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Study to collect MSME feedback on enforcement of contracts and awards of Arbitration, Facilitation Councils

Updated: May 06, 2019 09:38:09am
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Study to collect MSME feedback on enforcement of contracts and awards of Arbitration, Facilitation Councils

New Delhi, May 6 (KNN) The Federation of Indian Micro and Small & Medium Enterprises (FISME) has launched a programme of collating feedback from the Micro, Small and Medium Enterprises (MSMEs) nationally on enforcement of contracts and execution of awards handed by Arbitration and Facilitation Councils set up under MSMED Act 2016.

Enforcement of Contracts is one of the critical elements of business eco-system.  That is why it is included as one of the ten parameters in the World Bank’s ‘Ease of Doing Business Report’.

Incidentally, while India has jumped over 70 points during last five years in EODB ranking, one parameter on which it continues to remain at the bottom heap is ‘Enforcing Contracts’.

In a communication addressed to its hundreds of affiliated MSME associations, FISME observed that MSMEs suffered the most because of the prevailing dysfunctionality as they could ill afford the lengthy legal process and costs associated with it.

The feedback is being gathered in four major categories namely ‘Ease or difficulty in execution of Orders passed by Facilitation Councils in cases of delayed payments under MSMED Act, Experience of time and cost in pursuing Arbitration (with Government or Private agencies), Quality of Arbitration awards and MSMEs’ perception of awards being ‘just’ and Other methods MSMEs/ Industry resorting to solve disputes.  

‘With enhanced mandatory Public Procurement target (25%) from MSEs announced by Government recently and increased formalization of businesses, contracts are set to become more ubiquitous and so would be disputes and arbitration clauses.  However, even current arbitration dispensation suffers from huge cost and time overruns,’ FISME states.  

The Facilitation Councils- the quasi-judicial bodies, were set up by the State Governments under the MSMED Act 20016 to ensure speedy justice to MSMEs on disputes of delayed payment. However, they have yielded mixed results as their awards could not be executed especially those against the Government agencies and Public Sector Undertakings. (KNN/ AB)

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