The Micro, Small, and Medium Enterprises Development Act (MSME Development Act) is a pivotal piece of legislation aimed at fostering the growth of small businesses in India. Enacted in 2006, this Act provides a structured framework for facilitating the development, funding, and support of MSMEs. As these enterprises are the backbone of India’s economy, the MSME Development Act plays a vital role in accelerating their contribution to GDP and job creation.
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The MSME Development Act was introduced to promote and safeguard the interests of Micro, Small, and Medium Enterprises. This Act defines MSMEs based on their investment in plant, machinery, or equipment and annual turnover. It also establishes criteria to classify businesses and offers a slew of benefits to ensure their competitiveness in the global market.
The MSME Development Act aims to:
1. Classification of MSMEs
Under the Act, businesses are categorized based on their investment and turnover thresholds, ensuring clarity in eligibility for government schemes.
2. Facilitation of Credit
The Act emphasizes financial inclusion by mandating banks and financial institutions to provide collateral-free loans to MSMEs. This ensures easy access to credit, which is vital for their growth.
3. Protection Against Delayed Payments
One of the standout provisions of the MSME Development Act is the protection it offers to enterprises from delayed payments. Buyers are required to make payments within 45 days, failing which they are liable to pay a penalty.
4. MSME Facilitation Councils
To resolve disputes related to delayed payments, the Act establishes MSME Facilitation Councils. These councils are tasked with ensuring speedy redressal, empowering small businesses to thrive.
The MSME Development Act is a cornerstone of India’s economic strategy, ensuring small enterprises flourish in a competitive landscape. By offering financial aid, market access, and legal protections, the Act empowers MSMEs to become engines of innovation and growth. For any entrepreneur looking to start or expand a small business, understanding the MSME Development Act is essential for leveraging its numerous benefits.
By aligning your business objectives with the provisions of the Act, you can unlock opportunities for sustainable growth and success.
Money recovery is a critical process for individuals and businesses facing delayed payments or unresolved financial disputes.
Whether it’s about unpaid invoices, debts, or compensation, the importance of efficient recovery of money cannot be overstated.
This article highlights various approaches to ensure successful money recovery while emphasizing legal, financial, and strategic considerations
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Recovery of money refers to the process of reclaiming funds owed by an individual, organization, or entity. This issue often arises in business transactions, loans, or agreements where buyers delay or deny payments. To recover money effectively, you need a well-structured approach to ensure timely and lawful payment of outstanding amounts.
One of the most reliable methods for recovery of money is to pursue legal action. Depending on the nature of the dispute, creditors can file a complaint under the applicable laws, such as the MSMED Act for MSMEs or other debt recovery laws. Legal channels often involve:
1. Sending Legal Notices: Initiating communication with a debtor through a formal notice.
2. Using Arbitration or Conciliation: These alternative dispute resolution methods are cost-effective for money recovery.
3. MSME Samdhan: Best method of recovery through MSME Samadhan for Micro and Small Enterprises under the provisions of Micro, Small and Medium Enterprises Act, 2006.
4. Commercial or Civil Suits for money recovery: One of the methods to recover the money through this process in the Court.
5. Cheque bouncing cases: Applicable where cheque is issued and it bounces. Provisions of section 138 of Negotiable Instrument Act, 1881 applies.
6. Debt Recovery Tribunal: Normally available to Banking and financial institutions.
For businesses, recovery of money is essential to maintain cash flow and operational stability. Delayed payments can lead to financial strain, especially for small and medium enterprises (SMEs). Tools such as invoicing software, payment tracking systems, and reminders play a significant role in smooth money recovery.
To streamline recovery of money, consider the following best practices:
1. Document Agreements: Ensure all transactions are backed by signed agreements.
2. Maintain Clear Records: Keep detailed records of all invoices, payments, and communication.
3. Act Promptly: Address payment delays immediately to prevent further complications.
Recovery of money isn’t just for businesses; individuals can also face situations where they need to recover money. From lending money to friends to addressing fraudulent transactions, tools like legal advice, debt collection agencies, and online dispute resolution platforms are invaluable.
