MSME Council Not Deciding Your Claim? 90-Day Delay, Legal Remedies, and How to Get Your Case Moving

Have you filed a Statement of Claim before the Micro and Small Enterprises Facilitation Council (MSEFC), but your matter has been pending for months without any meaningful progress?

Has the Council accepted your reference, received the pleadings, and yet failed to proceed with conciliation or arbitration within the prescribed period?

Are you wondering whether the Council has violated the 90-day timeline under Section 18(5) of the Micro, Small and Medium Enterprises Development Act, 2006, and whether you can approach the High Court to seek a direction for early disposal?

For a micro or small enterprise waiting to recover its outstanding dues, delay in proceedings can create serious financial hardship. The very purpose of the MSME Act is to provide a statutory mechanism for resolving payment disputes, yet prolonged proceedings can leave a supplier waiting indefinitely.

The important legal position is that the 90-day timeline under Section 18(5) is not generally treated as an automatic deadline that terminates the Council’s jurisdiction. However, prolonged and unexplained inaction may justify seeking appropriate judicial intervention for expeditious disposal, depending on the facts and the stage of the proceedings.

This article explains what Section 18 requires, what happens when the Council does not act within the prescribed timeline, how to pursue a time-bound hearing, and what the courts have held on the issue.

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1. What Is the MSME Facilitation Council?

The Micro and Small Enterprises Facilitation Council is a statutory body constituted under Section 20 of the MSMED Act, 2006.

Its principal role under Section 18 is to facilitate the resolution of disputes concerning amounts due to eligible micro and small suppliers under the Act.

The Council may:

• Receive references concerning amounts due under Section 17.
• Conduct conciliation between the parties.
• Refer conciliation to an appropriate institution or centre.
• Take up the dispute for arbitration if conciliation fails.
• Refer the dispute to an institution or centre providing alternative dispute-resolution services for arbitration.
• Proceed in accordance with the applicable statutory framework.

The Council’s role is not limited to receiving documents. It is expected to move the matter through the statutory dispute-resolution process.

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2. What Does Section 18 of the MSME Act Say?

Section 18 of the MSMED Act provides the statutory mechanism for resolving disputes concerning amounts due to eligible suppliers.

The provision lays down a sequence of steps.

Section 18(1): Reference to the Council

A party to a dispute concerning an amount due under Section 17 may make a reference to the Micro and Small Enterprises Facilitation Council.

Section 18(2): Conciliation

Upon receiving the reference, the Council may conduct conciliation itself or refer the matter to an institution or centre providing alternative dispute-resolution services.

The purpose is to explore whether the dispute can be resolved amicably.

Section 18(3): Arbitration after unsuccessful conciliation

Where conciliation fails and is terminated without a settlement, the Council may either take up the dispute for arbitration itself or refer it to an appropriate institution or centre for arbitration.

The applicable provisions of the Arbitration and Conciliation Act, 1996 govern the arbitration process, subject to the statutory framework.

Section 18(4): Jurisdiction

This provision deals with the Council’s jurisdiction to act as an arbitrator or conciliator in disputes between a supplier within its jurisdiction and a buyer located anywhere in India.

Section 18(5): The 90-day timeline

Section 18(5), in the statutory text traditionally applied to these proceedings, provides that every reference under Section 18 shall be decided within 90 days from the date of making the reference.

This is the provision commonly relied upon when a party complains that the Council has kept a matter pending for an unreasonable period.

Important: The 90-day period is linked to the date of the reference under Section 18, not automatically to the date on which a Statement of Claim is filed. The applicable statutory text and any relevant amendments must be checked for the particular proceeding.

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3. What Does It Mean When the Council Has Not Acted on Your Statement of Claim?

Consider a situation where a supplier files a reference before the Council for recovery of unpaid invoices.

The Council registers the matter. The supplier files its Statement of Claim. The buyer may have filed a reply or Statement of Defence. However, despite the pleadings being complete, the matter is repeatedly adjourned or no further hearing takes place.

This may raise several questions:

• Has the Council commenced conciliation?
• Has conciliation been formally terminated?
• Has the matter been referred to arbitration?
• Has the Council framed the issues or fixed a hearing?
• Is the delay attributable to the parties, the Council, or an external institution?
• Has the statutory timeline expired?
• Is there a reasonable explanation for the delay?

