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CHAPTER V
: DELAYED PAYMENTS TO
MICRO AND SMALL ENTERPRISES |
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15. Where any supplier
supplies any goods or renders any services to any buyer, the buyer shall
make payment therefor on or before the date agreed upon between him and
the supplier in writing or, where there is no agreement in this behalf,
before the appointed day:
Provided that in no case the period
agreed upon between the supplier and the buyer in writing shall exceed
forty-five days from the day of acceptance or the day of deemed
acceptance. |
Liability of buyer to make payment. |
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16. Where any buyer fails to
make payment of the amount to the supplier, as required under section
15, the buyer shall, notwithstanding anything contained in any agreement
between the buyer and the supplier or in any law for the time being in
force, 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 upon, at three times
of the bank rate notified by the Reserve Bank. |
Date from which and rate at which interest is
payable. |
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17.
For any goods supplied or services rendered by the supplier, the buyer
shall be liable to pay the amount with interest thereon as provided
under section 16. |
Recovery of amount due. |
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18
(1) Notwithstanding anything contained in any other law for the time
being in force, any party to a dispute may, with regard to any amount
due under section 17, make a reference to the Micro and Small
Enterprises Facilitation Council.
(2) On
receipt of a reference under sub-section (1), the Council shall
either itself conduct conciliation in the matter or seek the assistance
of any institution or centre providing alternate dispute resolution
services by making a reference to such an institution or centre, for
conducting conciliation and the provisions of sections 65 to 81 of the
Arbitration and Conciliation Act, 1996 shall apply to such a dispute as
if the conciliation was initiated under Part III of that Act. |
Reference to Micro and
Small Enterprises Facilitation Council. |
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26 of 1996 |
(3)
Where the conciliation initiated under sub-section (2) is not
successful and stands terminated without any settlement between the
parties, the Council shall either itself take up the dispute for
arbitration or refer it to any institution or centre providing alternate
dispute resolution services for such arbitration and the provisions of
the Arbitration and Conciliation Act, 1996, shall then apply to the
dispute as if the arbitration was in pursuance of an arbitration
agreement referred to in sub-section (1) of section 7 of that
Act. |
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26 of 1996 |
(4)
Notwithstanding anything contained in any other law for the time being
in force, the Micro and Small Enterprises Facilitation Council or the
centre providing alternate dispute resolution services shall have
jurisdiction to act as an Arbitrator or Conciliator under this section
in a dispute between the supplier located within its jurisdiction and a
buyer located anywhere in India.
(5) Every
reference made under this section shall be decided within a period of
ninety days from the date of making such a reference. |
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19.
No application for setting aside any decree, award or other order made
either by the Council itself or by any institution or centre providing
alternate dispute resolution services to which a reference is made by
the Council, shall be entertained by any court unless the appellant (not
being a supplier) has deposited with it seventy-five per cent of the
amount in terms of the decree, award or, as the case may be, the other
order in the manner directed by such court:
Provided
that pending disposal of the application to set aside the decree, award
or order, the court shall order that such percentage of the amount
deposited shall be paid to the supplier, as it considers reasonable
under the circumstances of the case subject to such conditions as it
deems necessary to impose. |
Application for setting aside decree, award or order. |
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20.
The State Government shall, by notification, establish
one or more Micro and Small Enterprises Facilitation Councils, at such
places, exercising such jurisdiction and for such areas, as may be
specified in he notification. |
Establishment of Micro and Small Enterprises Facilitation Council |
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21. (1) The
Micro and Small Enterprise Facilitation Council shall consist of not
less than three but not more than five members to be appointed from
among the following categories, namely:-
(i) Director of Industries, by whatever name
called, or any other officer not below the rank of such Director, in the
Department of the State Government having administrative control of the
small scale industries or, as the case may be, micro, small and medium
enterprises; and
(ii) one or more office-bearers or
representatives of associations of micro or small industry or
enterprises in the State; and
(iii) one or more representatives of banks and
financial institutions lending to micro or small enterprises; or
(iv) one or more persons having special
knowledge in the field of industry, finance, law, trade or commerce.
(2) The
person appointed under clause (i) of sub-section (1) shall be the
chairperson of the Micro and Small Enterprise Facilitation Council.
(3) The composition of the Micro and Small
Enterprise Facilitation Council, the manner of filling vacancies of its
members and the procedure to be followed in the discharge of their
functions by the members shall be such as may be prescribed by the State
Government. |
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22. Where any buyer is
required to get his annual accounts audited under any law for the time
being in force, such buyer shall furnish the following additional
information in his annual statement of accounts, namely:-
(i) the principal amount and the interest
due thereon (to be shown separately) remaining unpaid to any supplier as
at the end of each accounting year;
(ii) the amount of interest paid by the
buyer in terms of section 18, along with the amounts of the payment made
to the supplier beyond the appointed day during each accounting year;
(iii) the amount of interest due and
payable for the period of delay in making payment (which have been paid
but beyond the appointed day during the year) but without adding the
interest specified under this Act;
(iv) the amount of interest accrued and remaining unpaid at the end of
each accounting year; and
(v) the amount of further interest
remaining due and payable even in the succeeding years, until such date
when the interest dues as above are actually paid to the small
enterprise, for the purpose of disallowance as a deductible expenditure
under section 23. |
Requirement to specify unpaid amount with
interest in the annual statement of accounts. |
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43 of 1961. |
23.
Notwithstanding anything contained in the Income-tax Act, 1961, the
amount of interest payable or paid by any buyer, under or in accordance
with the provisions of this Act, shall not, for the purposes of
computation of income under the Income-tax Act, 1961, be allowed as
deduction. |
Interest not to be allowed as deduction from income. |
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24.
The provisions of sections 15 to 23 shall have effect notwithstanding
anything inconsistent therewith contained in any other law for the time
being in force. |
Over-riding effect. |
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1 of 1996 |
25.
Notwithstanding anything contained in any law for the
time being in force, the Central Government may, with a view to
facilitating closure of business by a micro, small or medium enterprise,
not being a company registered under the Companies Act, 1956, notify a
scheme within one year from the date of commencement of this Act. |
Scheme for closure of business of micro, small and medium enterprises |
