There is no doubt that Delayed Payment has been and is the biggest problem majority of the business entities are facing and there are very less companies who pay to its vendors in time. This delay in payment to MSME creates a huge financial problem as due to this the money is stuck and the MSME business entities are not able to use the money for business growth and are stuck due to less finance and infact sometimes this money becomes claimable money and for this such business entities have to approach Court or Forum for recovery and this is where they have to approach Lawyers for recovery of money and in India to recover the money as such is big headache from legal point of view due to lengthy and more lengthy procedure and also a Litigation is a costly affair.

As per the published Annual Statement of MSME Body they have stated that “The Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. It contributes significantly in the economic and social development of the country by fostering entrepreneurship and generating largest employment opportunities at comparatively lower capital cost, next only to agriculture. MSMEs are complementary to large industries as ancillary units and this sector contributes significantly in the inclusive industrial development of the country. The MSMEs are widening their domain across sectors of the economy, producing diverse range of products and services to meet demands of domestic as well as global markets”.

There is no doubt of the relevance MSME business sectors are getting from the Government of India and infact many schemes and guidelines are being made to ensure a good future and success for MSME. It is very interesting to note that more than 38.95 lakh UAMs have been filed since September 2015 upto December 2017.

Benefit of MSME: Registration of an MSME is not legally mandatory but registering it will help you reap several benefits from the government including credit at low interest rate, incentives on products for exports, excise exemption, statutory aid such as reservations, and the interest on the payments delayed due to unavoidable Fees for MSME registration: There is no fee being charged for MSME Registration or popularly called as Udyog Aadhar Registration.

There are many benefits under MSME Act and infact getting business registered under MSME only plays an important part in availing the benefit of all the schemes under MSME Act. One of the most important and best advantages given to all MSME holders is the simplest process and procedure to recovery their pending dues from MSME Forum which is nothing but popularly called as Statutory Arbitration.

How MSME Registration helps in the Recovery of Dues?
There is a defined period for raising any dispute regarding goods or services under MSME rules from delivery and if there is no such raised dispute/s, then raising dispute at later stages is of no use and these reasons have been used by many in court matters in any monetary claim as defense and hence this benefit take away one of the major Defense of the proposed defaulter and secondly, the invoice payment has to be made within 45 days from the date of invoice except for any credit period mutually agreed between parties to the business. In case there is a default in making the payment, the following steps be followed:(The person who files the case is called Aggrieved Party/Claimant/s and against whom it is filed is called as Opposite Party/Respondent/s)
  • Issue MSME Civil Notice stating the provisions of MSME
  • In case of no payment, issue another Demand Notice
  • In case of no payment, then start drafting MSME Petition in the format as per MSME Act with the help of legal advisor and not else as a legal advisor is the best to understand the importance of drafting and its relevance at the time of argument. The process is that one has to submit the reference letter as per Form1 of said Act and rules and thereafter Petition and then Petition once accepted then will be forwarded to MSME Department for Conciliation/Arbitration and in the event, there is no response from defaulter, the Arbitration Proceedings will start to be held at MSME Office. As per MSME Act, all MSME proceedings shall be closed within 180 days and one of the prayers in MSME Petition shall always be claiming interest at the compound rate and other damages.
The biggest advantage of MSME Act is that MSME overrides the Contractual Arbitration clause between the Parties