Works Contracts - Unravelling The Interplay Between MSME And Arbitration Acts

INTRODUCTION

The implementation of the Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED") Act aimed to provide assistance and protection to Micro, Small, and Medium Enterprises ("MSMEs") by addressing issues related to their growth and payments. The establishment of the Micro and Small Enterprises Facilitation Council ("MSEFC") was intended to ensure fairness and safeguard the interests of MSMEs. However, challenges arise in applying the MSEFC framework to Works Contracts, as such contracts do not conform to the Act's typical definition of an enterprise involving goods or services production. Consequently, uncertainty surrounds the applicability of the Act and the jurisdiction of Facilitation Councils in Works Contracts. This article seeks to clarify the interaction and constraints of the MSMES Act and Arbitration and Conciliation Act, 1996 ("Arbitration") Act in the context of Works Contracts. It aims to provide valuable insights to SMEs,