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 firstname.lastname@example.org
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.
a). Micro, Small and Medium Enterprises Development Act, 2006;
b). Personal experience