Money recovery is a crucial aspect of financial management, ensuring that funds owed are returned promptly and fairly. By understanding the available legal options, leveraging technology, and following best practices, individuals and businesses can make their recovery of money processes more efficient.
For seamless and effective recovery of money, always prioritize communication, documentation, and professional assistance when required. Ensure you follow a lawful approach to reclaim your dues without complications.
MSMED Full form is Micro, Small, and Medium Enterprises Development. MSMED refers to the Micro, Small, and Medium Enterprises Development Act, 2006, introduced by the Government of India.
he MSMED Act aims to support the growth and development of micro, small, and medium enterprises (MSMEs). It also focuses on enhancing the competitiveness of these enterprises in the country.
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The primary aim of the MSMED Act is to promote and facilitate the growth of MSMEs in India. It seeks to:
Provide Legal Framework: The Act establishes a clear legal framework for identifying, supporting, and categorizing MSMEs based on investment and turnover criteria.
Promote Competitiveness: By offering financial incentives, training, and infrastructure, the Act aims to enhance the competitiveness of MSMEs in domestic and global markets.
Address Payment Delays: The Act ensures timely payment to MSMEs, reducing financial strain and enhancing their operational efficiency.
Facilitate Credit Access: It promotes easier access to loans and credit, enabling MSMEs to invest in technology and business expansion.
Definition and Classification of MSMEs:
MSMED Act defines MSMEs based on investment in plant and machinery or equipment and turnover, making it easier to identify and categorize enterprises for various benefits.
Promotional Measures:
The government, under this act, undertakes initiatives such as providing credit support, setting up incubation centres, and encouraging innovation and entrepreneurship.
Delayed Payments Resolution:
MSMED Act mandates that buyers must make payments to MSMEs within 45 days of acceptance of goods or services. In case of delays, buyers are liable to pay interest three times the bank rate.
Establishment of Facilitation Councils:
The Act provides for the establishment of MSME Facilitation Councils in each state to help resolve payment disputes between MSMEs and their buyers.
Credit and Financial Assistance:
The Act ensures that MSMEs have better access to credit through initiatives like priority sector lending and the Credit Guarantee Fund Scheme.
The Act is critical for the growth of the Indian economy.
MSMEs contribute significantly to employment generation, GDP, and exports.
By addressing their specific needs and challenges, the act fosters a more inclusive economic environment. It also encourages innovation and self-reliance by supporting start-ups and small-scale industries.
The MSMED Act, 2006, is a cornerstone of India’s efforts to promote the micro, small, and medium enterprises sector.
Its comprehensive framework supports MSMEs in overcoming challenges and achieving sustainable growth.
With this act, the Government of India underscores the importance of MSMEs as a key driver of economic development, innovation, and job creation.
RBI Bank Rate current 2024 – MSME Notes by NB Associates
The Reserve Bank of India (RBI) is India’s central banking institution, responsible for regulating the country’s monetary policy. Among its many tools, the RBI bank rate is a crucial parameter. It influences the cost of borrowing and lending in the financial system.
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As of November 2024, the RBI bank rate current stands at 6.75%.
Last change in RBI Bank rate was on Feb, 2023 vide circular / notification RBI/2022-23/174 DOR.RET.REC.101/12.01.001/2022-23. It was notified on date February 8, 2023. On this date the Bank Rate is revised upwards by 25 basis points from 6.50 per cent to 6.75 per cent with immediate effect.
Click here to read the notification / circular
The bank rate is the interest rate at which the RBI lends money to commercial banks without any collateral for the long term. Bank rate is different from repo rate. Repo rate influences short-term borrowings with collateral. Bank rate often signals the overall interest rate environment. When the RBI increases the bank rate, borrowing from the central bank becomes costlier for commercial banks, leading to a cascading effect of higher interest rates in the economy. Conversely, a reduction in the bank rate can encourage borrowing and stimulate economic activity.
How RBI Bank Rate is connected is MSME Laws?
In case of delayed payment by the Buyer to the Supplier, section 16 of the MSMED Act, provides for the payment of compounding interest (monthly rest) at the rate which is 3 times of the RBI current bank rate.
