MSEs can also approach Ministry of Company Affairs to realise Delayed Payment
Updated: Jan 06, 2016 11:11:50am
New Delhi, Jan 6 (KNN) Delayed payments to MSMEs from the large units have emerged as a menace for the MSME sector. So far, only redressal availed by the micro and small enterprises was to approach the state facilitation council (MSEFC) to arbitrate on the issue. Recently, at the request of a small enterprise, Registrar of Companies of the State concerned has also issued notice to the Directors of the defaulting Companies.
In the Notice, the Company was ordered to comment on the complaint on delayed payment by the small enterprise. The Company and its Directors have also been cautioned by the notice that penal action may be contemplated under the Companies Act, if they fail to forward their comments by the stipulated date.
Delaying payments to the MSME suppliers is a common tool for the large enterprises to conserve funds and minimise working capital. As per a study by FISME, the leading federation of micro and small enterprises, more than Rs 10,000 crore of payment to micro and small enterprises are being held by the corporate sector beyond the designated date of payment.
Keeping in view the menace of the Delayed Payment in the MSME sector and its causal relation with sickness in MSMEs, Government enacted delayed payment act in 1999 which was subsumed in the MSME development act of 2006.
MSMED Act provides for arbitration in Delayed Payment by the state facilitation council (MSEFC) but its awards are often delayed and again challenged in the civil court. So the actual realisation of payment by MSEs through the MSEFCs is nearly negligible.
Taking a novel way, a small entrepreneur approached the public grievance portal of PMO, pgportal.gov.in to approach the Ministry of Corporate Affairs for taking action against the defaulting buyer and under instructions from the Ministry, the Registrar of Company of the State, where the defaulting Company is registered, has issued a notice to the Company and its Directors.
With some sweeping power under the Companies Act 2013, the Ministry of Company Affairs can force the corporate sector to release overdue payments to MSMEs and the final action to be taken in the instant case will be watched with interest by the MSME fraternity. (KNN/ DB)
In the Notice, the Company was ordered to comment on the complaint on delayed payment by the small enterprise. The Company and its Directors have also been cautioned by the notice that penal action may be contemplated under the Companies Act, if they fail to forward their comments by the stipulated date.
Delaying payments to the MSME suppliers is a common tool for the large enterprises to conserve funds and minimise working capital. As per a study by FISME, the leading federation of micro and small enterprises, more than Rs 10,000 crore of payment to micro and small enterprises are being held by the corporate sector beyond the designated date of payment.
Keeping in view the menace of the Delayed Payment in the MSME sector and its causal relation with sickness in MSMEs, Government enacted delayed payment act in 1999 which was subsumed in the MSME development act of 2006.
MSMED Act provides for arbitration in Delayed Payment by the state facilitation council (MSEFC) but its awards are often delayed and again challenged in the civil court. So the actual realisation of payment by MSEs through the MSEFCs is nearly negligible.
Taking a novel way, a small entrepreneur approached the public grievance portal of PMO, pgportal.gov.in to approach the Ministry of Corporate Affairs for taking action against the defaulting buyer and under instructions from the Ministry, the Registrar of Company of the State, where the defaulting Company is registered, has issued a notice to the Company and its Directors.
With some sweeping power under the Companies Act 2013, the Ministry of Company Affairs can force the corporate sector to release overdue payments to MSMEs and the final action to be taken in the instant case will be watched with interest by the MSME fraternity. (KNN/ DB)
Loading...
