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Supreme Court Clarifies: Limitation Act Applies to MSMED Arbitration But Not Conciliation

13Aug

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Supreme Court

Supreme Court Clarifies: Limitation Act Applies to MSMED Arbitration But Not Conciliation

The Supreme Court ruled on the applicability of the Limitation Act, 1963, to conciliation and arbitration proceedings under Section 18 of the MSMED Act, 2006. It held that the Limitation Act does not apply to conciliation proceedings, allowing time-barred claims to be referred for settlement. However, the Act applies to arbitration proceedings under Section 18(3), as Section 43 of the Arbitration and Conciliation Act, 1996, incorporates the Limitation Act into such arbitrations. The Court emphasized that the MSMED Act’s provisions override general laws, ensuring a balanced approach to dispute resolution while protecting suppliers' rights. The disclosure of unpaid amounts in financial statements under Section 22 may extend limitation periods, subject to case-specific scrutiny. Facts Of The...

SARFAESI Act’s Section 11: Supreme Court Affirms Mandatory Arbitration for Financial Institutions

The Supreme Court, in Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd., ruled that Section 11 of the SARFAESI Act is mandatory, requiring inter-se disputes between banks and financial institutions concerning secured assets to be resolved through arbitration. No explicit arbitration agreement is needed; the provision legally mandates it, thereby divesting DRT of jurisdiction in such matters. Facts Of The Case: In the case of Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd. & Ors., the core dispute involved the priority of charge over secured assets (stocks of paddy and rice) belonging to a common borrower, M/s Sri Nangli Rice Mills Pvt. Ltd., between two public sector banks: Bank of India (appellant) and Punjab National Bank (respondent). Both banks had extended credit facil...

Cheque Bounce Case: Supreme Court Reinstates Case Against Director in ₹6 Crore Cheque Dishonour Case

The Supreme Court clarified that for vicarious liability under Section 141 of the Negotiable Instruments Act, complaints need not reproduce statutory language verbatim. Substantive allegations demonstrating a director's responsibility for company affairs suffice. The Court emphasized substance over form, ruling that technical pleading deficiencies don't invalidate proceedings if the complaint, read holistically, establishes the director's operational role. The judgment reinstated criminal proceedings against the director, overturning the High Court's quashing order. Facts Of The Case: The case involved a complaint filed by HDFC Bank against M/s R Square Shri Sai Baba Abhikaran Pvt. Ltd. and its directors, including Mrs. Ranjana Sharma (Respondent No. 2), for dishonor of a cheque worth ₹6...