DELAYED PAYMENTS TO MICRO AND SMALL ENTERPRISES [Section – 15]
1. Where any supplier [Being MICRO OR SMALL ENTERPRISE], supplies any goods or any services to any buyer,
Buyer shall make payment thereof on or before the date agreed between buyer and the supplier in writing.
(‘’The date agreed between buyer and the supplier in writing SHALL NOT exceed Forty-Five Days from the day of acceptance of goods or services.
The date of acceptance of goods or services shall mean the date of actual delivery of goods or rendering of services if no objection made by the buyer regarding acceptance of goods or services in writing within fifteen day, if any 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 on which such objection is removed by the supplier shall be the date of acceptance’’)
Buyer shall pay before expiry of period of fifteen days from actual delivery of goods or the rendering of services:
|Where there IS AGREEMENT in writing between the buyer and supplier regarding date of payment.||Buyer shall pay on or before the agreed date between buyer and the supplier in writing.||Agreed date shall NOT EXCEED FORTY-FIVE DAYS (45) from the day of acceptance of goods or services.|
|Where there is NO AGREEMENT in writing between the buyer and supplier regarding date of payment||Buyer shall pay before the appointed day.||Before expiry of the period of FIFTEEN DAYS (15) from the date of actual delivery of goods or services.|
|This provision is applicable only if Supplier is either MICRO OR SMALL ENTERPRISE but buyer may be any enterprises that is buyer may be MICRO OR SMALL or Medium or Large ENTERPRISE|
CONSEQUENCES OF FAILURE TO PAY WITHIN PRESCRIBED TIME
If any buyer fails to make payment of the amount to the supplier within time specified in section 15 of Micro, Small and Medium Enterprises Development Act, 2006, the buyer shall, be liable to pay compound interest with monthly rests to the supplier on that amount from the date of acceptance of goods or services, at the rate of three times of the bank rate notified by the Reserve Bank of India notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force,
Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial / cooperative banks, development banks etc. current Bank Rate is: 5.40%
MICRO AND SMALL ENTERPRISES FACILITATION COUNCIL.
Each state have Micro and Small Enterprises Facilitation Council. Any party to a dispute may make a reference to the Micro and Small Enterprises Facilitation Council for conciliation or dispute resolution. Council will act as an Arbitrator or Conciliator in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India. Every dispute shall be decided within a period of NINETY DAYS from the date of making such a reference.
MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 & ANNUAL STATEMENT OF ACCOUNTS & Audit
Where any buyer is required to get his annual accounts audited under any law for the time being in force, such buyer shall furnish the following additional information in his annual statement of accounts, namely:
CLASSIFICATIONS OF ENTERPRISES
|Enterprises||Engaged in manufacture or production of goods||Engaged in providing or rendering of services|
|Investment in plant and machinery||Investment in equipment|
|“Micro enterprise”||≤ 25 lAKHS||≤ 10 Lakhs|
|“Small enterprise”||> 25 lakhs but ≤ 5 Crore rupees;||> 10 lakhs but ≤ 2 Crore rupees;|
|“Medium enterprise”||> 5 Crore but ≤ 10 crore rupees;||> 2 Crore but ≤ 5 Crore rupees;|
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved change in the basis of classifying Micro, Small and Medium enterprises from ‘investment in plant & machinery/equipment’ to ‘annual turnover’ but even after approval of the cabinet Section 7 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 not amended yet (detail available at https://pib.gov.in/newsite/PrintRelease.aspx?Relid=176353)
PROPOSED CLASSIFICATION AS APPROVED BY THE CABINET
A medium enterprise will be defined as a unit where the annual turnover is more than seventy five crore rupees but does not exceed Rs 250 crore.