These questions are important because the remedy depends on the stage at which the proceedings have stalled.

A matter pending at the conciliation stage may require a different procedural request from one in which arbitration has already commenced and the Statement of Claim and Statement of Defence have been filed.

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4. What Is the 90-Day Rule Under Section 18(5)?

The 90-day provision is intended to promote expeditious resolution of disputes before the Facilitation Council.

Its purpose is to prevent eligible suppliers from being left in prolonged uncertainty while their claims for outstanding dues remain unresolved.

However, the statutory language does not expressly provide that the Council automatically loses jurisdiction after 90 days.

This distinction is crucial.

Does the Council become functus officio after 90 days?

Generally, no.

The expiry of 90 days does not, by itself, automatically terminate the Council’s mandate or invalidate the proceedings.

Courts have interpreted the timeline as directory rather than as a rigid jurisdictional cut-off, while emphasising that the statutory objective of expeditious disposal should be respected.

Does that mean the Council can keep the matter pending indefinitely?

No.

The fact that the Council’s mandate does not automatically terminate does not mean that unexplained or unreasonable delay is legally irrelevant.

Where a matter remains pending without meaningful progress, the affected party may seek appropriate procedural and judicial remedies to secure a decision within a reasonable period.

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5. What Should You Do If the Council Has Not Decided Your Claim Within 90 Days?

If your reference has remained pending beyond the statutory timeline, the following steps may help you build a proper record and pursue the matter.

Step 1: Obtain the complete record of proceedings

Collect the following:

• Reference application and acknowledgment.
• Statement of Claim.
• Statement of Defence and any counterclaim.
• Orders and minutes of every hearing.
• Notices issued by the Council.
• Correspondence with the Council’s secretariat.
• Any conciliation proceedings or termination record.
• Any order referring the matter to arbitration.
• Details of the last effective hearing.

This record helps establish the exact stage of the proceedings and the period of inactivity.

Step 2: Calculate the period of delay

Identify the date on which the reference was made under Section 18.

Then calculate the period that has elapsed and compare it with the applicable statutory timeline.

It is important to distinguish the date of filing the reference from the date of filing the Statement of Claim.

Step 3: File a formal application seeking an early hearing

A written application may be submitted before the Council requesting:

• Fixing of an early date of hearing.
• Completion of the pending procedural stage.
• Recording of the status of conciliation or arbitration.
• Appropriate directions for expeditious disposal.
• A reasoned order on any pending application.

The application should identify the dates of proceedings and explain the prejudice caused by the delay.

Step 4: Send a formal representation to the Council

Where the matter remains inactive, a representation may be addressed to the Chairperson or the competent authority of the Council.

The representation should refer to the pending reference, the applicable statutory timeline, the history of adjournments, and the relief sought.

A representation is not a substitute for a judicial remedy where one becomes necessary, but it can create a clear record of the request for timely action.

Step 5: Consider approaching the High Court

If the Council continues to remain inactive despite reasonable requests, a writ petition seeking appropriate directions may be considered under Article 226 of the Constitution.

The relief should ordinarily focus on securing a decision or progress in accordance with law, rather than asking the High Court to decide the underlying commercial claim itself.

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6. Can You File a Writ Petition Against the MSME Facilitation Council for Delay?

Yes, a writ petition under Article 226 of the Constitution may be considered in an appropriate case where the Council has failed to discharge its statutory functions within a reasonable period.

The precise relief depends on the facts and the nature of the delay.

A petition may seek directions such as:

• Directing the Council to consider a pending application.
• Directing the Council to proceed with the matter in accordance with Section 18.
• Directing the Council to complete the pending procedural stage within a reasonable, court-prescribed period.
• Directing the Council to decide the reference expeditiously.
• Directing the Council to pass an appropriate order on a pending procedural issue.

What must be established?

A petitioner should ordinarily demonstrate:

1. That a valid reference was made before the Council.
2. That the proceedings remain pending.
3. That a substantial period has elapsed without meaningful progress.
4. That the petitioner has taken reasonable steps to seek progress.
5. That the delay is causing identifiable prejudice.
6. That the relief sought is legally maintainable and does not improperly bypass the statutory dispute-resolution process.