Sec 29A of the Arbitration and Conciliation Act: An Overview
Arbitration has long been recognized as a cornerstone of alternative dispute resolution (ADR) mechanisms. It offers a faster, less formal, and often cost-effective means of resolving disputes outside traditional court systems. In India, the Arbitration and Conciliation Act, 1996 governs this process, aligning domestic arbitration practices with international standards.
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Among the numerous amendments made to the Act, the inclusion of Section 29A, introduced through the Arbitration and Conciliation (Amendment) Act, 2015, marked a significant step towards ensuring timeliness in arbitration proceedings.
Section 29A is a progressive yet stringent measure that mandates the timely resolution of arbitration cases, addressing one of the primary criticisms of arbitration in India—delays. This article explores the contours of Section 29A, its implications, and its impact on the arbitration ecosystem
Before the introduction of Section 29A, arbitration proceedings in India were often marred by undue delays, defeating the very purpose of choosing arbitration as a mode of dispute resolution. Critics frequently cited protracted timelines and procedural inefficiencies as significant drawbacks. To remedy this, Section 29A was added to the Arbitration Act in 2015, with the aim of introducing time-bound arbitration proceedings.
The section was envisioned to align Indian arbitration practice with global standards by ensuring that disputes are resolved efficiently. By enforcing strict timelines, the legislature sought to promote India as a hub for international arbitration, enhancing its credibility in the global business landscape.
Section 29A lays down a clear framework for the timely completion of arbitration proceedings:
1. Timeline for Completion of Proceedings
Section 29A(1) specifies that arbitral awards must be rendered within 12 months from the date the arbitral tribunal enters reference.
The period of 12 months can be extended by a mutual agreement between the parties, but this extension is capped at an additional 6 months.
2. Role of Courts in Extensions
If the arbitral award is not rendered within the stipulated 18 months (12 months plus 6 months extension), the parties must approach the court for an extension
Under Section 29A(4), the court may extend the time on reasonable grounds. However, courts are empowered to impose conditions, including a reduction in the arbitrator’s fees, if they find that the delay was caused by the arbitrators’ negligence.
3. Termination of Arbitrators’ Mandate
If an arbitral award is not rendered within the time frame specified under Section 29A, the mandate of the arbitral tribunal automatically terminates unless extended by the court.
4. Expedited Procedure
For matters requiring swift resolution, Section 29A encourages arbitrators to adopt expedited processes without compromising fairness.
The Arbitration and Conciliation (Amendment) Act, 2019 introduced significant changes to Section 29A to address practical challenges and enhance its effectiveness:
1. Applicability to Domestic Arbitrations
Post the 2019 amendment, the time limit under Section 29A applies only to domestic arbitrations. For international commercial arbitrations, no specific time frame is prescribed, reflecting the need for flexibility in such cases.
2. Commencement of Timeline
The 2019 amendment clarified that the 12-month period starts from the date of completion of pleadings. This modification prevents delays caused by procedural wrangling during the initial stages.
1. Promotes Timeliness
By enforcing strict deadlines, Section 29A addresses the perennial issue of delays in arbitration. Parties and arbitrators are incentivized to work efficiently to avoid court intervention or financial penalties.
2. Enhances Credibility of Arbitration
A time-bound resolution mechanism builds confidence among parties, particularly in commercial disputes. It underscores the efficiency and reliability of arbitration as an ADR mechanism.
3. Challenges in Implementation
While Section 29A seeks to promote efficiency, it has also raised concerns. Arbitrators have criticized the provision, arguing that strict timelines could compromise the quality of arbitral awards. In complex cases requiring detailed examination, adhering to rigid deadlines may not be practical.
Indian courts have played a pivotal role in interpreting and shaping the application of Section 29A:
1. Pro-Arbitration Approach
Courts have generally adopted a pro-arbitration stance, granting extensions under Section 29A(4) to prevent the annulment of arbitration proceedings due to technicalities.
