Private firms to join govt ‘panacea for small biz disputes'

Mint

2 days ago

New Delhi: Two private online dispute resolution (ODR) companies—Mumbai-based Presolv360 and Hyderabad-based Amika Arbitration and Mediation Centre—are likely to enroll as service providers on the government's new ODR portal, they said, fuelling hopes of swift, out-of-court resolution of disputes.
The portal was launched on 27 June to cater to micro and small enterprises that are the worst hit by delayed payment disputes. These disputes occur when these enterprises do not receive payments for over 45 days for goods and services sold to large businesses.
The portal was launched by the ministry of micro, small and medium enterprises (MSME).
As per provisions of the MSME Development Act, 2006, MSEs need to raise a complaint with facilitation councils (MSEFC), government bodies that can either resolve the issue themselves or delegate it to a private firm providing the same service.
The new MSME portal, for the first time, allows private ODR firms to be empanelled in a move that aims to cut delays.
"Presolv360 will definitely be planning to get empanelled in the entire ecosystem," said Krunal Modi, co-founder and chief of staff at the firms that has overseen 350,000-400,000 dispute resolutions since its launch in 2019.
"We have already been empanelled under the Sebi ecosystem. And this is also a great space for Presolv360 to get empanelled into and we will be undertaking that process in due course," Modi said.
Sebi ecosystem refers to an online dispute resolution platform named SmartODR created by the capital markets watchdog Securities and Exchange Board of India in July 2023.
The move is likely to enhance the caseload of these online dispute resolution firms, as small businesses prefer using their services.
As per the MSME Development Act, an MSE failitation council (MSEFC) under Section 18 of the Act, a facilitation can request the services of an institution that provides alternative dispute resolution (ADR).
ADR refers to any dispute resolution that takes place outside courts. It includes procedures such as arbitration, mediation, and conciliation, where parties can resolve their issues speedily.
Micro and small enterprises are likely to go to facilitation councils and independent ODR firms for dispute resolution as they operate on lower capital, and cannot necessarily afford litigation or long-drawn arbitrations, experts said.
MSME delayed payment disputes commonly range in valuation from ₹ 5 lakh to ₹ 5 crore, said Modi of Presolv360. Additionally, delays and capacity crunches in facilitation councils only led to MSEs seeking litigation instead of state-run services.
These facilitation councils were set up in 2017. Each state was given the responsibility to set up such councils. There are 161 such councils in the country. Over 242,000 applications have been filed by MSEs with facilitation councils, but nearly a fourth of them are yet to be viewed by a council. About 68,000 grievances have also rejected by the councils, data by the MSME ministry showed.
The MSME ministry's ODR portal, launched under the World Bank-backed Raising and Accelerating MSME Performance (RAMP) scheme, is expected to be the panacea to these delays, according to ODR experts.
"This entire initiative coupled with the public-private partnership would really boost MSME growth because in a lot of disputes, a lot of money that is caught up in the delayed payment disputes will be freed up," said Modi.
As per data from the MSME ministry's Samadhaan portal for delayed payments, complaints from MSEs since 2017 have been worth more than ₹ 27,000 crore, while facilitation council dispute resolution has managed to resolve cases worth approximately ₹ 7,800 crore, less than a third of the total payable amount.
Hyderabad-based Amika Arbitration and Mediation Centre is also planning to get empanelled on the MSME ODR portal, said its registrar P. Madhava Rao. "We have begun the process of getting empanelled onto the portal," he told Mint.
The firm, which has handled 26 MSME arbitrations and nearly 300 mediations in the last three years, has faced some difficulties in the procedure.
Rao said, "It appears that the Indian government did not consult with all of the country's ADR institutions before creating the website, and neither was any letter issued to all asking them to get empanelled. Many people are unaware of the empanelment circular released in April 2025."
On 2 April 2025, the MSME ministry notified guidelines for empanelment of ADR/ODR firms on its portal during the testing phase.
MSE facilitation councils are run by state governments, under powers granted by a central legislation, said Rao. But this is likely to create a conflict of interest, as a considerable volume of delayed payment disputes are between MSEs and governments or government agencies and ministries.
"This underscores the need for an impartial system of dispute resolution for MSEs at affordable rates, or in some cases, even pro bono services," he said.
Mint earlier reported on 23 April that some MSEs had started opting for litigation over these state-run facilitation councils due to a lack of enforcement and delays in awards.