Supreme Court: Limitation Act Doesn't Bar Conciliation Process Under MSMED Act

The Supreme Court has held that time-barred claims by MSME suppliers cannot be enforced through arbitration but may still be settled through conciliation under the MSMED Act.

The Court explained that while arbitration is adjudicatory and subject to the Limitation Act, conciliation is a voluntary process where limitation rules don’t apply.

The ruling came in a case where transformer supplier Sonali Power’s ₹2.7 crore claim was rejected by the Facilitation Council as time-barred.

The Court clarified that MSMEs can recover such dues through conciliation under Section 18(2) of the Act, despite limitation hurdles in arbitration.