Msme development act 2006

Hi Mr Mukul,

As per you you have an award. if so then you need to file execution case against the buyers at the concerned district court. Have you filed it. Have they filed any application under section 34 objecting the award. What is pending before the collecctors,

Regards

Saurendra Rautray

Rautray&Co

New Delhi

09437008255

www.rautray.com

Dear Mr Rautray

I am running a micro manufacturing unit and supplying to Govt depts.I am registered with the Local DIC as well EMpart II/Udyog Adhaar 

I am getting delayed payments where in it is taking more than 100-130 days against receipt of material as a result our viability is severely being affected.More ever the Govt dept(buyer) is imposing heavy Liquadation damages on my firm on regularly as my deliveries of material are also being delayed due to delayed payments. The Govt dept buyer is not making timely payments but are deducting huge amounts as LD .

The LOA(letter of award) or Agreement which we have entered into with the Govt Dept has following clauses
1. Payment Terms - Payments will be made progressively as and when the payments are due as per terms of payments.

TERMS OF PAYMENTS -

Payment to be made to supplier ON receipt of material in Good condition by the consignee - No time or no of days has been mentioned so  
My query is- ON receipt means i am eligible for payment the next day i deliver the material or i will calculate Interest on delayed payment after  45 days of delivering of material??

2nd Query - In the agreement , the buyer has mentioned " No claim of interest will be entertained whatsover" .  But as per my information , our SSI unit will still  be eligible to get iNterest on delayed payments as MSME ACT 2006 supersedes/not withstands anything written/mentioned or contained in any other law what soever? Is that correct?   

Kindly suggest

Abhinav

omoroze@gmail.com

Dear Mr Rajasekaran

I am running a micro manufacturing unit and supplying to Govt depts.I am registered with the Local DIC as well EMpart II/Udyog Adhaar 

I am getting delayed payments where in it is taking more than 100-130 days against receipt of material as a result our viability is severely being affected.More ever the Govt dept(buyer) is imposing heavy Liquadation damages on my firm on regularly as my deliveries of material are also being delayed due to delayed payments. The Govt dept buyer is not making timely payments but are deducting huge amounts as LD .

The LOA(letter of award) or Agreement which we have entered into with the Govt Dept has following clauses
1. Payment Terms - Payments will be made progressively as and when the payments are due as per terms of payments.

TERMS OF PAYMENTS -

Payment to be made to supplier ON receipt of material in Good condition by the consignee - No time or no of days has been mentioned so  
My query is- ON receipt means i am eligible for payment the next day i deliver the material or i will calculate Interest on delayed payment after  45 days of delivering of material??

2nd Query - In the agreement , the buyer has mentioned " No claim of interest will be entertained whatsover" .  But as per my information , our SSI unit will still  be eligible to get iNterest on delayed payments as MSME ACT 2006 supersedes/not withstands anything written/mentioned or contained in any other law what soever? Is that correct?   

Kindly suggest

Abhinav

omoroze@gmail.com

You have correctly answered 2nd Querry;

There is no harm in highlighting delays in recovery under the "managed" conditions and you may get suitable directions for time bound recovery procedure from the High Court, which may not be easy for Collector / Tehlidar to overlook;

Contempt of Court can thereafter be persued;

Jai shree Ram !

Status at the relevant time matters, irrespective of your current status ?

You may pursue recovery in your erstwhile status only;

Jai shree Ram !

MSMED Act 2006 as well as Interest on Delayed Payment Act, enpowers units less tahn 5 cr investment to be qualified as supplier and toapproach the Facilitation Council. If you got an award in your favour, there is no issues, section 19 will apply , wherein the buyer has to contest with 75% predeposit within 90 days.

 

Dear Abhinav,

You can file the case but in you case since the demands are old four years have passed hence the limitation act applies which states that 3 years period is the limitation from the date of supply or payment which ever is later.

Secondly you need to be a supplier as per the msmed act. if any queries you can contact me.

I further fail to understand why people with an award need to go to the collector for enforcemnt instead of the court under section 36 of arbitration act.

