Hope all of you are doing great, this write up will be helpful for the small businesses that are searching to recover their outstanding from corporate and other entities.
Government of India has taken the number of measures for the promotion and development of MSME ie., Micro, Small and Medium Enterprises as it is being presumed that this sector is very critical for the overall development of a nation. Further, these small businesses play a substantial role in the economy of a nation as they not only generate production but also help in creating employment opportunities for the younger generation.
Going forward, as the very title of the present article suggests, I will be restricting the flow only towards the recovery of delayed payment, this means that I am assuming you all are well aware of the provisions related to the classification and other condition for the recognition of MSME.
A quick look at the relevant Provisions
Chapter V of the Micro, Small and Medium Enterprises Development Act, 2006 (Hereinafter “MSMED”) contained the provisions with regard to the recovery of the outstanding from the buyer in case of any service(s) availed or well brought by him.
Section 15: It provides that buyer to make payment in case of any service(s) being availed or well brought by him on or before the date as agreed in writing otherwise before the appointed date.
It is to be noted that the period whether agreed in writing or otherwise cannot exceed a maximum period of 45 days from the day of acceptance or deemed acceptance. This means that buyer to make payment in all cases before 45 days. Here, it is equally important to understand the meaning of the terms ie., appointed date, day of acceptance or deemed acceptance collectively used in the aforesaid provision.
Appointed date means the day following immediately after the expiry of the period of 15 days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.
Day of Acceptance means,-
(a) the day of the actual delivery of goods or the rendering of services; or
(b) where any objection is made in writing by the buyer regarding the acceptance of goods or services within 15 days from the day of the delivery of goods or the rendering of services, the day on which· such objection is removed by the supplier;
Day of Deemed Acceptance means, where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services.
Section 16:Buyer shall be liable to pay compound interest with monthly rests in case of failure to comply with the aforesaid provision. Interest Rate will be 3 times of the bank rate notified by the RBI.
Section 17: Buyer to make payment along with interest.
Section 18:MSME may make a reference to the Micro and Small Enterprises Facilitation Council (“MSEFC”) and MSEFC may initiative on its own, action as it may deed necessary.
Though the provisions for recovery were always there from the constitution of the Act however, it is being very difficult for the small business registered under the Act to recover the outstanding from Big Entities. Further, the problem still persist, if you are also facing the same problem ie., whom to visit or before whom to file an application and/or complaint, or having any concern here is how your problem can be resolved.
Government of India has launched https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_Welcome.aspx portal, a unique and central point where all the MSMEs can file their complaint.
Any Micro or small enterprise having valid Udyog Aadhar(UAM) can apply. Register in UAM by Clicking Here
Step 1: Visit above web portal and look for the option case filing for entrepreneurs/MSE units in the menu bar. After clicking above option enter your UAN and the mobile number which was provided at the time of registration along with the verification captcha. Thereafter, one time password will be sent to your registered email ID please enter that and click on continue.
Step II:Now, you will see an option Application entry which will help you to file an application and/or compliant with the appropriate authority, before filling it please keep the details of work orders and/or details of invoices ready or any other document which can prove your claim. You can provide the details over the portal, if it is less than 5 however, in case it is more than 5 then you can combined all invoices in single PDF and upload it over the web-portal and submit it, thereafter one more page will be pop-up for the review and final submission.
Step III: All done now MSEFC will send this application to the concerned respondent and status of your complaint can be seen Entrepreneur Application list, the application will proceed faster than that of the court, furthermore the concerned officer may ask you to come and advise you in case of any other document and/or information being required by him.
The buyer is liable to pay compound interest with the monthly rests to the supplier on the amount at the three times of the bank rate notified by RBI in case he does not make payment to the supplier for his supplies of goods or services within 45 days of the acceptance of the goods/service rendered. (Section 16)
State Governments to notify (i) Authority for filing Entrepreneur Memorandum (ii) Rules of MSEFC and (iii) Constitution of MSEFC.
All States/UTs have notified Authority for Filing Entrepreneur's Memorandum, 33 States/UTs (i.e. except Arunachal Pradesh, Assam and Manipur) have Notified rules of MSEFC and all the 36 States/UTs have constituted MSEFCs, as per provisions laid down under MSMED Act 2006.
Every reference made to MSEFC shall be decided within a period of ninety days from the date of making such a reference as per provisions laid in the Act.
If the Appellant (not being the supplier) wants to file an appeal, no application for setting aside any decree or award by the MSEFC shall be entertained by any court unless the appellant (not being supplier) has deposited with it, the 75% of the award amount. (Section 19)
Hope they write will provide clarity on how to proceed with the filing of the complaint about the recovery of money.
The above write up is only for the educational purpose and shall not constitute any opinion. Author in no case shall be responsible for and actions being taken on the basis of above write up.
Ans : MSME Samadhaan is a Portal created by Office of DC(MSME), Ministry of Micro, Small and Medium Enterprises (MSME) where Micro and Small Enterprises (MSEs) can file their applications online regarding delayed payments.
Ans : No, MSME SAMADHAAN online portal is developed by Ministry of MSME only to facilitate MSEs filing of their applications regarding delayed payments online. The application once filed is forwarded automatically online to the concerned Micro and Small Enterprise Facilitation Council (MSEFC) established by the State/UTs as per the provisions of MSMED-Act 2006. Action on the applications regarding delayed payment is taken by the concerned MSEFC only.
Ans: No. Only the MSEFCs have been empowered as per MSMED Act, 2006 for taking decisions regarding its reference made with them. This office does not intervene in the matters of MSEFC. In short Ministry of MSME cannot interfere with judicial functioning of MSEFC.
Ans: After submission, the application is automatically forwarded online to concerned MSEFC. Therefore, concerned MSEFC is to be contacted after filing the application online on MSME Samadhaan Portal. The contact address of concerned MSEFC is mentioned on the acknowledgement sent on the registered email of the applicant.
Ans:No. But the meeting/proceeding can take place, if Coram of three members is complete, members can elect the Chairperson and take further proceedings. It is necessary to mention why Chairperson could not attend the hearing.
Ans: Only the claim under Section 6 of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1993 if pending, before IFC or Civil Courts, they can be considered. However, to approach the MSEFC, liberty of court is to be obtained on earlier claims.
Ans: Petition with Purchase Order, Bills, delivery challans of goods and services and demand letter etc. are to be kept if the matter is challenged in any higher court. In any other case, where the amount is already realized by the supplier, it is at the discretion of the MSEFC.
Ans: Yes. When the supplier is a micro or small enterprises and agreement is made between Micro/ Small Enterprises in India. Goods are purchased/taken by foreign buyer and he returns to his country. Payment terms are not honored in these circumstances, matter can be filed before the Council. After following due procedure of law, the Council can issue award and same could be sent to both Consulates i.e Foreign buyers Consulate in that country. It can be enforced.
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