Status as on- 24/05/2022
MSME ACT 2006
Above the act of parliament received the assent of the president on the 16th of June 2006 and was published for the general public.
Let’s understand what MSME stands for, so the full form of the MSME i.e., Micro, Small, and Medium Enterprises.
The act provides for facilitating the promotion and development of MSMEs and for the matter connected thereto.
What is Appointed day: – The day immediately after the expiry of the period of fifteen days of acceptance or the day or deemed acceptance of any goods or services by a buyer from a supplier.
Day of acceptance
- The day when the actual day of delivery of goods and services.
- Where any objection made in writing by the buyer regarding the acceptance of goods and services within 15 days from the day of the delivery of goods or rendering of services, the day on which such objection is removed by a supplier.
- Deemed acceptance where no objection is made in writing by the buyer within 15 days in writing by the buyer regarding the acceptance of goods or services.
Section 7 Entities whether proprietorship, Hindu Undivided Family, Association of Persons, co-operative society, partnership firm, company, or undertaking by whatever name called are come under the purview of MSME.
- In the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and Regulation) Act. 1951.
a) Micro Enterprises where the investment in plant and machinery does not exceed twenty-five lakh rupees.
b) Small Enterprises where the investment in plant and machinery is more than exceed Twenty-five lakh but not exceed five corer rupees.
c) Medium Enterprises where the investment in plant and machinery is more than five corer rupees but does not exceed ten corer rupees.
2. In the case of the enterprises engaged in providing or rendering services.
a) Micro Enterprises where the investment in equipment does not exceed ten lakh rupees.
b) Small Enterprises where the investment in equipment is more than ten lakhs but does not exceed two corer rupees.
c) Medium Enterprises where the investment in equipment is more than two corer rupees but does not exceed five corers rupees.
Calculation of Investment in plant and machinery the cost of pollution control, research and development, industrial safety devices, and such other items as may be specified, by the notification shall be excluded.
Protection against the delayed payments
Section 15 where any supplier supplies any goods or renders services, to any buyer. The buyer has to make the payment on or before the date agreed upon between him and the supplier in writing or, where there is no agreement on this behalf, before the appointed day.
Provided that in no case the period agreed between the supplier and buyer in writing shall exceed 45 days from the day of acceptance or the day of deemed acceptance.
Section 16 where the buyer fails to make the payment of an amount to the supplier as required under Section 15 the buyer shall notwithstanding anything contained in any agreement between the supplier and buyer or in any law for the time being in force be liable to pay compound interest with monthly rest to the supplier on the 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 of India.
Section 18 (1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may with regards to any amount due under section 17, make the reference to the Micro and Small enterprises Facilitation council.
(2) On the receipt of a reference under sub-section (1), the council shall either conduct the conciliation in the matter or seek the assistance of any institution or centre for conducting conciliation. The arbitration and conciliation Act. 1996 shall apply to such dispute if the conciliation was initiated under Part III of the Act.
(3) Where the conciliation is initiated under sub-section (2) is not successful and stands terminated without a settlement between the parties. The council either takes up the dispute for arbitration or refers it to any institution or centre providing alternate dispute resolution services.
(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 the jurisdiction to act as an arbitrator and conciliator under this section.
(5) Any reference made under this section shall be decided within a period of 90 days from the date of making such reference.
Conclusion: It is suggested that every proprietorship, Hindu Undivided Family, Association of persons, co-operative society, Partnership firm, company or undertaking should registered under the MSME Act, 2006 as it helps the MSME’s to recover the money against the supply they made along with interest notified by the Reserve Bank of India (RBI) if any company make the payment after 45 day of acceptance of goods and service from any MSME’s vendor.
Disclaimer: The above article is based on the personal interpretation of the statute/ act. The reader is expected to expert opinion before relying upon the article. For more information please contact us.