The availability of an alternative remedy, the nature of the Council’s action, and the stage of the proceedings may affect maintainability.

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7. What Relief Should Be Sought in a Writ Petition?

The relief should be tailored to the procedural position of the case.

A. Direction for time-bound disposal

Where the reference has remained pending for an unreasonable period, the petitioner may seek a direction to the Council to dispose of the reference within a reasonable time fixed by the Court.

B. Direction to proceed with conciliation

Where the Council has not meaningfully initiated or completed the conciliation stage, the petitioner may seek a direction to proceed in accordance with Section 18(2).

C. Direction to conclude conciliation and proceed further in accordance with law

Where conciliation has failed but the next statutory stage has not commenced, a direction to take the matter forward under the applicable provisions may be considered.

D. Direction to decide a pending application

If a specific application—such as an application seeking early hearing or a procedural direction—has remained undecided, the petitioner may seek an appropriate direction for its consideration.

E. Other appropriate relief

Depending on the facts, the petitioner may seek such other relief as is necessary to ensure that the Council discharges its statutory obligations in accordance with law.

The relief should not assume that the 90-day period automatically invalidates the proceedings or extinguishes the Council’s jurisdiction.

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8. Can the High Court Direct the Council to Pass an Award Within a Fixed Time?

The High Court may, in an appropriate case, issue directions for expeditious disposal of pending statutory proceedings.

However, the nature of the direction depends on the facts.

A direction to decide a reference within a reasonable period is different from directing the Council to pass an award in favour of one party or to decide the merits in a particular manner.

The Council must still follow the statutory procedure, provide the parties the legally required opportunity, and decide the dispute independently.

A writ petition should therefore ordinarily seek procedural progress and timely adjudication rather than a predetermined outcome.

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9. What Are the Legal Consequences of Delay by the Council?

Delay can have several practical and legal consequences.

A. Continued uncertainty over recovery

The supplier may remain unable to recover outstanding dues while the reference is pending.

B. Financial hardship

An enterprise awaiting payment may face cash-flow difficulties, difficulty meeting operational expenses, and disruption of business activities.

C. Increased litigation costs

Prolonged proceedings may require repeated appearances, additional applications, and further legal expenses.

D. Difficulty in securing evidence

As time passes, records may become harder to retrieve, witnesses may become unavailable, and the parties may face greater difficulty in establishing the relevant facts.

E. Potential judicial intervention

Where the delay is unreasonable and the legal requirements are satisfied, the affected party may seek appropriate directions from the High Court.

F. No automatic invalidation of proceedings

The expiry of the 90-day period does not, by itself, automatically render the proceedings void or terminate the Council’s mandate.

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10. Can the Council’s Mandate Be Terminated Because It Failed to Decide the Matter Within 90 Days?

This is one of the most important legal questions in delayed MSME proceedings.

The general judicial approach is that the 90-day timeline under Section 18(5) is directory, not mandatory in the sense of automatically terminating the Council’s jurisdiction.

The provision does not expressly state that the Council loses its authority once the period expires.

Accordingly, a party should not assume that the matter has automatically lapsed or that it can unilaterally abandon the Council proceedings and commence a separate arbitration.

The proper course is to examine the stage of the proceedings and pursue an appropriate remedy for expeditious disposal.

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11. Important Judgments on Delay Under Section 18(5) of the MSME Act

1. Indian Highways Management Company Limited v. Mukesh & Associates

Delhi High Court | 16 March 2021 | ARB.P. 209/2020

This is an important Delhi High Court judgment on the 90-day timeline under Section 18(5).

The Court held that the 90-day period is directory rather than mandatory and that the Council’s mandate does not automatically terminate upon expiry of the period.

The Court also explained that the statutory framework must be interpreted harmoniously with the dispute-resolution mechanism under the Arbitration and Conciliation Act, 1996.

Key legal principle: Expiry of 90 days does not automatically terminate the Council’s mandate or render the proceedings invalid.

2. Avnish Chowdhary v. District Level MSME Facilitation Council

Punjab and Haryana High Court | 7 July 2023

The Court considered the nature of the 90-day timeline under Section 18(5).

It held that the provision is directory in nature and that an award does not become invalid merely because it is passed after the expiry of 90 days.

