Section 18 MSME dispute mechanism overrides Section 8 arbitration reference before the Facilitation Council

Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 requires the Facilitation Council to attempt conciliation first and, if that fails, either arbitrate the dispute itself or refer it to an alternate dispute resolution institution. Because Section 24 gives the special scheme overriding effect, recourse to Section 8 of the Arbitration and Conciliation Act, 1996 is not available before the Council when it acts under Section 18. The Council's role is confined to the statutory options in Section 18(3), and the general arbitration procedure cannot displace that mechanism.

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Issues: (i) Whether the Micro and Small Enterprises Facilitation Council could entertain an application under Section 8 of the Arbitration and Conciliation Act, 1996 when the dispute was governed by Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006. (ii) Whether the statutory scheme under Section 18 of the 2006 Act, read with its overriding provision, excluded recourse to Section 8 before the Council.

Issue (i): Whether the Micro and Small Enterprises Facilitation Council could entertain an application under Section 8 of the Arbitration and Conciliation Act, 1996 when the dispute was governed by Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006.

Analysis: The statutory framework under Section 18 requires the Council first to undertake conciliation and, upon failure, to either itself take up the dispute for arbitration or refer it to an institution or centre providing alternate dispute resolution services. Once the Council assumes the role of arbitrator under the special statutory mechanism, Section 8 of the Arbitration and Conciliation Act, 1996, which operates before a judicial authority, does not govern proceedings before the Council in that capacity.

Conclusion: The Council had no jurisdiction to entertain the Section 8 application, and the challenge to its refusal failed.

Issue (ii): Whether the statutory scheme under Section 18 of the 2006 Act, read with its overriding provision, excluded recourse to Section 8 before the Council.

Analysis: Section 24 gives overriding effect to Sections 15 to 23 of the 2006 Act. The special enactment therefore prevails over inconsistent provisions of other laws. After unsuccessful conciliation, the Council is confined to the options expressly provided by Section 18(3), namely arbitration by the Council itself or reference to an alternate dispute resolution institution, and the matter cannot be diverted under Section 8 before the Council itself.

Conclusion: The special statutory scheme excluded the applicability of Section 8 before the Council.

Final Conclusion: The appeal failed because the special mechanism under the 2006 Act controlled the dispute and the Council was required to proceed only in the manner prescribed by Section 18.

Ratio Decidendi: Where a special statute vests the dispute in a statutory council for conciliation followed by arbitration under an overriding scheme, an application under Section 8 of the general arbitration law is not maintainable before that council when it acts as the arbitral forum.

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