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1) The new definition of MSME, vide notification on 1 st June 2020 in the official gazette, came into
effect from 1st July 2020 is as follows:
2) MSME manufactures a wide variety of products that are sold in domestic as well as international
markets. In this way the MSMEs help in the promotion of growth and development of Khadi,
Village and Coir Industries.
How are disputes resolved under MSME?
3) Any party with a dispute over an amount due to a Supplier may refer the matter to the MSME
Facilitation Council for resolution under Section 18 of the MSME Act.
4) There is a facility to make such a reference online through MSME Samadhaan Portal.
MSME Samadhaan is a Portal created by the Office of DC(MSME), Ministry of Micro,
Small and Medium Enterprises (MSME), where Micro and Small Enterprises (MSEs) can file
their applications online regarding delayed payments. The portal gives information about
individual CPSEs/Central Ministries, State Governments, etc. and other Buyers regarding the
payments pending with them in respect of the MSEs. The said portal also facilitates MSEs to
file their delayed payments-related complaints online.
Flow chart of the stages of Dispute filed through MSME Samadhan Portal
Conciliation proceeding
i) On such reference, there is a provision for conciliation between the parties. The
council can itself conduct conciliation proceedings or it may seek the assistance of an
institution or centre providing alternate dispute resolution services by making a
reference to such an institution or centre for conducting conciliation.
ii) The provisions of sections 65 to 81 of the Arbitration & Cancellation Act, 1996 apply
to such a dispute as if conciliation was initiated under part III of the Arbitration &
Cancellation Act, 1996.
Arbitration proceeding
iii) If the issues cannot be resolved through conciliation, the Facilitation Council either
takes up the case directly or refers it to an institution or centre for dispute resolution
through arbitration under the Arbitration & Conciliation Act, which must be
completed within ninety days of the referral.
iv) The provisions of the Arbitration & Cancellation Act, 1996 apply to the dispute as if
arbitration was in pursuance of an arbitration agreement referred to in section 7 of the
Arbitration & Cancellation Act, 1996
In the case of Jharkhand Urja Vikas Nigam Limited Vs State of Rajasthan & Ors. [Civil
Appeal No. 2899 of 2021] The Hon’ble Supreme Court observed that the conciliation and
arbitration proceedings under the MSME Act cannot be clubbed if the appellant did not
submit a response during the conciliation stage. As per the legislative mandate, the Council is
under the obligation to initiate an arbitration procedure if the conciliation procedure fails.
What are the Prerequisites for Making a Claim Before Micro and Small Enterprises Facilitation
Council (MSEFC)?
5) To file a complaint with the MSEFC, the concerned enterprise must have a Udyog Aadhar
Memorandum (UAM) or Udyam Registration prior to the dispute or contract with the
Supplier.
6) MSME should have a valid and strong claim against the Buyer. A well-founded claim
comprises a written purchase agreement and a valid invoice post-UAM or Udyam
registration.
7) Work Order is compulsory. In case the purchase order is oral an affidavit to that effect is to be
submitted.
8) It is also crucial that the statutory duration (45 days) from the date of acceptance or deemed
acceptance of the goods/service, within which the payment should have been made, stands
lapsed.
9) The application process mandates intensive scrutiny of relevant documents such as purchase
agreements, invoices, notices served, etc.
If there is no action on an application filed by MSEs, whom to contact?
10) After submission, the application is automatically forwarded online to the concerned MSEFC.
Therefore, the concerned MSEFC is to be contacted after filing the application online on
MSME Samadhaan Portal. The contact address of the concerned MSEFC is mentioned in the
acknowledgement sent to the registered email of the applicant
Form MSME-1
11) Purpose: The Ministry of Corporate Affairs (MCA) issued a notification on 22 January 2019
that specific companies having outstanding dues to the MSME (Micro, Small and Medium)
enterprises have to file the particulars of all current outstanding dues in Form MSME-1 with
the ROC (Registrar of Companies).
When the suppliers are registered under the MSME Act, and there are outstanding dues by a
company to the MSME suppliers, it must file Form MSME-1.
12) Who Should File: Specified companies should file Form MSME-1 when payments are due to
MSME for more than 45 days from the date of acceptance of the services or goods, along
with the reason for its delay.
13) Details to be reported in Form MSME-1:
CIN and PAN of the company
Name, address and e-mail of the company
Name and PAN of the suppliers
Outstanding amount due against the supply of goods or services
Date from which the amount is due
Reason for delay in payment of the amount due
Related Document and website with respect to HARYANA
MSME Samadhaan Portal: https://samadhaan.msme.gov.in
MSME Development Act, 2006:
https://samadhaan.msme.gov.in/WriteReadData/DocumentFile/MSMED2006act.pdf
Haryana MSEFC Rules, 2021: https://msme.haryana.gov.in/haryana-micro-and-small-
facilitation-rules-2021
Form I, II & III as per HMSEFC Rules, 2021
Udyam Registration: https://udyamregistration.gov.in
Haryana Udhyam Memorandum: http://harudhyam.edisha.gov.in
Bank Rate by RBI (click on Key Rates tab): https://dbie.rbi.org.in
Documents to be submitted to MSEFC Haryana