The provisions under Section 15 to 18 of the MSME Act deal with the procedure that the Micro and Small Industries can follow to register MSME case to recover their dues or any outstanding.
These provisions are an effective solution for the MSEs dues recovery. Here we are going to discuss the step-by-step procedure for MSME case filing.
Step 1. MSME case filing through MSME Samadhan Portal
MSEs can file cases through MSME Samadhaan portal.
MSME Samadhaan portal was launched by the Government of India in 2017. This portal provides a platform through which an MSME case can be filed against the buyer for recovery of MSEs dues.
Required Documents for MSME case filing
The MSEs are required to upload certain documents at the time of filing the case through the MSME Samadhan portal. These documents can be contract order, work order or invoices, as the case may be.
Once the case is registered, an acknowledgement receipt with a unique case number is generated which can be later used to track the progress of the case.
Eligibility for MSME case filing
The complainant or claimant should fall under the category of micro or small enterprise (MSE) as per the definition provided in the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
The complainant or claimant should also have a valid Udyog Aadhaar Number (UAN), which is a 12-digit identification number provided to MSEs by the Ministry of Micro, Small and Medium Enterprises (MSMEs).
What happens after MSME case filing?
After MSME case filing through MSME Samadhan portal, the MSME complaint is forwarded to the concerned buyer. The buyer is given 15 days to respond to the complaint.
What happens if buyer does not respond or pay after MSME case filing
If a buyer does not respond or pay after a case has been filed by an MSE on the MSME Samadhan portal, the case is forwarded to the respective MSME facilitation council.
MSME facilitation council then convert this complaint into an MSME case.
MSME facilitation council then start proceedings under section 18(2), which is a mandatory conciliation proceeding between the parties. If conciliation fails MSME facilitation council refers the matter to statutory arbitration.
Tracking of MSME case filing status
MSMEs can track the status of the complaint online through their dashboard available on the Samadhan portal using the unique case number that is provided on the acknowledgement receipt.
The portal also provides information related to the various schemes and policies of the Government related to MSMEs.
Whether prior legal notice is required for MSME case filing
MSMEs can issue legal notice to the buyer demanding payment that is due. The legal notice serves as a catalyst and may prompt the buyer to make payment to avoid litigation.
However, it is not mandatory to issue a legal notice for filing a case.
Step 2. Conciliation proceeding under section 18(2)
When there is no response to the notice from the buyer or the buyer refuses to make the payment the MSME facilitation council converts the complaint into an MSME case. Once the case is converted into an MSME case, Section 18 (2) provides for conciliation between the parties.
The council can itself conduct conciliation proceedings or it may seek the assistance of an institution by making a reference to such an institution or Centre for conducting conciliation.
The provisions of sections 65 to 81 of the Arbitration & Conciliation Act, 1996 apply to such a dispute as if conciliation was initiated under part III of the Arbitration & Conciliation Act, 1996.
Step 3. Arbitration proceeding under section 18(3)
Where the conciliation under section 18(2) is not successful or stands terminated without any settlement between the parties, a reference to the arbitration is made by MSME facilitation council for adjudication of the dispute as per law.
The council can itself take the dispute for arbitration or refer the dispute to any institution or Centre providing alternate dispute resolution services for such arbitration.
The provisions of the Arbitration & Conciliation Act, 1996 apply to such arbitration proceeding or disputes.
Appeal against decree, award or order under section 19
Section 19 of the MSME Act, provides for an application for setting aside a decree, award or order arising out of an arbitration proceeding can be filed.
The provisions of the Arbitration and Conciliation act, 1996 are applicable to an alternate dispute resolution/arbitration initiated under this Act.
Hence an objection / Application for setting aside the decree, or award order can be filed as per provisions of section 34 of Arbitration and Conciliation Act, 1996 read with section 19 of MSME act.
Arbitral decree, award or order – Execution
The degree, award or order can be executed as per the provisions of section 36 of the Arbitration and Conciliation Act, 1996.
Certain states have formulated their own rule under which the amount decree can be recovered as arrears of land revenue e.g. Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006 (Rule 5)
MSME case filing provisions a significant step
MSME case filing provisions as provided under the MSME Act, and Government of India initiative in the form of MSME Samadhan portal is a significant step towards creating a more business-friendly environment and improving the ease of doing business in the country.
The provisions of filing case through MSME Samadhan reduces the need for physical visits to government offices, saves time and resources, and provides greater transparency and accountability in the MSME dispute resolution process.
Conclusion
MSME case filing process through the Samadhan portal is a significant step. It has made the recovery process easy for MSME.
The Samadhan portal is slowly gaining popularity among the MSEs. However, it is important to create more awareness among entrepreneurs with respect to the portal and other initiatives taken by the Government for the benefit of these MSMEs.
Hopefully, the Government is taking care to make this information widely available so the public can avail the benefits of such initiatives at large.