TMI BlogRECOVERIES UNDER MSMED ACT 2006X X X X Extracts X X X X X X X X Extracts X X X X ..... RECOVERIES UNDER MSMED ACT 2006 - By: - VAIBHAV JAIN - Other Topics - Dated:- 16-1-2023 - - Brief Overview of the MSMED Act 2006 The Micro small and Medium Enterprises Development Act 2006 (MSMED Act) was enacted as a special law for facilitating the promotion and development micro, small and medium enterprises (MSME s) and contains detailed provisions for the benefit of such enterp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises The aim behind the enactment of the Act was to establish a mechanism for expeditious adjudication of the claims of the MSME s and to accordingly ensure the financial viability of MSME s through timely recovery of pending dues Applicability of MSMED Act MSMED Act is applicable to manufacturing enterprises engaged in production of goods and provision of services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recently in 2021, the MSME Policy division issued an office memorandum covering Wholesale and Retail traders (for NIC codes 45-47) also under the MSME scheme Enterprise under the MSMED Act has been defined as S.No Enterprise Investment in plant and machinery Turnover 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Micro Does not exceed 1 crore Does not exceed 5 crore 2. Small Does not exceed 10 crore Does not exceed 50 crore 3. Medium Does not exceed 50 crore Does not exceed 250 crore Investment in plant and machinery link ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to Income Tax returns filed for previous years. For new enterprises investment based on self-declaration Turnover of an enterprise to be taken from linked GST Portal Procedure to be followed for Re-claiming outstanding dues The Seller who is a supplier registered under MSMED Act (with Udyam Registration) can file its claim for recovery of the outstanding dues along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith interest Interest rate: As per the provisions of the Act, the supplier is mandatorily eligible to interest at 3 times the bank rate as per the provisions of the act. Interest is also compounding.. This provision at times leads to a situation where generally the Interest is more than the principal amount, and has to be paid as per the provisions of the Act MESFC Council : C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim first gets filed before the Micro and Small Enterprise Facilitation Council (MSEFC Council) with Claim petition, outstanding invoices, work orders and agreement (if any) Territorial jurisdiction Claim is required to be filed in the jurisdiction of the seller irrespective of the cause of action, or where the buyer resides as is generally the process followed by Civil Courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Conciliation proceedings: Notice is issued by the Council to the buyer for appearance and settling the disputes. Generally two-three short dates are given to settle the disputes Arbitration proceedings: In case Conciliation fails, matter is referred to Arbitration centre and Arbitration proceedings are commenced. The Council in some states even takes Arbitration proceedings itself. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, in Delhi it is before Delhi International Arbitration centre (DIAC) in Delhi High Court Time Duration: Generally , the process before the Arbitrator is completed within one, one and half years Arbitral award: On passing of a favourable arbitral award, and the buyers if challenges the same, it is important to note that he has to first deposit 75% of the award amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under the law. This generally does not happen in civil proceedings challenging a favourable order Costs Very nominal fee is required to be filed before the MSEFC council for filing a claim by the seller. Court fees for arbitration before the Arbitration centre is to be equally shared by the buyer and not completely borne by the seller itself Remarks: For recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery of outstanding dues, it is advisable to file a claim under the MSMED Act, for faster recovery of outstanding dues, reducing debts and increasing cash flows for the business - Reply By deepak gulati as = Q. 1.what is the jurisdiction if registered office is in Delhi and Factory is out of Delhi? Goods supplied from out of Delhi. Q.2. Do Jurisdiction has any relation with Bank Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .? Dated: 12-9-2023 Reply By VAIBHAV JAIN as = Answer 1- Jurisdiction will be Delhi Answer 2- No Correlation with Banks Dated: 12-9-2023 - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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