2. Balancing Efficiency and Fairness
Judicial rulings emphasize that while timeliness is crucial, it should not come at the cost of justice. Courts often impose conditions on arbitrators to ensure accountability without undermining the arbitration process.
Despite its laudable objectives, Section 29A has faced criticism:
1. Potential Compromise on Quality
Critics argue that arbitrators may prioritize meeting deadlines over delivering well-reasoned awards, particularly in cases involving complex legal or factual issues.
2. Increased Court Intervention
The requirement to seek court extensions after 18 months can lead to procedural delays, contradicting the principle of minimal judicial interference in arbitration.
Flexible Timelines: Introduce flexibility in timelines based on the complexity of cases.
Specialized Arbitration Courts: Establish dedicated arbitration benches to expedite decisions on Section 29A applications.
Capacity Building: Invest in training and resources for arbitrators to ensure quality and efficiency in decision-making.
International arbitration frameworks often prioritize timeliness, but without rigid timelines. For instance:
The UNCITRAL Model Law on International Commercial Arbitration encourages efficient proceedings but does not prescribe specific deadlines.
In jurisdictions like Singapore and the UK, arbitral institutions play a central role in ensuring timeliness, rather than courts.
India’s adoption of a statutory timeline is unique but has sparked debates on its compatibility with international best practices
Section 29A of the Arbitration and Conciliation Act, 1996, represents a bold step towards making arbitration in India more efficient and time-bound. While it addresses the critical issue of delays, its rigid framework has raised concerns about its impact on the quality of arbitral awards and the increased role of courts
Striking a balance between efficiency and fairness is essential for realizing the full potential of Section 29A. By refining its provisions and fostering a supportive arbitration ecosystem, India can strengthen its position as a preferred arbitration destination while upholding the principles of justice and fairness.
MSME law refers to legislation and regulations governing Micro, Small, and Medium Enterprises.
These MSME laws are designed to provide a conducive environment for the growth and sustenance of small businesses, which are vital for economic development, employment generation, and fostering entrepreneurship.
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The major MSME Law in India is Micro, Small and Medium Enterprises Development Act, 2006. This MSME law is also called MSMED Act or MSME Act in short.
Besides, the several State governments have enacted its own MSME rules for giving intent to main MSME law.
The Central and the State Government, from time to time also come up with regulations, and notification in consonance with and to facilitation the provisions of the above MSME Law.
The above mentioned MSME laws include provisions related to:
1. Definitions and classification: Establishing criteria for defining what constitutes a micro, small, or medium enterprise based on factors such as investment in plant and machinery, turnover etc.
2. Registration and Compliance: Procedures for MSME registration to avail benefits of MSME law provisions and incentives provided by the government.
3. Financial Support and Incentive: Provision of financial assistance, subsidies, tax breaks, credit guarantees, and other incentives to support MSMEs in accessing capital, technology, and markets.
4. Promotion and Development: Measures to promote the growth and development of MSMEs through capacity-building programs, skill development initiatives, technology upgradation, market linkages, and entrepreneurship development.
5. Protection and Facilitation: Ensuring fair treatment, protection of interests, and facilitation of MSMEs in dealing with government agencies, larger enterprises, and other stakeholders
MSME laws aim to create an enabling environment for small businesses to thrive, contribute to economic growth, generate employment opportunities, and foster innovation and competitiveness.
They play a crucial role in promoting inclusive and sustainable development by empowering smaller enterprises and entrepreneurs.
MSME laws aim to create an enabling environment for small businesses to thrive, contribute to economic growth, generate employment opportunities, and foster innovation and competitiveness.
They play a crucial role in promoting inclusive and sustainable development by empowering smaller enterprises and entrepreneurs.
Section 19 of MSME Act – What is Section 19 of MSME Act
MSME Law Notes by NB Associates
A Micro and Small enterprise can file an MSME claim against its buyer if the buyer fails to make payment of the dues within a period of 15 (Fifteen) days of the date of the delivery of the goods or services.
Such a claim can be filed before the concerned MSME facilitation council through the online portal MSME Samadhan.
We have already published an article on MSME claim/court procedure and you can visit it by clicking here.
