Background:

Hope all of you are doing great, this write up will be helpful for the small businesses that are searching to recover their outstanding from corporate and other entities.

Government of India has taken number of measures for the promotion and development of MSME ie., Micro, Small and Medium Enterprises as it is being presumed that this sector in very critical for the overall development of a nation. Further, these small businesses plays substantially role in the economy of a nation as they not only generate production but also help in creating employment opportunities for the younger generation.

Going forward, as the very title of the present article suggest, I will be restricting the flow only towards recovery of delayed payment, this mean that I am assuming you all are well aware of the provisions related to the classification and other condition for the recognition of MSME.

Quick look to the relevant Provisions

Chapter V of the Micro, Small and Medium Enterprises Development Act, 2006 (Hereinafter “MSMED”) contained the provisions with regard to the recovery of the outstanding from the buyer in case of any service(s) availed or good brought by him.

Section 15: It provides that buyer to make payment in case of any service(s) being availed or good brought by him on or before the date as agreed in writing otherwise before the appointed date.

It is to be noted that the period whether agreed in writing or otherwise cannot exceed a maximum period of 45 days from the day of acceptance or deemed acceptance. This means that buyer to make payment in all cases before 45 days. Here, it is equally important to understand the meaning of the terms ie., appointed date, day of acceptance or deemed acceptance collectively used in the aforesaid provision.

Appointed date means the day following immediately after the expiry of the period of 15 days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.

Day of Acceptance means,-

(a) the day of the actual delivery of goods or the rendering of services; or

(b) where any objection is made in writing by the buyer regarding acceptance of goods or services within 15 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;

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.

Section 16: Buyer shall be liable to pay compound interest with monthly rests in case of failure to comply with the aforesaid provision. Interest Rate will be 3 times of the bank rate notified by the RBI.

Section 17: Buyer to make payment along with interest.

Section 18: MSME may make a reference to the Micro and Small Enterprises Facilitation Council (“MSEFC”) and MSEFC may initiative on its own, action as it may deed necessary.

Though the provisions for recovery were always there from the constitution of the Act however, it is being very difficult for the small business registered under the Act to recover the outstanding from Big Entities. Further, the problem still persist, if you are also facing the same problem ie., whom to visit or before whom to file an application and/or complaint, or having any concern here is how your problem can be resolved.

Government of India has lunched https://samadhaan.msme.gov.in portal, a unique and central point where all the MSMEs can file their compliant.

Step 1: Visit above web portal and look for the option case filing for entrepreneurs/MSE units in the menu bar. After clicking above option enter your UAN and the mobile number which was provided at the time of registration along with the verification captcha. Thereafter, one time password will be sent to your registered email ID please enter that and click on continue.

Step II: Now, you will see an option Application entry which will help you to file an application and/or compliant with the appropriate authority, before filling it please keep the details of work orders and/or details of invoices ready or any other document which can prove your claim. You can provide the details over the portal, if it is less than 5 however, in case it is more than 5 then you can combined all invoices in single PDF and upload it over the web-portal and submit it, thereafter one more page will be pop-up for the review and final submission.

Step III: All done now MSEFC will send this application to the concerned respondent and status of your compliant can be seen Entrepreneur Application list, the application will be proceed faster than that of the court, furthermore the concerned officer may ask you to come and advise you in case of any other document and/or information being required by him.

Hope the write will provide clarity on how to proceed with filing of compliant for recovery of money.

You can reach out in case of any clarification at cspraveensingh111@gmail.com

Disclaimer: The above write up is only for the educational purpose and shall not constitute any opinion. Author in no case shall be responsible for and actions being taken on the basis of above write up.

Source:

a). Micro, Small and Medium Enterprises Development Act, 2006;

b). Personal experience

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Company: Letscomply a unit of Red Chilli Management Services Private Limited
Location: Delhi, New Delhi, IN
Member Since: 08 Sep 2017 | Total Posts: 23
Praveen Singh is a Founder and Managing Partner of TRIJURIS (Legal & Taxation Service Provider in Delhi). The head office of the firm is based in Delhi. The firm inter-alia engaged in providing services related to Corporate and Commercial laws advisory, Indirect taxation, Setting up industries in In View Full Profile

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31 Comments

  1. JAY N DAVE says:

    Dear Sir,
    My firm is engaged in trading and distribution of mechanical components. I have registered my firm under UAM /MSME in June 2020. Under MSME act we have filed a complaint for recovery of dues of one customer whose invoice date is SEPT 2019 / OCT 2019 / NOV 2019. Its been almost 2 months still havent got response MSEFC Council although they have send a notice to the buyer on the date of our complaint. All I need to know is whether we are eligible to route the case through MSME or should check other way which you suggest. Awaiting your advise. Thanks in advance. JAY DAVE. Metasys

  2. NIPUN SHAH says:

    Sir how can payment recover if buyer had apply to close GST & also he start with other GST registration with other firm , proprietary firm .

  3. Prakash Mirani says:

    We are registered under msme. Our product is c grade item for our customer. Some of them hold payment for indifinte period and then stop business with us and start procurement from another supplier. How Can we collect payment from these willful defaulters some limited company and some Pvt. Ltd?

