Are you a business owner registered under Udyam Registration who has customers who wont settle your dues on time?
You might be among the many MSMEs who also face this problem while doing business in India. The Ministry of MSME through The Micro, Small and Medium Enterprise Development Act, 2006 has laid down a framework and provision to assist MSMEs with this problem of delayed payments or potential bad debts. The Ministry recognizes that this problem has been causing a hindrance in the growth of MSMEs and moreover the environment it creates is not favorable for business growth in India. To help MSMEs with this problem the Ministry of MSME has included some provisions under the MSME Development Act, 2006.
The Section 15 to Section 24 of the Micro, Small and Medium Enterpsrise Development Act 2006, lays down a provision of Delayed Payment to Micro and Small Enterprises and requires the state governments to establish the Micro and Small Enterprise Facilitation Council [MSEFC] for settlement and resolution of disputes arising from non-payment or delayed payment to MSMEs.
The MSEFC of the state will examine the case filed and issue directions to the buyer for payment of the due amount with interest as per the provisions laid in the MSMED Act, 2006.
First things first, let us understand who is eligible to avail the benefits under this provision.
Eligibility Criteria –
All MSMEs who have a valid Udyam Registration Certificate are eligible to avail benefits under this program.
Application Process –
The Ministry of MSME has introduced the MSME Samadhaan Portal where the eligible Micro & Small Enterprises can file a case using their Udyam Registration Certificate.
You can use the below link to file a case: https://samadhaan.msme.gov.in/MyMsme/MSEFC/COM_MSEFC_EntLogin.aspx
Process of every case –
After a case has been filed the following process is followed:
-
The Application is sent to the respective council and it takes 15 days to take initial action on the case by this Council.
-
The Entrepreneur and the Buyer will both be notified by Mail or Email.
-
The Council will give an option to the Entrepreneur to mutually settle the application before registering a case. The Entrepreneur can choose to amicable settle the matter and intimate the council accordingly, if the buyer does not co-operate then the Entrepreneur can direct the council to register a case.
-
Upon reviewing the merits of the application the Council will take an action to register a case.
If the application does not have merits the Council has the right to reject the application.
-
A second intimation is sent to the Entrepreneur and the buyer by SMS and Email by the council upon registering the case.
-
The council upon receiving replies from all parties or either parties will decide on a hearing date.
-
Upon hearing both sides the council will make a final decision. If any of the party decides not to respond the council will make a final decision based on the legal grounds and proofs submitted with the application.
Till date a total of 94,426 applications have been filed.
Out of them 9246 applications have been mutually settled by the buyer and whereas 19155 applications were rejected by the Council for having insufficient merits.
At present there are 41467 cases filed having a total amount of Rs. 14839.15 Cr. involved and 13807 cases have been disposed. The remaining pending cases are awaiting for response from either parties.
A Few Salient Features of MSME Samadhaan which we might have missed
-
If found guilty, the buyer will have to pay a compound interest with the monthly interest to the supplier at a rate which will be three times of the bank rate notified by the RBI.
-
Every case which is referred to the MSEFC shall be decided within a period of 90 Days from the date such a reference was made.
-
If anyone except the supplier wants to file an appeal, then such an application shall not be entertained by the MSEFC unless a deposit of 75% of the reward has been made by the appellant.
The purpose of the Ministry of MSME to promote Udyam Registration in such a large scale all over India is to be able to help implement such and similar other schemes for the benefits of MSMEs in India. The government aims at creating a business friendly environment in India through the system of Udyog Aadhaar and Udyam Registration. Every Udyami as the government likes to call registered MSMEs is an important part of the economy and cannot be neglected at any cost.
You can read more about MSME Samadhaan by visiting their official link as given below:
https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_Welcome.aspx