the parties have decided the seat of arbitration in their agreement then that will not be considered void by the virtue of section 18(4).

Whether the Limitation Act, 1963 is considered relevant to the cases made under the Act?

Delton Electricals v. Maharashtra State Electricity Distribution Company Limited, 31st August, 2017

The Court dismissed the dispute that by prudence of Section 43 read with Section 2(4) of the Arbitration Act, the Limitation Act isn't material to statutory arbitration. Thinking about that the limitation regulations have an advantageous aim, it held that an explanation which permits the Council to make a decision on time barred cases can't be taken by the Court. Further, it was held that such decisions ought to be kept aside on the ground of breaching public policy.

Section 19- Is this Section constitutionally valid?

The Managing Director, KSRTC v. Union of India, 1st Dec, 2009

The Court saw that the interpretation behind Section 19 is to benefit and help the micro and small enterprises and a regulation can't be challenged on the ground of such imbalances. Further, it was observed that under Section 19, since the purchasers and sellers are treated differently on valid grounds, the condition of pre-deposit is not breaching the constitutional provisions mentioned in Article 14.