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Section 1: Short title and commencement

Micro, Small and Medium Enterprises Development Act, 2006 • Official Statutory Text & Practice Guide

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Legal Commentary & Landmark Judgments: Section 1

Section 1 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) establishes the short title, universal pan-Indian territorial extent, and phased statutory commencement of the special legislation enacted to facilitate the promotion, development, and enhancement of the competitiveness of micro, small, and medium enterprises.

  • Universal Pan-Indian Territorial Application: Extends to the whole of India; following the enactment of the Jammu and Kashmir Reorganisation Act, 2019, its provisions apply uniformly across all States and Union Territories without territorial exception.
  • Statutory Notification and Phased Commencement: Came into force on October 2, 2006, pursuant to Central Government Notification S.O. 1154(E) dated July 18, 2006, repealing and superseding the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993.
  • Special and Beneficial Legislative Character: Enacted as an exhaustive socio-economic commercial code consolidating measures for enterprise facilitation, progressive credit flow, public procurement preference, and an autonomous dispute resolution mechanism for delayed payments.
Key Landmark Precedents:
  • Shanti Conductors (P) Ltd. v. Assam SEB (2019) 19 SCC 529: A 3-Judge Bench held that the MSMED Act, 2006 is prospective in operation; where transactions, supplies, and contracts were entered into prior to October 2, 2006, the substantive provisions of the predecessor 1993 Act govern the liability to pay compound interest, whereas supplies after October 2, 2006 are regulated exclusively by the 2006 Act.
  • Gujarat State Civil Supplies Corpn. v. Mahakali Foods (P) Ltd. (2023) 6 SCC 401: The Supreme Court affirmed that the MSMED Act is a special legislation enacted to facilitate the promotion and development of MSMEs and to provide an expeditious dispute resolution mechanism; its statutory framework prevails over general enactments.
Courtroom Practice & Strategic Litigation Guidance:

When initiating proceedings under the MSMED Act, establish that the underlying contract, purchase order, and supply of goods or rendering of services occurred after the Act's commencement on October 2, 2006. If the transaction originated prior to October 2, 2006, invoke the savings clause and the predecessor 1993 Act as governed by Shanti Conductors.

All 32 Sections of MSMED Act Section 2