MSME & MSMEFC Practice

THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT (MSMED) 2006- A BRIEF INTRODUCTION: In most Developed countries and Developing countries like India, in order to address the concerns of the small and medium enterprises the sector is provided with an essential and much needed single Legal Framework.

The MSMED Act, 2006 came into force on 2.10.2006, specially enacted to facilitate the growth and development of the small enterprises and to help them achieve higher productivity in order to remain competitive in a fast globalization area. The legal framework is needed for providing fast redressal mechanism for Micro, Small and Medium Enterprises.

The act provides quick dispute resolution to the Micro, Small and Medium Enterprises to safeguard their rights and enhance their competitiveness in the market, it provides mechanism to resolve disputes relating to delayed payments through conciliation proceedings, on failing of which the parties are referred to Arbitration.

A Micro or Small Enterprise (Supplier) registered under the MSME Act, 2006 (Udyam Registration) may file its reference application seeking delayed payments from the buyers, along with the interest as stipulated under the Section 15-18 of Chapter V of the Act.

Under the act, the buyers are required to make payments to the supplier within the prescribed time stipulated in Section 15, failing which the buyer shall be liable to pay the statutory interest on the outstanding amount due towards the MSME.Under sec 16 of the act, the buyers are liable to pay the compound interest with monthly rests to the supplier on that amount from the appointed day or from the date agreed upon, at three (3) times of the bank rate notified by the RBI.

The appointed day means the day following immediately after expiry of the period of 15 days from the day of acceptance (day of actual delivery of goods or the rendering of services or the day of deemed acceptance of any goods or any services by a buyer from a supplier.

Thus, the suppliers for seeking recovery of their outstanding dues of delayed payment from the buyers shall approach the Micro and Small Enterprises Facilitation Council for conducting conciliation, by way of filing a reference application under sec 18 of the Act.

MSME SAMADHAAN PORTAL:
The supplier can file an application for recovery of delayed payment from the buyer on the MSME Samadhaan portal, by filling all the necessary details at each step of the application and uploading the relevant documents relating to the goods/services provided. The details to be filled in the application on the portal shall be strictly pertaining to the outstanding dues of delayed payments in respect to the goods/services rendered E.g. Description of Product/Services sold or provided by the claimant, date of delivery, bill raised on date, date when payment became due, amount received if any, also the application form provides automatic calculation of the interest in respect to the each and every bill due.

Further, after the application is filed on the portal by the supplier, the same is forwarded to the concerned Micro and Small Enterprises Facilitation Council of that State/U.T for initiation of conciliation, and if necessary, Arbitration proceedings.

REFERENCE TO ARBITRATION BY MSMEFC:
On failing of the initial conciliation efforts, the MSEFC, under the powers conferred by section 18(3) of the Act, may refer the parties to any institution or center providing alternate dispute resolution services for such arbitration and the provision of the Arbitration and Conciliation Act, 1996 shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in Sec 7(1) of that Act.

OVERRIDING EFFECT:
The Section 24 of the MSMED Act, 2006 clearly states that the provisions of sec 15 -23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

The Core objective of the Act is to safeguard the financial interest of the Micro, small and Medium Enterprises by ensuring expeditious recovery of the delayed payments for promoting easy business.

The firm AEGIS LEGAL has very wide practice in arbitration before DIAC where the matters are referred by the MSME Council in Delhi. The firm assists its clients at all aspects of the recovery proceedings viz. in filing of online claims on the MSME Samadhaan Portal, representation and appearances before the Micro and Small Enterprises Facilitation Council, MSME Compliances, Arbitration proceedings after referral to DIAC, and execution or challenge the arbitral awards under section 34 of the Arbitration Act, 1996 before High Courts. In a very short span, the firm has created its niche in the field of MSME practice of recovery of delayed payments & Arbitration, and identified as one of the best MSME law firm in New Delhi India.