Saurendra Rautray

Rautray&Co

www.rautray.com

09437008255

Dear Mr Rautray

Thanks for your reply.

Yes we are registered with as Small scal unit with Local DIC/MSME govt office. 

Regarding deadline of 3 years (according to limitation act) ,Instead of the deadline for filing of case being taken on date of payment or date of supply (which ever is later) , Can the deadline  also be taken from the date of Closure of agreement also??

As in our case , few agreements for supply of material are still ON GOING and if we start filing Interest on delayed on payments for payments which we received 3 years back , we are afraid that the (Buyer) Govt Dept might start putting Liquadation damages on every future payments we receive (based on delayed delivery of material penalty as our supplies are also subsequently being badly delayed due to delayed payment receipts from the buyer)  as retialiation against us. Since Liquadation penalty amounts are much higher (around 2-3 Lacs) which we wont be able to sustain at all.

Would you recommend us to wait for closure of agreements first and then apply for Intr on delayed payments even if it has crossed 3 years (from date of supply/date of payment) as per MSME act ??

Or 2nd option - Could be , instead of filing a formal case with the DIC , at present we can write a brief letter to the buyer govt dept intimating and requesting them that our past payments were delayed and therefore we are eligible for int on delayed payments etc etc. We will take receiving along with govt Seal on the letter , and keep as proof for future that we had informed the Govt dept about our grievance within time.

Actually Such letters never really reach the main authority and generally keep on lying with the lower lever clerks of the govt dept. In this case , the buyer wont get too much against us and later on after closure of agreements , we can then formal for proper case with DIC.   

If during the case , they say your matter is more than 3 years old and hence limitation act applies , we can show them this letters along with their receivings and prove that we had intimated them.

Looking forward to hearing from you.. I hope you understand our concern and situation.

Regards

Abhinav

Dear Sir,

If the agreement are still subisisting then you still have lot of time and you dont need to file the case. You can wait till the completion of the agreement and till  the payment made by the Govt dept thereafter you can choose to file. Please i wouldnt suggest to make them aware that you are aware of you rights of getting interest as a counter they might put damages against you even though not sustainable in law. so just simply write letter asking them for payment with interest as per law.

Regards

Saurendra Rautray

Rautray&Co

www.rautray.com

09437008255

Dear Mr Rautray

Thank you very much for your suggestion , we shall do the same and wait for agreements to first close .

One last query sir , as per MSME act we are aware, interest is calculated from date of receipt of goods in good condition . In our buyer govt dept , when we deliver the material , the dept verbally asks us to raise one TOTAL BILL (of all materials supplied in one month) in one Single go . It is the delibrate tendancy of our govt dept to keep out taking faults whatsover and ask us to repeatedly submit BILL again and again . This re submission of BILLS many times , results in wasting of 3-4 months.

We feel , when we will file for Intr of delayed payments case , i am sure they will try to defend themselves by saying that , the supplier did not submit the correct format of BILL etc etc and hence payment got delayed. How do you suggest we tackle this situation?

Or if the MSME law clearly says , from DATE OF SUPPLY OF MATERIAL , then we do not have to worry and date of supply records are very much with us along with proof of Invoice /material acceptance with us . Or will it be calculated from date of Raising of BiLL? In such a case we will be surely at a loss , due to clever tactics being used by lower lever Govt clerks/accountants etc?

Thank you again for your enlightenment

regards

Hi,

Since the supply has been made and the materials have been accpeted and they havent raised any objection regarding to the qulaity in this case you just carry one finish your contract and keep trying to get the max payment from them and when you feel that there is no hope there after you may file the case. But keep them posted about your payment delays and which resulting in intrets acculmulation in the bank if u have any loans, payment delay for labour, raw material etc. keep asking them for payment and tell them that cos of non payment your sufffering for procuring material, payment to labour , loan repayment etc etc. once you done then file the case as per MSMED Act read with Arbitration act 1996 read with limitation act.

Regards

Saurendra Rautray

Rautray&Co

www.rautray.com

09437008255

 

Surely sir, thankful for sharing your extremely valuable knowledge and experience on this MSME act.

regards

Limitation can be counted from the last receipt of billing for the entire running account;