There are cases where a buyer of goods or services from MSMEs fails to make payment to the supplier for his supplies of goods or services. In extreme cases, the period of non-payment for goods and services received by the buyer may exceed 45 days from the day of acceptance of such goods or services.
Thus, to settle such issues related to delayed payments Micro, Small and Medium Entreprises Development (MSMED) Act, 2006, has laid out provisions to deal with such cases. Sections 15 to 24 of the MSMED Act, 2006, deals with the issues of delayed payments to the MSEs by buyers to MSE supplier. Further, the Ministry of MSME launched the MSME Samadhaan Portal where the aggrieved supplier can file a complaint regarding delayed payments and also check the status of such complaints. This article talks about what is MSME Samadhaan, its features and the procedure to file complaint on the MSME Samadhaan portal.
MSMED Act, 2006
The Micro, Small and Medium Entreprises Development Act 2006 lays down provisions to deal with the issues relating to delayed payments made to MSEs suppliers by the buyers.
In case an MSE buyer makes a delay in payment beyond 45 days, the MSE suppliers can approach the Micro and Small Entreprises Facilitation Council (MSEFC) constituted under the Act in all states or UTs.
Further, the buyer shall be liable to pay compound interest on monthly basis to the supplier at a rate that is three times of the bank rate notified by the Reserve Bank. And such an interest shall be payable on the amount from the appointed day or from the date that immediately follows the date agreed upon between the buyer and supplier for making such a payment.
So to settle the disputes pertaining to filing of complaints regarding delayed payments, the state government shall establish one or more Micro and Small Entreprises Facilitation Councils (MSFC) as per section 20 and 21 of the act.
The Council on receiving a complaint shall either undertake conciliation itself or take the assistance of any other institution. Further, the Council needs to adjudicate each reference made to it within a period of 90 days from the date of making such a reference.
Thus, MSEFC is the authority that implements the provisions of this act. Further, the Council is chaired by director of industries and is assisted by one or more officers or representatives of associations of micro or small industry, persons having specialized knowledge in the filed of industry, finance, law, representatives of banks and financial institutions lending to MSEs etc
Features of MSME Samadhaan
- As per section 16 of MSMED Act, 2006, the buyer is liable to pay compound interest on monthly basis to the supplier at a rate which is three times of the bank rate notified by the RBI. Such an interest is paid in case the buyer does not make payment to the supplier for goods or services supplied to him within a period of 45 days of acceptance of such goods or services.
- Each state government needs to provide notification regarding:
- authority for filing Entrepreneur Memorandum
- rules of MSEFC
- constitution of MSEFC
- Each reference or a case made to MSEFC must be decided within a period of 90 days from the date of making such a reference as per the provisions in the act.
- In case the appellant (who is not the supplier) wants to file an appeal, he can do so by depositing 75% of the award amount. The court shall not entertain any application made either by the council or any institution to which a reference is made to the Council for setting aside any decree, award or any order unless the appellant deposits the above mentioned amount.
MSME Samadhaan Portal
On 30th October, 2017, the ministry of MSME launched an online portal to enable the MSE suppliers to file an online application against the buyer of goods or services before they actually come to the concerned MSEFC of his or her state or UT.
These complaints will be viewed by the MSEFC Council in order to take further actions. Such complaints would also be visible to concerned central ministries, departments, state governments etc for proactive action.
Following is the procedure to file a case on the MSME Samadhaan portal – a delayed payment monitoring system:
- Access the MSME Samadhaan portal at samadhaan.msme.gov.in/.
- Enter your Udyog Aadhaar Number and mobile number as in the Udyog Aadhaar. Fill verification code as displayed and then click ‘validate udyog aadhaar’ button. You will get an OTP on your email. Fill the OTP and start filing the case.
- In case you have not registered under Udyog Aadhaar, then first register yourself at udyogaadhaar.gov.in and start filing the case on MSME Samadhaan Portal.
- You should have maximum three work order and three invoices in PDF to be uploaded on the portal. File size should not exceed 1MB.
- You can check status of your case by entering udyog Aadhaar Number or application number.