Mumbai, Oct. 8 -- The Bombay High Court has set aside orders by the Micro and Small Enterprises Facilitation Council (MSEFC), ruling that conciliation and arbitration under the MSMED Act cannot be clubbed.

A bench led by Justice N.J. Jamadar held that if the appellant had not participated in conciliation, the council could have recorded its failure and then initiated arbitration under the Arbitration and Conciliation Act, 1996.

The court found that the council had bypassed conciliation and directly allowed the claim, making the orders unsustainable as arbitration awards.

The case involved Mexim supplying adhesive tapes to Dodal Electro Instruments. Mexim alleged non-payment and approached the council, which directed Dodal to pay the am...