A WAKE-UP CALL: MSMED ACT EMPOWERS YOU

The article incorporates relevant legal considerations under the MSMED Act, the importance of professional unity, and the implications of the recent award against PNB.

A Wake-Up Call for Valuation Professionals: MSMED Act Empowers You – Use It

By Er. Nalin Tayal | Special to CEV TECHNO NEWS

In a significant and empowering move for small service providers, a recent award passed by the Micro, Small and Medium Enterprises Facilitation Council (MSME FC) in favor of a registered valuer against Punjab National Bank (PNB) underscores a critical message: legal recourse under the MSMED Act, 2006 is real, enforceable, and must be exercised.

The Case in Brief

The valuation professional in question had a pending fee of ₹1,86,731 for services rendered to the bank. However, the payment was not made within the stipulated timeline under the bank’s own procurement policy, which aligns with the MSME Development Act (MSMED), 2006 norms. Upon initiating proceedings under the Act, the Facilitation Council awarded an additional ₹3,27,724 as interest, calculated as per Section 16 of the Act.

This award – totaling over ₹5.1 lakh – was not only a financial vindication but also a symbolic victory for small service providers routinely sidelined by large institutional clients.

Understanding the MSMED Act, 2006: A Lifeline for Service Providers

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is a progressive legislation designed to protect and promote the interests of micro and small enterprises. Two key provisions that make this law a game-changer are:

Section 15: Mandates that buyers (including banks and PSUs) must make payments to registered MSMEs within 45 days from the date of invoice or delivery of goods/services.
Section 16: If a buyer defaults, the supplier is entitled to compound interest at three times the bank rate notified by the RBI, starting from the date of default.

What makes this mechanism more effective is the dedicated Facilitation Council (MSME FC) set up in each state to adjudicate disputes. These councils have powers equivalent to that of a civil court under the Arbitration and Conciliation Act, 1996 – ensuring speedy, enforceable remedies.

Valuers and Professionals: Why You Must Register Under the MSMED Act

The financial and emotional cost of chasing delayed payments is not unfamiliar to many valuation professionals, especially those engaged by banks, NBFCs, and government bodies. However, a surprisingly low number of service providers in this sector have formally registered under the MSME portal.

This needs urgent correction.

By registering as an MSME (now called Udyam Registration), professionals unlock a host of legal protections:

Time-bound payments from clients.
Access to statutory interest on delayed payments.
Eligibility for various government schemes (credit support, marketing promotion, grievance redressal).
Legal standing before MSME FC to initiate arbitration.

Moreover, Indian banks themselves – under RBI guidelines and internal procurement policies – are obligated to honor invoices from MSMEs within 45 days. Yet, the fear of losing business often deters professionals from enforcing their rights.

Professional Unity is Not Optional – It’s Essential

The recent award is more than just a victory for an individual—it is a call for collective awakening. UNITY IN PROFESSION is not a slogan, it is a survival strategy.

Too often, valuation professionals underquote, compromise on terms, or remain silent on overdue payments out of fear of being blacklisted. This weakens the profession’s ability to demand fair treatment and opens doors to exploitation.

Instead, imagine a united professional front where:

Every valuer is MSME-registered.
Payment delays are uniformly challenged.
Fair pricing and standard contract terms are adopted.

Such unity will not only elevate the profession but will also force systemic change in how institutions engage with service providers.

In Short:

This landmark award against PNB should serve as a template and a torchlight. It proves that legal rights are not merely ornamental—they are actionable when pursued diligently.

As a valuation professional or any service provider working with institutional clients:

✅ Register under the MSMED Act via the Udyam portal.
✅ Ensure invoices are dated and acknowledged.
✅ Track payment timelines and initiate proceedings after 45 days of delay.
✅ Support fellow professionals in asserting their rights.

In an evolving economic ecosystem where MSMEs are the backbone of innovation and service delivery, asserting your legal and financial rights is not defiance—it is your duty.

Let this be the turning point.

For assistance with MSME registration, or to understand your rights under the Act, contact your local MSME Facilitation Council or consult with legal professionals experienced in MSME and commercial dispute resolution.