Supreme Court's Verdict on Limitation Act and MSMED Arbitration

The Supreme Court ruled on Thursday that the Limitation Act applies to arbitration but not conciliation under the 2006 MSMED law. This decision ensures timely disputes resolution but allows time-barred claims in conciliation. The verdict partially overturns a Bombay High Court ruling on the Limitation Act's applicability.

In a significant judgment, the Supreme Court on Thursday declared that the Limitation Act applies to arbitration proceedings under the 2006 law for micro, small, and medium enterprises (MSMED), ensuring the timely resolution of disputes.

A bench of Justices P S Narasimha and Joymalya Bagchi further clarified that the Limitation Act from 1963 is not applicable to conciliation processes between parties under the MSMED Act.

This ruling emerged following appeals, including one by Sonali Power Equipments Pvt Ltd, partially overturning a 2023 Bombay High Court decision.

(With inputs from agencies.)