Key Provisions of the MSMED Act on Delayed Payments:
Timely Payment Obligation (Section 15): Buyers are required to make payments to MSE suppliers on or before the agreed date. If no specific date is mentioned, payment must be made within 45 days from the acceptance of goods or services.
Interest on Delayed Payments (Section 16): In cases where buyers fail to make timely payments, they are liable to pay compound interest with monthly rests to the supplier. The interest rate is three times the bank rate notified by the Reserve Bank of India (RBI).
Establishment of MSE Facilitation Council (MSEFC) (Sections 20 and 21): State Governments are mandated to establish MSEFCs to address disputes related to delayed payments. These councils facilitate conciliation and arbitration between buyers and suppliers.
Recent Developments and Mechanisms for Addressing Delayed Payments:
MSME Samadhaan Portal: To streamline the process of addressing delayed payments, the Ministry of MSME launched the MSME Samadhaan portal. This online platform allows MSEs to file complaints against buyers regarding delayed payments. Once a complaint is filed, it is directed to the respective MSEFC for further action. This initiative enhances transparency and expedites the resolution process.
Jurisdiction and Applicability: The MSEFC has the authority to entertain complaints related to delayed payments to MSMEs. Jurisdiction is typically determined by the location where the supplier (MSME) is registered. It’s important to note that while micro and small enterprises can benefit from these provisions, medium enterprises are excluded from certain benefits under the Act.
Dispute Resolution Process: Upon receiving a complaint, the MSEFC first attempts to resolve the dispute through conciliation. If conciliation fails, the matter proceeds to arbitration. The Act emphasizes timely resolution, with a stipulated period of 90 days for resolving such disputes.
Mandatory Deposit for Appeals (Section 19): If a buyer wishes to appeal against an MSEFC award, they are required to deposit 75% of the award amount before the court entertains the application. This provision acts as a deterrent against frivolous appeals and ensures that the interests of MSEs are protected.
Who Can Apply?
Any micro or small enterprise with a valid Udyam Registration can apply for redressal under these provisions. This registration serves as a recognition of their status and allows them to avail benefits and protections under the MSMED Act.
Add a Comment