The Parliament in all its wisdom passed the MSMED act 2006,
which enabled MSME units to file recovery suits within their own jurisdiction,
through a simple application to The Commissioner of Industries acting as a Quasi
Judicial Authority empowered to conduct arbitration between parties. The law
explicitly provided that the cases should be resolved
within 90 days after the application was filed with the Commissioner. It provided for above 30% interest on payments
delayed to MSME units beyond 45 days with compounding effect. With
respect to the matter of recovery, the Act
overruled all other terms of the
purchase order. The appeal
procedure required the appellant to deposit 75% of the award amount to
the court with court having jurisdiction to pass on the award amount or part of
it to the aggrieved party.
However, though this Act has benefitted many MSME units,
some MSME companies are not getting any
benefit of the same, as the big and the mighty companies specially in the field
of construction and contracting, which are vital sectors for any growing
economy, use the route of filing writ petitions
in High Courts and drag the procedures of the MSME Council. The writ petitions are admitted by the High Courts
and the Honourable Supreme Court though they do not have any major locus
standi.
It is obvious that the small companies, who are not in a
position to hire able lawyers and are already facing cash flow problems due to
stoppage of payments, do not have the wherewithal
to fight at that level.
There are cases where for a single outstanding case filed by
the MSME Unit the customer, instead of paying money, has filed 3 writ petitions
in 3 different courts of India and after having lost one of the cases has moved
the Supreme Court.
If the acceptance of frivolous Writ Petitions against the conduct of the MSME
Council proceedings are not admitted by the High Courts and the Honourable
Supreme Courts, and the Honourable Higher Courts ensure that the parties strictly
comply by the APPEAL PROCEDURE LAID DOWN BY THE MSMED ACT 2006 it will do a lot
of good to the MSME companies who many
times suffer at the hands of the bigger companies. Needless to say, the MSME
companies are the blood veins of the economy and facilitating early justice to
them is a major responsibility of the society.
Strict adherence to the MSME Act will without allowance of
frivolous Writ Petitions will deter
the delay of payments by the bigger companies to smaller companies.
I have written here how just making payments on time would lead
to a robust economy. Would feel
privileged if the reader also goes through this article in conjunction with the
current one.
Jai Hind.
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