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Section 32: Act to have overriding effect

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

MSME Law
3x Compound Interest
MSEFC Facilitation Council
Act 27 of 2006
Section 31 All 32 Sections of MSMED Act
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Legal Commentary & Landmark Judgments: Section 32

Section 32 enacts an expansive non-obstante clause conferring supreme overriding statutory effect upon Sections 15 to 23 of the MSMED Act over any other inconsistent law, contract, or instrument for the time being in force.

  • Express Overriding Supremacy: Explicitly mandates that 'the provisions of sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.'
  • Supersession of Private Arbitration Clauses: Overrides party autonomy and private arbitration agreements under the Arbitration and Conciliation Act, 1996; disputes must be submitted to the statutory MSEFC mechanism under Section 18.
  • Nullification of Inconsistent Contract Terms: Overrides contractual payment terms exceeding 45 days (Section 15), contractual interest caps or waivers (Sections 16 & 17), and standard dispute forum selection clauses.
  • Interplay with Other Enactments: Prevails over the Interest Act, 1978 and regular civil procedural limitation bars regarding compounding of interest, subject only to general limitation principles.
Key Landmark Precedents:
  • Gujarat State Civil Supplies Corpn. v. Mahakali Foods (P) Ltd. (2023) 6 SCC 401: A landmark 2-Judge Bench of the Supreme Court held that Section 18 read with Section 32 has an overriding effect over the Arbitration and Conciliation Act, 1996. A private arbitration agreement between the parties entered into under Section 7 of the 1996 Act yields to the statutory conciliation and arbitration regime of the MSEFC.
  • Silpi Industries v. Kerala State Road Transport Corpn. (2021) 18 SCC 790: Held that while Section 32 overrides inconsistent laws, the provisions of the Limitation Act, 1963 apply to references before the MSEFC under Section 18, meaning claims barred by limitation cannot be revived by invoking the non-obstante clause.
  • Principal Chief Conservator of Forests v. J.K. Howrah (2020 SCC OnLine SC 102): Affirmed that the statutory provisions of Chapter V of the MSMED Act prevail over any inconsistent state or central legislation, reinforcing the supremacy of the MSEFC forum.
  • Tata Steel Ltd. v. Atma Tube Products Ltd. (2013 SCC OnLine P&H 2452): Full Bench of the Punjab & Haryana High Court affirmed that Section 32 elevates Sections 15 to 23 above all other laws, rendering contractual clauses seeking to bypass statutory interest or MSEFC jurisdiction void ab initio.
Courtroom Practice & Strategic Litigation Guidance:

When a buyer files a Section 8 or Section 11 application under the Arbitration and Conciliation Act seeking reference to a private sole arbitrator or arbitral tribunal, oppose it aggressively by citing Section 32 read with Mahakali Foods. The non-obstante clause strips the civil court and High Court of jurisdiction to refer MSME disputes to private arbitration, confirming exclusive MSEFC competence.

Section 31 All 32 Sections of MSMED Act