MSMED ACT

Even not registered as MSME at the time of execution of contract with the debtor, the company qualifies to claim recovery of delayed payments.

Thank you for your revert Vibha.
Yes we are trying to recover payment but can we go through MSME? If yes, can't client claim that we were not informed about this at the time of providing services? Can you help me with the process in this type of situation?

Yes, for recovery of delayed payments, reference for resolution relating to delayed payments under Section 18 of the MSMED Act, 2006 shall be made.

The Company can also avail online portal of MSME Delayed payment portal which is MSME Samadhaan.

Sir, the client may claim that at the time of provision of services, the company was
not registered as MSME. So the company is not authorised to make reference under section 18 of MSMED Act, 2006. But there a Delhi High Court Judgement in this regard which says that MSME Registration is not mandatory at the time of entering contract for being eligible to make reference under section 18 of the MSMED Act, 2006. If the company is falling within the definition of MSME it can avail of section18 of MSMED Act, 2006.

Further the client cannot say that he/she was not informed about registration as MSME in near future as the company' s board takes decisions regarding all this. No permission is taken from any outsider which in your case is the client.

Thanks a lot Vibha. This will help me a lot.

You're Welcome Sir

Hello,
If I want to start new business of designer clothes I. E. for new startup I need machinaries like sewing machine etc. Starting with 2 3 workers on weekly basis payment.
So, what is applicability of MSME on this. May I get registered under the MSME act. Also guide on do and don'ts

Dear Mayur,

I would like to make a point in concern to whether a registration of a unit post the contract or post delivery of  goods/service will not be able to take the benefit of MSMED Act.

Although the Delhi High Court[4] has taken the view that entities which fall under the third limb of the definition are absolved of the obligation to get a registration but if we take a close look it is abundantly clear that the act talks about entities who are selling the goods and service of Micro or Small units. In my opinion the Delhi High Court Judgement is per incuriam since Bombay High Court and other High Courts have already held that  MSMED Act does not have retrospective effect and hence registration subsequent to the execution of the contract will not attract the MSMED Act 2006.

Saurendra Rautray

Advocate

Rautray & Co

New Delhi

9437008255