The decision reinforces the distinction between a statutory expectation of expeditious disposal and automatic loss of jurisdiction.

3. Indian Oil Corporation Ltd. v. Haryana Micro and Small Enterprise Facilitation Council

Punjab and Haryana High Court | 1 August 2023

The Court considered the question whether proceedings or an award become invalid merely because the 90-day period under Section 18(5) has expired.

The decision is relevant to the argument that the Council’s authority automatically ends upon expiry of the statutory period.

4. Porel Dass Water & Effluent Control Pvt. Ltd. v. [Council/Other Party]

Calcutta High Court | 2024

The Calcutta High Court considered the relationship between the statutory timeline under Section 18(5) and the continuation of proceedings before the Facilitation Council or an arbitral institution.

The Court held that expiry of the 90-day period does not, by itself, terminate the Council’s mandate or render the proceedings invalid.

The judgment is relevant to the question of whether a separate extension of mandate under Section 29A of the Arbitration and Conciliation Act is required merely because the 90-day period has expired.

5. MDD Medical Systems (India) Pvt. Ltd. v. Delhi International Arbitration Centre

Delhi High Court | 25 April 2025

The Delhi High Court considered the statutory timeline under Section 18(5) and the effect of delay on the Council’s mandate.

The Court held that the 90-day provision does not automatically terminate the Council’s mandate merely because the reference has not been decided within that period.

The decision is particularly relevant to proceedings where a party argues that the Council has become incapable of continuing solely due to expiry of the 90-day period.

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12. What Is the Difference Between Delay in Conciliation and Delay in Arbitration?

The distinction matters because Section 18 provides a staged process.

Conciliation stage	Arbitration stage
The Council attempts to facilitate an amicable settlement.	The dispute is adjudicated through arbitration after conciliation fails and is terminated.
The Council may conduct conciliation itself or refer it to an appropriate institution.	The Council may arbitrate itself or refer the dispute to an institution or centre.
The objective is settlement.	The objective is adjudication and an arbitral award.
The relevant procedural framework includes the conciliation provisions of the Arbitration and Conciliation Act, where applicable.	The arbitration provisions of the Arbitration and Conciliation Act apply, subject to the MSMED Act.

If the Council has not formally terminated conciliation, the party should first establish whether the matter is still at the conciliation stage or has proceeded to arbitration.

The appropriate remedy for delay should be framed accordingly.

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13. Can Section 29A of the Arbitration and Conciliation Act Be Used to Extend the Council’s Mandate?

Section 29A of the Arbitration and Conciliation Act, 1996 deals with the time limit for making an arbitral award in specified arbitration proceedings.

However, the mere expiry of the 90-day period under Section 18(5) of the MSMED Act does not automatically mean that an application under Section 29A is necessary.

Courts have recognised that Section 18(5) and the arbitration framework must be read in the context of the statutory scheme.

Whether Section 29A is applicable to a particular proceeding depends on the nature of the arbitration, the applicable statutory framework, and the procedural stage.

A party should not assume that the Council’s mandate has terminated or that an extension application is necessarily required merely because 90 days have elapsed.

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14. Can You Appoint a Separate Arbitrator If the Council Is Not Acting?

A party should be cautious before appointing a separate arbitrator.

Where a dispute has been validly referred to the Facilitation Council under Section 18, the statutory mechanism may prevail over an independent contractual arbitration procedure.

The Council’s delay does not automatically mean that a party is free to bypass the statutory process and appoint another arbitrator.

The availability of any separate arbitration remedy must be examined in light of the MSMED Act, the contract, the stage of the proceedings, and the applicable judicial precedents.

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15. Myth vs Reality: MSME Council Delay and the 90-Day Rule

Myth	Reality
The Council automatically loses jurisdiction after 90 days.	Courts have generally treated the timeline as directory rather than as an automatic termination of jurisdiction.
The entire proceeding becomes void after 90 days.	Expiry of the period does not, by itself, invalidate the proceedings.
A party must wait indefinitely if the Council does not act.	Appropriate procedural steps and, in suitable cases, judicial intervention may be available.
Filing a writ petition automatically results in an award.	A writ petition may seek procedural progress or time-bound disposal; the merits remain for the competent forum.
The 90-day period starts from the date of filing the Statement of Claim in every case.	Section 18(5) refers to the date of the reference under Section 18, subject to the applicable statutory framework.
A separate arbitrator can always be appointed if the Council is delayed.	The statutory dispute-resolution mechanism may restrict the availability of a separate arbitration procedure.
The Council can ignore the statutory timeline without any consequence.	The timeline reflects the legislative objective of expeditious disposal, and unreasonable inaction may justify appropriate remedies.

