No, it is not mandatory. Section 18(1) of the MSMED Act, 2006 states that any party may refer a dispute to the MSEFC. This means MSMEs have the option to use the Council for conciliation and arbitration, but they can also pursue other remedies such as civil courts or contractual arbitration. However, if a dispute is referred to the MSEFC, its process takes precedence and becomes binding under the Arbitration and Conciliation Act, 1996. [Pawwan Khanna vs Deepak Bagga-Del. HC. on 03-Jul-2026]

No. once a dispute is referred to the MSEFC, civil courts cannot entertain parallel proceedings. The Council has exclusive jurisdiction, and any challenge must be made after its award under the Arbitration and Conciliation Act. [Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd. & Ors. (2022) 2 SCC 150]

No. Once an MSME refers a dispute to the MSEFC under Section 18 of the MSMED Act, 2006, the Council’s process of conciliation and arbitration takes precedence. The Supreme Court in Gujarat State Civil Supplies Corp. Ltd. v. Mahakali Foods Pvt. Ltd. (2022) held that the MSMED Act overrides contractual arbitration clauses. This means the buyer cannot compel arbitration under the agreement while MSEFC proceedings are pending.

No. The Supreme Court has consistently held — in TRF Ltd. (2017), Perkins Eastman (2019), and most recently in Bhadra International (2026, Constitution Bench) — that unilateral appointment clauses are invalid. They violate the principles of independence, impartiality, and equality under the Arbitration and Conciliation Act, 1996. Courts will step in under Section 11(6) to appoint an impartial arbitrator instead.

Yes. The Supreme Court in Nagreeka Indcon Products Pvt. Ltd. v. Cargocare Logistics (India) Pvt. Ltd. [2026 INSC 384] clarified that “shall” creates a binding obligation, while “can” (or “may”) is optional and gives discretion. For entrepreneurs, this means that if your agreement says you can do something (like refer a dispute to arbitration or a council), you are free to choose whether to do so. But if it says you shall, you are legally bound to follow that procedure without exception.

Yes, but only if you can prove continuous readiness and willingness to perform your part of the contract. In Habban Shah v. Sheruddin [2026 INSC 451] and Jayamma case [2026 INSC 651], the Supreme Court clarified that missing a deadline or filing late does not automatically bar relief. However, if you fail to show financial capacity and genuine intent at the relevant time, the decree or claim becomes inexecutable.

A lease transfers a legal interest in immovable property and grants exclusive possession for a fixed term with rent, whereas a licence merely gives permission to use property without transferring any interest. The Supreme Court in Associated Hotels of India Ltd. v. R.N. Kapoor (AIR 1959 SC 1262) held that the real test is whether exclusive possession is given: if yes, it is a lease; if not, it is a licence. Similarly, in Rajbir Kaur v. S. Chhokar (AIR 1988 SC 1845), the Court reiterated that substance prevails over labels — even if an agreement is called a “licence,” if it grants exclusive possession, it will be treated as a lease.

No. In Vivekananda Kendra v. Pradeep Kumar Aggarwalla [2026 INSC 199], the Supreme Court held that a registered instrument with clear lease terms cannot be treated as a licence. Such unilateral cancellation is invalid, and the lessee’s possession and rights must be protected.