Nilesh M Kharche, LLB, CS
The Micro, Small and Medium Enterprises Development (MSMED) Act was notified in 2006 to address policy issues affecting MSMEs as well as the coverage and investment ceiling of the sector. The Act seeks to facilitate the development of these enterprises and enhance their competitiveness.
The highlights of the Act are enumerated as follows:
The Act contains 32 Sections divided into VI Chapters
Chapter I (Sec 1 – 2)
√ 2 (b) “appointed day” means the day following immediately after the expiry of the period of fifteen days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.
“the day of acceptance” means-
(a) the day of the actual delivery of goods or the rendering of services;
(b) where 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;
the day of deemed acceptance” means, where no 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 of the actual delivery of goods or the rendering of services;
√ Constitution (Sec 3)
-Head Office at Delhi, 48 Members
-Containing Ministers, MPs, Persons representing Indian Bank Association, RBI, association of Micro, Small & Medium enterprises, Central Govt. etc.
-Term (2yrs) and Procedure would be as may be prescribed
-No act or proceeding on the ground of vacancy, defect , irregularity in procedure etc
-Meeting once in three months
-Board has the power to associate with any person, association for the compliance of the provisions of the Act.
√ Removal of members by Central Govt if he/she adjudged as insolvent, become unsound mind, refuses to act as member, convicted of offence involving moral turpitude, abused the position (Sec 4)
√ Board’s functions for subject to the Central govt directions (Sec 5):- Promotion and development of micro, small and medium enterprise and enhancing competitiveness of them, make recommendation and advise Central Govt
√ Such other powers as may be prescribed (Sec 6)
NBMSME, Rules were notified on 26th September 2006 (G.S.R. 596 (E).
Insolvency laws in India:-
Moral turpitude is a conduct that is considered contrary to community standards of justice, honesty or good morals.
√ Classification on the basis of investment in plant & machinery for manufacturing and equipments for service sector (Sec 7)
Two types of industries:-
1. Manufacturing/ production- goods pertaining to industry specified in the first schedule to the Industrial (Development & Regulation) Act, 1951
2. Enterprises engaged in Service
Explanation 1:- cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded
Explanation 2:- Section 29B of the Industries (Development & Regulation) Act, 1951 shall be applicable to Micro and Small manufacturing enterprises
√ Filing of Memorandum with authorities as may be prescribed (Section8)
Advisory Committee Notification:- S.O. 1622 (E) 27th September, 2006
Authority for filing Memorandum Notification:- S.O. 1909 (E) 7th November 2006
Link for Industrial (Development & Regulation) Act, 1951
Measures for Promotion, Development and enhancement of competitiveness (Sec 9-13)
Few of the schemes and incentives:-
Refer following links for various schemes & incentives:-
Delayed payments to Micro and Small enterprises
√ Buyer who require to get accounts audited under any law shall furnish the following additional information:-
– the Principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier at the end of each accounting year;
– the amount of interest paid by the buyer in terms of Section 16, along with the amount of the payment made to the supplier beyond the appointed day during each accounting year;
– the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act;
– the amount of interest accrued and remaining unpaid at the end of each accounting year; and
– the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible under section 23.
Alternate dispute resolution is a process for the parties to come to an agreement without litigations through negotiation, mediation, conciliation, arbitration etc. Some of such associations are Internal Center for alternate Dispute resolution, India International ADR Association etc.
A annul Return needs to be filed with the DIC in ELP form by the Enterprises who has filed IEM and got the IEM No.
BENEFITS TO THE MSME ENTERPRISES
Following immediate benefits can be availed by the MSMEs on filing the IEM with the DIC:-
Apart from various incentives, export promotion, marketing assistance, MSMEs can avail the benefits under various policies as under