If your enterprises fall under the definition of Micro Small and Medium Enterprises as defined under Section -7 of MSMED ACT, 2006, then this article will help you in recovering your outstanding dues, which are pending for more than 45 days. As per a report published in Today’s Economic Times (03/11/2019), small and medium enterprises are facing a cash crunch situation, because they are not receiving their dues within the decided time period, which creates hurdle even in their growth as well as in survival in this competitive market.  As per data published in the report, Indian firms have the worst payment record in the Asia Pacific. On average bases Indian firms take 67 days to get their payments against the global average of 65 days. To improve this situation the Government of India has taken many initiatives but its effects are not very much visible in a practical situation, the reason for this is that, either the procedural part is so much time consuming like a court case or they are not aware of these initiatives.

In today’s article, we are going to discuss a very good initiative taken by the Government of India to help MSME Enterprises to file a complaint against the person who defaults in making payment after the decided time period. The prerequisite for filing an application under MSME SAMADHAAN, your enterprises must be covered under the MSMED Act, 2006 and you have a valid Udyog Aadhar Number.

MSME Samadhaan

Eligibility and Benefits:

  • Any enterprises having Valid UAM can file their application under this initiative
  • 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
  • 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

Details required while Filing an Application under MSME SAMADHAAN

  • UAM Number of Entity who wants to file Application
  • Mobile and mail accessibility, which is used at the time of UAM Registration
  • Copy of Work order/ Purchase Order for which payment is under dispute
  • Copy of Invoices under dispute along with proof of delivery/ receipt from the buyer.
  • Complete address detail of Buyer and supplier along with mail and mobile detail

After successful submission of application, concerned department issue notice to both parties (Buyer and Supplier) and try to resolve the disputed matter with mutual consent. If a dispute is not sorted with mutual consent then concerned department will file a formal case against the buyer and further proceeding will be governed by the MSMED Act, 2006

FAQ’s on MSME SAMADHAAN

  1. Whether submission of the work order is mandatory while filing an application under MSME SAMADHAAN?

 Yes, a work order is compulsory. In case of purchase order is oral an affidavit to that effect is to be submitted.

  1. Whether a trading concern can file an application for recovery of their dues?

No, as on date only manufacturing and service sector is allowed to file an application through this initiative

  1. Whether the silence of the buyer after physical receipt of goods can make a claim ineligible for admission by the Council?

No. The silence of the buyer is confirmation of liabilities upon him. 

  1. Whether the council should deliver a conciliation award after the successful conciliation?

 Yes. It is called award by mutual consent. It is a valid award and the buyer cannot make an appeal against it. 

  1. Whether a legal notice by the supplier to the buyer is necessary before filing the case in the Council?

No, Issuance of legal notice is not mandatory

Source: Economic Times, MSMED Act, 2006, MSME Samadhaan

This article is for the purpose of information and shall not be treated as a solicitation in any manner and for any other purpose whatsoever. It shall not be used as a legal opinion and not be used for rendering any professional advice. This article is written on the basis of the author’s personal experience and provision applicable as on the date of writing of this article. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of other readers.

The Author “CA. Shiv Kumar Sharma” can be reached at mail –shivsharma786@gmail.com and Mobile/Whatsapp – 9911303737/ 9716118384

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Qualification: CA in Practice
Company: Shiv Kumar Sharma & Associates
Location: Delhi, New Delhi, IN
Member Since: 03 Dec 2018 | Total Posts: 21
My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. I have Qualified my B.Com (H) in 2010 And Cleared CS- Executive Exam in June 2013. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. View Full Profile

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