MSMED Act Overrides Arbitration Act In MSME Cases; 75% Pre-Deposit To Challenge Award Mandatory: Madras HC

The Madras High Court has held that in arbitration under the Micro, Small and Medium Enterprises Development Act, 2006, while the procedure is governed by the Arbitration and Conciliation Act, 1996, key substantive provisions such as the mandatory 75% pre-deposit for challenging an award will prevail in case of conflict. The court clarified that only those provisions of the Arbitration Act apply which are not inconsistent with the MSMED Act. Justice Abdul Quddhose observed that "MSMED Act is a...

State Cannot Defer MSME Payments Once Work Is Completed; Funds Shortage No Defence: J&K&L High Court

The Jammu & Kashmir and Ladakh High Court has recently held that under the Micro, Small and Medium Enterprises framework, once execution of work is admitted, the State and its instrumentalities cannot defer their obligation to make payment on the plea of paucity of funds or administrative approval. A bench of Justice Wasim Sadiq Nargal observed, “Once the execution of work is admitted, the obligation to make payment stands crystallized and cannot be deferred on the plea of paucity of funds...

Article 226 Can Be Invoked Against Non Est MSME Award Violating Statutory Provisions: Bombay High Court

The Bombay High Court on 2 April, held that a writ petition under Article 226 is maintainable against an award passed by the Micro and Small Enterprises Facilitation Council when such award is non est in law and contrary to mandatory statutory provisions. Justice S.G. Chapalgaonkar observed that where an impugned award is passed in violation of the mandatory provisions of the MSMED Act, 2006 and the Arbitration and Conciliation Act, 1996, it cannot be treated as a valid arbitral award in the...

Madras High Court Rejects MSME's Interest Claim Under MSMED Act In Absence Of Contract

The Madras High Court has dismissed an MSME's claim for interest under the Micro, Small and Medium Enterprises Development Act, 2006, holding that such interest cannot be awarded where the claim arises as compensation under Section 70 of the Contract Act and not from a contractual debt Justice Senthilkumar Ramamoorthy, in a judgment delivered on April 01, 2026, held that, “In any event, the plaintiff cannot claim interest on compounded basis with monthly rests, whether by invoking Section 16 of...

Amounts Deposited Pursuant To Court Orders Remain Assets Of The Corporate Debtor: Bombay High Court

The Bombay High Court on 6 April held that amounts deposited in Court under judicial orders remain assets of the corporate debtor, even if they arise from encashment of a bank guarantee after the commencement of insolvency proceedings. A Division Bench of Justices Anil L. Pansare and Nivedita P. Mehta directed the release of the deposited amount to the Resolution Professional of Morarjee Textiles Ltd, rejecting the claim of D.C. Weaving Mills Pvt Ltd, which had sought withdrawal of the amount...

Calcutta High Court Sets Aside Denial Of Interest Subsidy To MSME Despite Grant Of Power Subsidy Under WBIS 2013

The Calcutta High Court has set aside the West Bengal government's decision denying interest subsidy to Hooghly Extrusions Ltd., an MSME holding that once a unit is found eligible under the West Bengal Incentive Scheme, 2013 and granted one component of benefit, denial of another on technical grounds defeats the scheme's object.Allowing the writ petition, Justice Rai Chattopadhyay quashed the State's order dated February 22, 2019 and directed authorities to disburse the interest subsidy within...

Supreme Court Refuses To Interfere With NTPC Plea Against MSME Award Over Failure To Make 75% Pre-Deposit

The Supreme Court on Wednesday dismissed a special leave petition filed by NTPC Ltd, a government-owned power generation company, refusing to interfere with a Madhya Pradesh High Court order that declined to entertain its challenge to an MSME Facilitation Council award for non-compliance with the statutory pre-deposit requirement. A bench of Justices J.K. Maheshwari and Atul S. Chandurkar said, “After hearing learned counsel for the petitioner, we see no reason and ground to interfere with the...

Conciliation Under MSMED Act Is Mandatory, Cannot Be Waived By Parties: Kerala High Court

The Kerala High Court on 27 February held that the statutory mandate of conciliation under Section 18(2) of the Micro, Small and Medium Enterprises Development Act, 2006 cannot be waived by a party to proceedings before the Micro and Small Enterprises Facilitation Council. A Division Bench of Justice Anil K Narendran and Justice Muralee Krishna S allowed a writ appeal filed by Malabar Social Service and Sanitation (MASSS) and set aside the judgment of the Single Judge which had quashed an award...

MSMEs Need Not Always Approach Facilitation Council; Arbitration Clause Enforceable: Karnataka High Court

The Karnataka High Court has recently held that enterprises are not required in every case to move the Facilitation Council under Chapter V of the Micro, Small and Medium Enterprises Development Act, 2006, which provides a mechanism for referring delayed payment disputes to the Council. Justice Suraj Govindaraj clarified that a contractual arbitration clause remains enforceable unless the statutory process under Section 18 is actually invoked. “It cannot be said, as an absolute proposition,...

New RBI Directions Raise Collateral-Free Loan Limit For MSEs From ₹10 To 20 Lakh

The Reserve Bank of India (RBI) recently doubled the collateral-free loan limit for Micro and Small Enterprises (MSEs) from Rs. 10 lakh to Rs. 20 lakh.This change was made through the Lending to Micro, Small & Medium Enterprises (MSME) Sector (Amendment) Directions, 2026, and the revised limit will take effect from 1 April 2026.The move aims to strengthen last-mile credit delivery to smaller businesses with limited assets. By raising the ceiling to Rs. 20 lakh, the RBI aims to ease access to...

MSME Revival Benefits Depend On Loan Limit, Not Outstanding Dues: Bombay High Court

The Bombay High Court recently held that eligibility for benefits under the Reserve Bank of India's framework for revival and rehabilitation of MSMEs depends on the sanctioned loan limit and not on the outstanding amount. The court, thus, cleared the way for Union Bank of India to continue insolvency proceedings against Vardhan Agro Processing Limited. A Division Bench of Justice Manish Pitale and Justice Shreeram V. Shirsat heard the case. While explaining the scope of the RBI framework, the...

Union Budget 2026-27 Proposes 'Corporate Mitras' To Support MSME Compliance

The Union Budget 2026–27 on Sunday proposed the creation of a cadre of trained paraprofessionals, referred to as “Corporate Mitras”, to support micro, small and medium enterprises in meeting compliance requirements.Presenting the Budget, Finance Minister Nirmala Sitharaman said, “The government will facilitate professional institutions such as the Institute of Chartered Accountants of India, Institute of Company Secretaries of India and Institute of Cost Accountants of India to design short-term...