Most discussion of the Micro, Small and Medium Enterprises Development Act, 2006 proceeds as if the Facilitation Council were a suppliers-only forum. The text is more precise. Section 18(1) provides that, notwithstanding anything contained in any other law, "any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council." The width of "any party" and the narrowness of "amount due under section 17" pull in opposite directions, and understanding both is essential for suppliers framing references and buyers deciding how to respond.
The anatomy of Section 18
"Any party": real width, real limits
The drafting choice is deliberate — the section could have said "the supplier may refer", and does not. Its width does useful work in at least three situations. A buyer served with a Samadhaan demand it considers inflated or fictitious need not wait passively: placing the dispute before the Council puts the computation in issue in the statutory forum rather than leaving the supplier to control the timing. Parties locked in parallel proceedings can use the reference to consolidate the delayed-payment component where the statute says it belongs. And where the question is who is a "supplier" at all — registration status, the trading question, enterprise classification — the Council hears that jurisdictional objection first, from whichever side raises it.
The limits are just as important. The anchor phrase — "with regard to any amount due under section 17" — keeps the Council a delayed-payment forum. It is not a general commercial court for the relationship: a buyer's damages claim for defective goods is a defence and counter-narrative within the reference, but as an independent claim it must find its own forum, subject to the ordinary rules on counterclaims in Section 18(3) arbitration. Nor does Section 18 manufacture liability where Chapter V does not reach — without a supply by a registered micro or small enterprise and an amount within Section 17, there is nothing to refer.
Drafting the reference (supplier side): plead the anchor explicitly — supply, invoice, appointed day, non-payment, Section 16 interest computation with monthly rests — and attach the Udyam certificate, purchase orders, invoices, delivery proof and the running account. References fail at the Council stage mostly for gaps in this chain, not for want of sympathy.
Responding to a reference (buyer side)
Take the conciliation stage seriously — it is the only stage without statutory interest accumulating in the background on a settlement figure, and the Council records what each side offered. Put jurisdictional objections (supplier status, registration timing, absence of supply) in writing at the first hearing, but prepare the merits alongside: an objection-only strategy that fails leaves the quantum record one-sided. Document quality disputes contemporaneously — debit notes raised at the time of supply carry weight that litigation-born grievances do not. And remember the exit toll: challenging an eventual award under Section 34 requires the 75 percent pre-deposit under Section 19, so the economics of settlement are best computed before the award, not after.
Why the forum keeps mattering
Section 24 gives the delayed-payment chapter overriding effect, and the ninety-day aspiration — even loosely kept — makes the Council materially faster than a recovery suit. For micro and small suppliers in Delhi dealing with buyers across India, the supplier-location rule of Section 18(4) is itself a remedy: the dispute comes home. The "any party" phrase completes the design by making the forum common ground rather than one side's weapon — a feature parties on both sides of a delayed-payment dispute can use, provided they respect the Section 17 anchor that defines everything the Council can decide.
Note: this explainer is for general information only and is not legal advice. Forum questions in individual disputes depend on registration status, the supply chronology and the documents.
Frequently Asked Questions
What is the "amount due under section 17"?
Section 17 obliges the buyer to pay the amount due to the supplier, together with the interest mandated by Section 16 — compound interest, monthly rests, at three times the RBI-notified bank rate — for goods supplied or services rendered beyond the appointed day. The Council's subject-matter jurisdiction under Section 18 is anchored to that liability: a supplier's claim for the price of goods or services plus statutory interest.
Can a buyer make a reference to the Council?
The words "any party to a dispute" are wide enough that a buyer disputing a demand can, in principle, place the dispute before the Council — the reference still concerns the amount said to be due under Section 17. What a buyer cannot do is use the Council as a forum for its own independent money claims against the supplier: the Council decides the Section 17 liability, and claims outside that anchor belong to ordinary civil or arbitral remedies.
Does a buyer lose its defences before the Council?
No. The buyer participates fully in conciliation and, if that fails, in the arbitration under Section 18(3), where it can contest supply, quality, quantum and the computation of interest. What the Act forecloses is escaping the forum: Section 18 operates notwithstanding other laws, and Section 24 gives Sections 15 to 23 overriding effect over inconsistent laws, including contrary contract clauses.
Where must the reference be decided, and how fast?
Jurisdiction lies with the Council in whose territory the supplier is located — Section 18(4) — and Section 18(5) directs that every reference be decided within ninety days. The timeline is directory in practice but gives both sides a lever against drift.