Calcutta High Court: MSME Council Can’t Reject Claims Without Hearing Both Parties After Failed Mediation

The Calcutta High Court held that once mediation under Section 18 of the MSME Act, 2006 fails, the MSME Facilitation Council must either adjudicate the dispute or refer it to arbitration.

It cannot dismiss claims without valid reasons or without giving both parties an opportunity to present evidence.

In this case, the Council rejected a supplier’s claim for the final 10% payment due to the absence of a job satisfaction certificate without conducting a full hearing.

The Court, citing precedents including Bharat Coking Coal Ltd. and PSA Sical Terminals, set aside the order under Section 34 of the Arbitration Act.