In Brief
Sonali Power Equipments, a small enterprise, sought to recover time-barred debts for delayed payments for transformer supplies (1993–2004) from the Maharashtra State Electricity Board. The Supreme Court held that while the Limitation Act does not apply to conciliation proceedings under the MSMED Act—allowing time-barred claims to be settled amicably—it does apply to arbitration. The Court distinguished conciliation as non-adjudicatory and non-coercive, recognizing that settlement agreements for time-barred debts are valid contracts under the Indian Contract Act. For arbitration, the special MSMED Act provisions prevail over the general ACA, applying Section 43 of the ACA (which incorporates limitation law) to arbitrations under the Act.
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