In India, the Micro, Small and Medium Enterprises (MSME) sector is one of the sectors that have provided job opportunities to thousands if not millions of unemployed people. The MSME sector has also helped to industrialized rural areas in the country. That’s not all; the MSME sector has in one way or the other contributed immensely in the equitably distribute of national wealth and income.
However, despite the numerous benefits accrued to the MSME sector, Central Ministry, State Governments, CPSEs, and some Departments of government formed a habit of delaying payments to service providers and suppliers of goods. In a bid to address this challenge, the Union Ministry of Micro, Small & Medium Enterprises (MSME) launched a portal known as MSME Samadhaan.
The intention of the portal is to empower small and micro-entrepreneurs across India to access the portal (http://msefc.msme.gov.in) and directly lodge their cases of delayed payment by buyers.
A case lodged by suppliers via the portal will be viewed by the MSEFC Council in order for the Council to take action. The cases will also be visible by defaulting buyers for pro-active actions
FEATURES OF THE PORTAL
The following are the features of the MSME portal:
- Entrepreneurs are to file an online application using Udyog Aadhaar Number: MSE or entrepreneurs should avail the portal to file their cases. However, such an entrepreneur must have a validated Udyog Aadhaar Number
- Check case status: MSEs or entrepreneurs can track the status of their applications using the MSME portal.
- Pending payment dashboard: The MSME portal provides information about any pending or delayed payments of entrepreneurs and MSEs with the buyers.
The portal is designed in such a way that the Secretary of the concerned Ministries and the Chief Executive Officer of PSEs will be able to monitor delayed payment cases under their jurisdiction and then issue notices to the buyers to resolve the delayed payment.
DELAYED PAYMENTS TO MICRO AND SMALL ENTERPRISES UNDER MICRO, SMALL AND MEDIUM ENTERPRISE DEVELOPMENT (MSMED) ACT, 2006
The MSMED Act, 2006 contains certain provisions which cater for delayed payment to micro and Small Enterprise (MSEs).
The MSMED Act, 2006 States that whenever a supplier renders any service or supplies goods to any buyer, the buyer is supposed to make payment on or before the due date mentioned in the agreement.
Where there is no agreement, then the buyer should make payment on the appointed date. There is a provision in the Act which states that sellers should not give credit deadline to buyers exceeding 45 days from the date of deemed acceptance.
In the event that a buyer defaults in payment to a supplier after 45days, the buyer is liable to pay a monthly interest at a rate set by the Reserve Bank of India.
Micro Enterprise: Microenterprise are businesses whose interest is in the manufacturing or production of goods and their investment in Plant and Machinery does not exceed Rs. 25 Lakhs as specified in the First Schedule to the IDR Act, 1951.
Small Enterprise: Small enterprise are businesses whose interest is in the manufacturing or production of goods and their investment in plant and machinery is more than Rs. 25 Lakhs but does not exceed Rs.5 crore
State governments have also established Micro and Small Enterprise Facilitation Council (MSEFC) in order to settle disputes arising from delayed payment. The responsibility of MSEFC is to issue directions to any defaulting buyers to make payment and the accrued interest as contained in the MSMED Act 2006.
Any case referred to MSEFC shall be treated and resolved within 90 days from the date the case was lodged as contained in the Act.
If the buyer wants to file an appeal, no Court shall entertain the appeal to set aside the decree of the MSEFC unless the buyer has deposited 75% of the decree amount with it.
On November 2, 2018, the Central Government in exercise of its powers conferred on it by Section 9 of the Micro, Small and Medium Enterprises Development Act directed that all buyers whose payment deadline have exceeded 45 days should submit to the Ministry of Corporate Affairs a half yearly return and also state the outstanding amount, as well as the reasons for the delay.