MSME FACILITATION COUNCIL AS A STATUTORY ARBITRATION TRIBUNAL:LEGAL AND PRACTICAL CHALLENGES

Micro, Small and Medium Enterprises (MSMEs) are among the most vital contributors to India’s
economy, yet they have long suffered the crippling effects of delayed payments from buyers. The
Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) responded to this crisis by
establishing the MSME Facilitation Council under Section 18—a statutory body empowered to resolve
payment disputes through conciliation and arbitration. While this was a landmark legislative step, the
Council’s functioning as a statutory arbitration tribunal has opened up a web of legal and practical
difficulties that continue to strain the system. This paper, divided into two chapters, examines the
statutory framework governing the Council and the substantive challenges that have emerged in its
operation. Drawing on judicial decisions, constitutional principles, and comparative international
experience, it argues for meaningful reform to make the Council a truly effective and fair dispute
resolution forum.
Keywords: MSME, Facilitation Council, Statutory Arbitration, MSMED Act 2006, Delayed Payments,
Dispute Resolution, Section 18, Pre-deposit, Jurisdictional Conflict, Natural Justice.