Sections 17 and 18 of MSMED Act 2006 – Principles of Limitation are applicable to the claims for “amount due” and if Claims are stale / dead, they cannot be entertained – Full Bench Judgment of the Bombay High Court
Sections 17 and 18 of MSEMD Act 2006 – If Limitation Act 1963 is applicable to the claims and if Claims are barred by limitation cannot be entertained – Full Bench Judgment of the Bombay High Court
On a reference on the difference of opinion between two Benches, the matter was referred to the Full Bench.
Section 18(1) of the Micro, Small and Medium Enterprises Development Act, 2006, provides for a party to make reference for “amount due” under Section 17 to the Micro and Small Enterprises Facilitation Council.
The right to claim “amount due” by a supplier from a buyer as contemplated by Sections 15 to 17 is not a right, much less special right, created by the Act of 2006. There are other remedies available to a supplier to claim such amount due from the buyer.
Act of 2006 provides for a platform and mechanism by fixing time frame for payment of amount due, speedy recovery and charging compound interest.
Thus, the legal claims and specifically claims for unpaid money would be claims to be raised and filed within a reasonable time period. Though the Limitation Act would not apply to conciliation proceedings under Section 18(2) of the Act, the Council, however, cannot entertain a stale or dead claim at the behest of the supplier. Claim under Section 18 is a claim for money, the principles of Limitation Act governing money claims would be the criteria for determining whether the claim is a stale / dead claim. It is obligatory on Council to examine claim and to find out if it is a stale/ dead claim and if it is so, to decline to entertain the claim.
Judgment dated 20.10.2023 of 106 pages in Commercial Appeal No.1 of 2018 (Nagpur Bench) of M/s. Sonali Power Equipment Vs. Chairman, Maharashtra State Electricity Board, Mumbai & Ors with connected matters.
