Supreme Court Appoints Arbitrator but Denies MSMED Act Benefits Where Normal Arbitration Elected

Case Snapshot

• Case Name: M/s Indo Engineering Works v. Rashtriya Ispat Nigam Limited (RINL) & Ors.

• Citation: 2026 INSC 874

• Bench: Justice K.V. Viswanathan & Justice J.B. Pardiwala

• Date of Judgment: August 18, 2026

• Area of Law: Arbitration, MSMED Act, Contract Law

The Judgment in One Line

Arbitrator appointed in consent order, but appellant cannot claim MSMED Act benefits as it chose normal arbitration mode.

Why This Judgment Matters

This judgment clarifies the important interplay between the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, and arbitration under the Arbitration and Conciliation Act, 1996. The Supreme Court has held that if a small-scale industry chooses the "normal mode" of arbitration instead of arbitration through the Facilitation Council under the MSMED Act, it cannot claim the benefits provided under the MSMED Act. This decision will impact how MSMEs approach dispute resolution—they must choose their forum carefully, as selecting one mode may forfeit the statutory benefits available under the other. The judgment also highlights the Court's pragmatic approach in resolving disputes without waiting for larger bench decisions.

Background

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