MA Schedule 7 : Amendment to MSME Development Act, 2006

Explanation using Example

Example 1: Dispute Resolution for Unpaid Invoices

Introduction: ABC Manufacturing, a small enterprise based in Mumbai, supplied goods worth INR 5 lakh to XYZ Retailers, a large retail chain located in Delhi. Despite repeated reminders, XYZ Retailers has not paid the invoice, which is now overdue by 90 days.

Application: Under Section 18(1) of the Mediation Act, 2023, ABC Manufacturing can refer the dispute to the Micro and Small Enterprises Facilitation Council (MSEFC) for mediation regarding the unpaid amount. Upon receiving the reference, as per Section 18(2), the Council may conduct mediation itself or refer the matter to a mediation service provider.

Outcome: If the mediation is successful, both parties will reach a settlement, and XYZ Retailers will pay the due amount. However, if mediation fails, as per Section 18(4), the Council will either arbitrate the dispute itself or refer it to an alternative dispute resolution center for arbitration, applying the Arbitration and Conciliation Act, 1996.

Conclusion: By following this process, ABC Manufacturing can seek a resolution to the payment dispute, ensuring that the legal framework supports small enterprises in recovering dues efficiently.

Example 2: Cross-Jurisdictional Dispute

Introduction: DEF Textiles, a micro-enterprise in Chennai, supplied fabric to GHI Fashion House, a buyer located in Kolkata. GHI Fashion House disputes the quality of the fabric and refuses to pay the remaining INR 2 lakh.

Application: According to Section 18(5) of the Mediation Act, 2023, the MSEFC in Chennai has jurisdiction to mediate or arbitrate the dispute, despite the buyer being located in Kolkata. DEF Textiles can refer the dispute to the Council under Section 18(1), which will then initiate mediation as per Section 18(3).

Outcome: If mediation fails, the Council will proceed with arbitration as outlined in Section 18(4). The arbitration process will be governed by the Arbitration and Conciliation Act, 1996, ensuring a structured resolution process.

Conclusion: This provision allows micro and small enterprises to resolve disputes efficiently, even when the buyer is located in a different jurisdiction, ensuring access to justice and fair trade practices.

Example 3: Procedural Challenges in Mediation

Introduction: JKL Electronics, a small enterprise in Bengaluru, has a payment dispute with MNO Distributors in Hyderabad. JKL Electronics decides to refer the matter to the MSEFC for mediation.

Application: Under Section 18(1), JKL Electronics submits a reference to the MSEFC. However, due to procedural delays, the Council takes longer than expected to initiate mediation under Section 18(3).

Outcome: The delay in mediation could affect JKL Electronics' cash flow and business operations. If mediation is unsuccessful, the Council will move to arbitration as per Section 18(4), but the initial delay highlights the importance of timely procedural actions.

Conclusion: This scenario underscores the need for efficient procedural management by the MSEFC to prevent delays that could adversely impact small enterprises seeking dispute resolution.

Example 4: Special Circumstances in Mediation

Introduction: PQR Crafts, a micro-enterprise run by individuals with disabilities, faces a payment dispute with STU Traders, a buyer in Jaipur. PQR Crafts is located in a rural area with limited access to legal resources.

Application: Section 18(5) allows the MSEFC to act as a mediator or arbitrator, ensuring that PQR Crafts can access dispute resolution services despite their location and circumstances. The Council may provide accommodations, such as remote mediation sessions, to facilitate participation.

Outcome: By accommodating PQR Crafts' special circumstances, the Council ensures equitable access to mediation and arbitration services, promoting inclusivity in the legal process.

Conclusion: This example highlights the adaptability of the Mediation Act, 2023, in addressing the needs of enterprises with unique challenges, ensuring fair access to legal remedies.