Sonali Power Equipments Pvt. Ltd Vs Chairman Maharashtra State Electricity Board (Supreme Court of India)
Supreme Court of India, in the case of Sonali Power Equipments Pvt. Ltd. Vs Chairman Maharashtra State Electricity Board, has delivered a significant judgment clarifying the applicability of the Limitation Act, 1963, to dispute resolution mechanisms under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The Court ruled that while the Limitation Act applies to arbitration proceedings, it does not extend to the mandatory conciliation process, thereby allowing suppliers to seek settlement for claims that are otherwise barred by time.
The judgment addressed two critical legal questions: whether time-barred claims could be referred to conciliation under Section 18(2) of the MSMED Act, and subsequently, whether such claims could proceed to arbitration under Section 18(3).
Conciliation Not Barred by Limitation
The Court first examined the nature of conciliation. Drawing from precedents like State of Punjab v. Jalour Singh and Afcons Infrastructure Ltd. & Anr. v. Cherian Varkey Construction Co. (P) Ltd. & Ors., it reiterated that conciliation is a non-adjudicatory and non-coercive process. Its success hinges entirely on the voluntary agreement of the parties to reach a settlement, with the conciliator’s role being purely facilitative.
