Sonali Power vs MSEB

The core legal issue in this appeal is whether time-barred claims can be entertained in conciliation and arbitration under Section 18 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The Supreme Court upheld the applicability of the Limitation Act, 1963 to arbitration proceedings under Section 18(3) but held that the Limitation Act does not apply to conciliation proceedings under Section 18(2). Consequently, time-barred claims can be discussed and settled during conciliation, but cannot be the basis of arbitration awards. The Court harmonized the provisions of the MSMED Act, the Arbitration and Conciliation Act, 1996, and the Limitation Act to ensure clarity and consistency in the law governing delayed payments to micro and small enterprises.