MICRO AND SMALL ENTERPRISES FACILITATION COUNCIL
In an economy wherein, transactions between suppliers and buyers are several and numerous, an instance might occur wherein the buyer of the goods or services, does not pay the agreed upon consideration or value of the goods or services availed by him, to the supplier. To insulate such a supplier, and also reprimand the buyer defaulting with his payments, an authority, namely, the “Micro and Small Enterprises Facilitation Council” was brought in by the Micro, Small and Medium Enterprises Development Act, 2006.
According to Section 15 of this Act, when a supplier, who is registered as a micro or a small enterprise, supplies any goods or renders any services to a buyer, the buyer must make the payment for the said goods or services, as the case maybe, on or before the date which is agreed to in writing by the parties, or if there is no such agreement, then before the appointed day, which is within 15 days from the day of acceptance or the day of deemed acceptance of the goods or services, as the case may be. Such period agreed to by the parties in writing, must not exceed 45 days from the day of acceptance or the day of deemed acceptance.
Section 16 of the Act states that, if the buyer fails to make payment of the amount to the supplier, as mandated under Section 15 of the Act, the buyer shall, irrespective of what is contained in any agreement between the supplier and the buyer, or in any law, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day, or as the case may be, from the date immediately following the date agreed to, at three times the bank rate notified by the Reserve Bank of India.
Section 18 of the Act states that, any party to a dispute can make a reference to the Micro and Small Enterprises Facilitation Council. The mode of settlement to be employed by the Facilitation Council shall be conciliation, an amicable method of Alternative Dispute Resolution. The Facilitation Council can either conclude the conciliation by itself or refer it to a suitable institution for the same. If the process of conciliation goes in vain, the Facilitation Council, shall then employ arbitration as the method of settlement of the dispute in hand. The arbitration proceedings can either be concluded by the Facilitation Council itself or referred to a suitable institution for the same. Such references of disputes by parties to the Facilitation Council, shall be adjudicated and decided within 90 days from the date of making such references.
Section 19 of the Act states that, if an order or decree, delivered in a dispute, by the Facilitation Council, either by way of conciliation or arbitration, is challenged by the aggrieved party (not being the supplier) by making an application to the Court, he must first deposit with it 75% of the amount decided by the Facilitation Council, in its order or decree. The Court shall order a percentage of such amount to be paid to the decree-holder, which shall depend on the facts and circumstances of the case.
Sub-rule (iv) of Rule 3 of the Karnataka State Micro and Small Enterprises Facilitation Council Rules, 2018, states that, the State Government may specify any fee and for processing charges paid while filing application.
Sub-rule (i) of Rule 7 of the Rules, provides that, an aggrieved Micro or Small Enterprise unit can move a reference to the Facilitation Council which has jurisdiction of the area, in the format provided as Schedule-1 of these Rules. The said reference must contain the Udyog Aadhar Memorandum (UAM) number, mobile number and e-mail address of the aggrieved Micro or Small Enterprise unit as provided in Schedule-1.
The Micro and Small Enterprises Facilitation Council is of much relief to the micro and small enterprises in our country, as it helps them to avoid the long delays and huge Court fees, in case they had to approach an ordinary Court of law, for the recovery of money.
Authored by:
Adv VISHNU P.V
Associate,
MENTO ASSOCIATES