  4. Praveen says:

    Sir I am pmegp loan in Tumkur ruler village cattle feed manf my project not viable and source SBI manager scheme cancel in my project please help me 9113046212

  5. Yashvant Purushottam Deshpande says:

    Respected sir, I have lodge a complaint and Registered No.MH00015546 on 15/10/2019 for the delayed payment but still awaiting for the reply.I am unable to know.Viie status says Check with MSFC.
    But failed.How to confirm? Please help me.

  6. Sunil says:

    I registered case with Samadhan and uploaded documents. We uploaded invoice and order separately and noticed from confirmation copy received that system only saves last loaded document and the earlier ones are deleted. We checked with Samadhan office if can submit hard copy set but were told, you will be called when case is taken and can give it that time. However after 3 months we received mail stating case is rejected as PO is not attached. Please confirm is there a procedure we approach them again and submit papers for reassessing case???

  7. Mukesh Kumar says:

    In february 2020 have registered in MSME.
    Can we apply for non payment claim in MSME Samadhan prior to registered invoices. May be 2-3 months back of February 2020.

  8. Suman Malhotra says:

    I have supply from delhi to mumbai , last month due to loack down agreement not done and everything done on phone conversion, now the buyer is not paying to us . my company is register in MSME. can we file complaint against them.
    we have send the invoice to them and we have proff of delivery as well.

  9. Ajita Lopes says:

    We have uploaded order copies and relevant invoice on MSME site. Our application Transferred to Facilitation Council MSEFC-Konkan Thane. Now what is the further process? By when we will received the payments? Let us know the process from uploading the files on MSME site to payment received.

  10. Vikram says:

    I have not mentioned my msme number on my invoice but I’m already registered on Msme.can i file a complaint against my buyer for non payment by him.i received the order on phone.also what to mention in the work order number and date.what document should I upload for work order number

  11. Rakesh Kotecha says:

    sir ,
    we have supplied goods to govt office in multiple invoices against one PO and they have paid us part amount and balance they are not paying from last 3 years dispite many follow ups can we register complaint and how do we upload so many invoices

  12. Rajesh B Mestry says:

    Good Morning Sir,

    I Had Registered in MSME micro on 3-6-2020, but my bill to customer is on 31-3-2020 can I register complaint , recd Cerficiate also on 3-6-2020 of registration, Please tell

  13. Aditya says:

    Sir i am supplies many invoice buyer he did not give me any work order she gave me order on telephonic he gives me half payment of my invoice can I take action against him on msme portals

  14. SACHIN says:

    Dear Saurendra Sir, The service sector “lessor” gives porta cabins, ACs, PCs on rent to commercial, industrial, institutional clients. Their gross block of cabins, AC, PC (used for rental business) value is Rs. 2.5 cr. And equipment to maintain, repair, lift etc. is only Rs. 5 lakhs. What amt to be considered as investment in equip to fit in micro status thereby availing FC platform for recovery of delayed payments?

  15. Dipankar B says:

    Dear sir ,

    We have filed a case against a limited company for non payment of invoice. In May 2019 , the first supply has made and in july 2019 2nd supply has made against their purchase order. After regular followup the company has refused to pay saying that the material is not in use. In such cases they have damaged the material also. I have finally sent them a legal notice and also filed a complain in MSME samadhan . Now my question is what is the percentages of getting the payment and what time it may take

    1. Saurendra Rautray says:

      Dear Mr Dipankar,
      The question that has been put by you cannot be answered by any lawyer. There have been cases where MSEF Council has decided the case within four months and there have been cases where the award has been passed after many years. The result of the case depends on the facts of the cases. I would suggest to file the case against the buyer before MSEF Council directly rather than wasting time in samdhan portal.
      Regards
      Saurendra Rautray
      Rautray& Co
      New Delhi
      9437008255

      1. Praveen says:

        You are right is to better to file directly as once you filed the complaint online you may be asked to submit it offline as well if form as defined under MSME rules

    2. Praveen says:

      One need to note that you cannot take benefit of 2 legislation here, sending legal notice and then filing case in district court will not be possible if you have filed the complaint over MSME samdhan portal. Wait for a while if you have filed the complaint you will receive the money soon.

      1. Manoj Routroy says:

        Dear Praveen, Please be informed that I have posted the non paying complain at MSME portal bur no response is coming since last three months. What next. please guide.

  16. kunal mohite says:

    Do buyer and supplier both has to be registered under MSME act if we need to register complaint buyer.

    If buyer is not an MSME member then how shall we recover money and how to register a complaint

    1. Saurendra Rautray says:

      Dear Mr Kunal,
      There is no need for the buyer to be registered under the MSMED Act for filing a arbitration Claim. The only requirement is that the seller needs to be registered under the said Act.
      Saurendra Rautray
      Rautray & Co
      New Delhi
      9437008255

    2. Praveen says:

      Seller must be registered and msme no. must be mentioned in invoice while issuance of invoice, it is a pre condition for filing suit

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