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16. Practical Checklist Before Filing a Writ Petition for MSME Council Delay

Before approaching the High Court, organise the following documents:

• Udyam Registration Certificate, where relevant.
• Reference application filed before the Council.
• Acknowledgment of the reference.
• Statement of Claim and supporting documents.
• Statement of Defence and counterclaim, if any.
• Orders and minutes of proceedings.
• Proof of the last effective hearing.
• Applications seeking early hearing or procedural directions.
• Copies of representations sent to the Council.
• Any response received from the Council.
• A chronology showing the period of inactivity.
• Documents showing the prejudice caused by the delay.
• The precise relief sought from the High Court.

A properly organised chronology helps the Court understand whether the delay is attributable to the Council, the parties, or some other procedural circumstance.

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17. Frequently Asked Questions (FAQs)

Q1. What is the time limit under Section 18(5) of the MSME Act?

The statutory text traditionally applied to Section 18(5) provides that every reference under Section 18 should be decided within 90 days from the date of the reference.

Q2. What happens if the MSME Council does not decide the claim within 90 days?

The proceedings do not automatically become invalid, and the Council does not automatically lose jurisdiction. However, prolonged and unexplained delay may justify seeking appropriate procedural or judicial relief.

Q3. Can I file a writ petition if the MSME Council is not hearing my matter?

A writ petition under Article 226 may be considered in an appropriate case where the Council has failed to discharge its statutory functions within a reasonable period.

Q4. Can the High Court direct the Council to decide my claim within a fixed time?

The High Court may consider issuing directions for expeditious disposal, depending on the facts, the nature of the delay, and the maintainability of the petition.

Q5. Does filing a Statement of Claim start the 90-day period?

Not necessarily. Section 18(5) refers to the date of making the reference under Section 18. The date of filing the Statement of Claim may be different.

Q6. Can the Council continue proceedings after 90 days?

Generally, yes. Expiry of the period does not automatically terminate the Council’s mandate.

Q7. Can I ask the High Court to pass an award in my favour?

Ordinarily, the relief should focus on securing timely proceedings or a lawful decision. The merits of the claim are generally for the competent Council or arbitral tribunal to decide.

Q8. Can I appoint a private arbitrator because the Council is delaying the matter?

Not automatically. The statutory mechanism under the MSMED Act must be examined before considering any separate arbitration.

Q9. What if the Council has not even started conciliation?

The affected party may seek a direction for the Council to proceed in accordance with the statutory sequence, subject to the facts and applicable law.

Q10. Does a representation to the Council stop the limitation period for other remedies?

A representation does not automatically extend statutory limitation periods or suspend other procedural deadlines. Any applicable limitation period should be examined independently.

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18. Conclusion

The MSME Act provides a statutory mechanism intended to facilitate the resolution of disputes concerning amounts due to eligible micro and small suppliers.

However, where a reference remains pending before the Facilitation Council without meaningful progress, the affected party may face considerable financial and procedural hardship.

Section 18(5) reflects the legislative objective of expeditious disposal, but the expiry of 90 days does not automatically terminate the Council’s jurisdiction or invalidate the proceedings.

Where the delay is substantial and unexplained, the affected party may consider filing an application for early hearing, submitting a formal representation, and, in an appropriate case, approaching the High Court under Article 226 for directions to proceed with and dispose of the matter within a reasonable period.

The key is to identify the precise stage of the proceedings, establish the history of delay, and seek a remedy that advances the statutory process without assuming that the Council’s mandate has automatically expired.

Legal Disclaimer: This article is for general informational and educational purposes only and does not constitute legal advice. The applicability of Section 18(5), the effect of statutory amendments, and the availability of judicial remedies depend on the facts and the applicable law. Professional legal advice should be obtained for a specific dispute.