The Limitation Act, 1963 is not applicable to conciliation proceedings under the MSMED Act; however, it applies to arbitration proceedings, preventing stale claims from being raised under the Act.

ORDER :

Avinash G. Gharote, J. - Heard Mr. S.P. Dhole, learned counsel for the appellants in all appeals except Appeal No.5/2018, Mr. M.P. Khajanchi, learned counsel for the appellant in Appeal No.5/2018 and Mr. S.V. Purohit, learned counsel for the respondents in all appeals.

2. This is a reference made by the Hon'ble the Chief Justice on the request of the learned Division Bench (B. P. Dharmadhikari & Z. A. Haq, JJ.) in Commercial Appeal No.1/2018 [M/s. Sonali Power Equipment through its Managing Director v. Chairman, Maharashtra State Electricity Board, Mumbai and others and other connected matters] by the judgment dated 24/08/2018, being unable to agree with the view taken by another learned Division bench (S.C. Dharmadhikari & Smt. Vibha Kankanwadi, JJ.) in M/s. Delton Electricals v. Maharashtra State Electricity Distribution Company Limited and others [Commercial Appeal No.38/2017 decided on 31/08/2017 at Bombay], which holds that the claims under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act, 2006" for short hereinafter) were not entertainable, if they were barred by the LIMITATION ACT , 1963. The learned referring Bench found that in Delton Electricals (supra) several facets as indicated in para 46 of its judgment were not considered due to which Delton Electricals (supra) required reconsideration.

3. As no specific question was framed by the learned referral Bench in Sonali Power Equipment (supra) and the matter has been referred, on 20/09/2023, after hearing the learned Counsel for the parties we, had framed the following question :

Q. "Whether the provisions of Indian Limitation Act, 1963 are applicable to proceedings initiated under Section 18 of Micro Small and Medium Enterprises Development Act, 2006 ?"

4. The matter was thereafter heard on 20/09/2023 and 21/09/2023, wherein the following arguments were canvassed by Mr. S.P. Dhole, learned counsel for the appellants in all appeals except Appeal No.5/2018, Mr. M.P. Khajanchi, learned counsel for the appellant in Appeal No.5/2018 and Mr. S.V. Purohit, learned counsel for the respondent no.1 in all appeals.

5. Mr. S. P. Dhole, learned Counsel for the appellants contends that :

5.1. That judgment of Hon'ble Supreme Court of two judges in the matter of Silpi Industries Etc. v. Kerala State Road Transport Corporation and another 2021 SCC Online SC 439 on the issue of applicability of section 43 of the Arbitration and Conciliation Act, 1996 (for short, "A & C Act, 1996, hereinafter) to the claims under MSMED Act 2006, is based on the Andhra Pradesh High Court order which has relied on the Apex Court order in the matter of Andhra Pradesh Power Co-ordination Committee and others v. M/s. Lanco Kondapalli Power Limited and others (2016) 3 SCC 468 : AIR 2016 SC 1925 , which has totally different dimension.

5.2. In Silpi Industries (supra) the matter of applicability of limitation under section 43 of Arbitration and Conciliation Act 1996 (A & C Act, for short hereinafter), is considered. Though Lanco Kondapalli Power Limited (supra) is discussed saying that Section 43 of A & C Act, 1996 is applicable in the arbitration under Section 18 (3) of MSMED Act, 2006 it is on a different footing as Lanco Kondapalli Power Limited was not a Small Enterprise under the MSMED Act, 2006. The claim was under a contract referring to Section 14 of the LIMITATION ACT , 1963 ("Limi. Act", for short hereinafter) and the claimant had no vested right conferred upon them. No statut