MSMED ACT & ITS BENEFIT TO VALUERS

MSMED ACT & ITS BENEFIT TO VALUERS

AUTHOR: ER. NALIN TAYAL

MSMED Act ’06 was inceptualised on 16th June 2006 with an objective :

“An act to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto.

Whereas a declaration as to the expediency of control of certain industries by the Union was made under section 2 of the industries (Development and Regulation) Act, 1951;

And whereas it is expedient to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected herewith or incidental thereto”

The Act was created to provide a level playing field to SUPPLIER of goods and services irrespective of, their size. The Industry was left at the mercy of bigwigs, who called the shots and dictated their terms in the absence of any rules etc on payment terms.

The Act created categorization in the industry and accordingly benefits/incentives were planned for their handholding and development. Subsequently, the new definition of MSMEs came into existence on 01.07.2020, by virtue of this it is SMB (Small Medium Businesses) now instead of MSMEs.

Any SMB (Supplier of GOODS & SERVICES) is desired to get registered and obtained UDHYOG AADHAR MEMORANDUM # (UAM #). The entity of Business / Enterprises may be individual / Partnership / HUF / Society / Trust / Private Limited Company / Public Limited Company / LLP

In a recent Judgement of Hon’ble Delhi High Court.passed by Justice VibhuBakhru on April 7, 2018, in the matter of M/s Ramky Infrastructure Private Limited vs. Micro and Small Facilitation Council &Anr. W.P.(C) 5004/2017, wherein it has been held that an entity which falls within the definition of the micro/small enterprise will be treated as a ‘supplier’ under Section 2(n) of the MSMED Act even if it has not filed a Memorandum as required under Section 8(1) of the MSMED Act.

The important sections worthwhile for any entrepreneur are SECTION 15 – 19 OF MSMED Act 2006, which reads as under:

15. Liability of buyer to make payment.—Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:

Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.

16. Date from which and the rate at which interest is payable.—Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank.

17. Recovery of amount due.—For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under section 16.

18. Reference to Micro and Small Enterprises Facilitation Council.—(1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council.

(2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of sections 65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if the conciliation was initiated under Part III of that Act.

(3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer toany institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section(1) of section 7 of that Act.

(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India.

(5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference.

19. Application for setting aside the decree, award or order.—No application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy-five per cent of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court:

Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case, subject to such conditions as it deems necessary to impose.

CLICK BELOW TO READ MORE DETAILS