Addressing Delayed Payments in MSMEs: Role of MSME SAMADHAAN

Legal Framework

The Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 outlines provisions for Delayed Payment to Micro and Small Enterprises (MSEs) under sections 15 to 24. The Act mandates the establishment of Micro and Small Enterprise Facilitation Councils (MSEFCs) by state governments to mediate disputes relating to delayed payments (Sections 20 and 21).

Assistance Provided

Upon reviewing the case presented by an MSE unit, the relevant MSEFC will instruct the buyer unit to pay the due amount plus interest as detailed under the MSMED Act 2006.

Eligibility Criteria

Any micro or small enterprise holding a valid Udyam Registration is eligible to apply.

Key Features

Under the Act, the buyer is obliged to pay compound interest, calculated monthly, to the supplier at a rate triple the bank rate determined by RBI if payment for goods or services is not made within 45 days of acceptance (Section 16). It is the responsibility of state governments to notify the Authority for filing the Entrepreneur Memorandum, outline the Rules of the MSEFC, and establish the MSEFCs. All States/UTs have done so in line with the provisions of the MSMED Act 2006. Any case referred to an MSEFC must be resolved within ninety days from the date of filing (Section 19).

Implementation

The implementation of the Act’s provisions is the responsibility of the MSEFC, chaired by the Director of Industries of the state or union territory overseeing the MSE units. State governments and UTs are requested to ensure regular MSEFC meetings and timely decision-making within the mandated 90-day period.

MSME Samadhaan Portal – A Government Initiative

The Ministry of MSME has launched an online application system enabling supplier MSE units to file a case against the buyer before the pertinent MSEFC of their State/UT. These applications are accessible to MSEFC Council members, central ministries, departments, CPSEs, and state governments for proactive action.

Steps to Lodge a Delayed Payment Claim Online

1. Visit the MSME ministry’s delayed payment filing and monitoring portal at samadhaan.msme.gov.in
2. Click on ‘Case Filing for Entrepreneur/MSE Units’
3. Specify your MSME registration type — Udyog Aadhaar Number or Udyam Registration Number
4. Input your registration number, mobile number (as in the registration certificate), and verification code
5. Click on ‘Validate Udyog Aadhaar’ or ‘Validate Udyam Registration’ as per your registration type
6. Input the OTP sent to your registered mobile number or email address for verification
7. Upload PDFs of required documents (each no larger than 2MB), such as work orders from the buyer and invoices you’ve issued against these orders
8. Click ‘Submit’ to complete the application process
9. You will receive an acknowledgement and the contact details of the relevant MSEFC in your state