So, the MSME claim is finally adjudicated in an Arbitration proceeding conducted either by MSME facilitation council or an arbitrator appointed.
A party aggrieved with any order, decree or award passed under this arbitration proceeding can file an Section 19 of MSME Act under section 19 of the MSME Act.
We are the leading Law firm / Lawyers providing comprehensive MSME legal consultancy to our clients. We also help and legally assist our clients in the recovery of dues or outstanding.
Clients may contact us at the given number for any legal consultancy or through email id.
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So what is Section 19 of MSME Act.
Section 19 is a provision under MSME Act, which provides for filing of an appeal against the order, decree or award passed under an arbitration proceeding initiated under section 18(3) of the MSME Act.
It also provides pre-condition of the deposit of 75 % of the award amount before entertaining any appeal.
So, any person aggrieved with any order, decree or award passed under the arbitration proceeding initiated under section 18(3) of the MSME Act can file an appeal under section 19 of the MSME Act.
Section 19 of the MSMED Act provides for the filing of an application or petition to set aside a decree, award, or order made by the council itself or any alternative dispute resolution institution or centre referred to by the council.
According to Section 18(3) of the Act, the council has the option to either handle the dispute through arbitration itself or refer it to an alternative dispute resolution institution or centre.
Additionally, Section 18(3) states that the provisions of the Arbitration and Conciliation Act, 1996 apply to the dispute as if it were based on an arbitration agreement mentioned in Section 7(1) of that Act.
In accordance with the Arbitration and Conciliation Act, 1996, an objection or appeal against the arbitrator’s award can be filed under Section 34 of the Act.
Therefore, an application under Section 19 of the MSMED Act can be submitted under Section 34 of the Arbitration and Conciliation Act, 1996, in conjunction with Section 19 of the MSMED Act.
19. Application for setting aside decree, award or order.—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.
Section 19 of the MSMED Act stipulates that an application to challenge a decree, award, or order issued under Section 18(3) cannot be filed by the appellant (who is not a supplier) unless they have deposited 75% of the award amount with the court.
Therefore, unless 75% of the award amount is deposited with the court, no application under Section 19 of the MSME Act can be entertained by the court.
Furthermore, Section 19 of the MSMED Act grants the court the authority to direct the payment of the deposited amount to the supplier.
The court may issue such an order if it deems it reasonable given the circumstances, and the order may be subject to conditions determined by the court.
Thus, section 19 of the MSMED Act provides the followings:
1. An appeal against the order, decree or award under the proceeding started under section 18(3) / Arbitration proceeding can be filed.
2. No such appeal can be entertained by court unless the appellant (not being supplier) deposit with such court a sum equivalent to 75 % of the award amount.
3. Such deposited amount can be released to the respondent / supplier on such terms as the court may deem fit.
In an arbitration proceeding started under section 18(3) of the MSMED Act, the provision of Arbitration and Conciliation Act, 1996 applies 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.
Section 18(3) reads as under:
18.Reference to Micro and Small Enterprises Facilitation Council.—
(1)
(2)
(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 (26 of 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.
Under the provisions of the Arbitration and Conciliation Act, 1996 an objection or appeal to the award passed by the arbitrator can be filed under section 34 of the Arbitration and Conciliation Act, 1996.
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Bank rate notified by RBI for MSME delayed payment 2023
Section 16, read with Section 2(b) of the MSME Act, prescribes that:
– A buyer must make payment to a micro or small enterprise within a maximum period of 45 days. This period start from the acceptance or deemed acceptance of goods or services.
– If the buyer fails to do so, they must pay interest at a rate equal to three times the bank rate notified by the Reserve Bank of India.
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Bank rate notified by RBI for MSME delayed payment 2023 is currently stands at 6.75%
This means that a Micro or Small Enterprises can claim interest rate of 20.25 % per annum (6.75×3) from the buyer for delayed payment.
This interest is compounding at monthly interval as per the section 16 of the MSME Act.
Bank rate notified by RBI for MSME delayed payment 2023
| Start date | End date | Rate of Interest | Three times (x3) |
| 8-Feb-2023 | till date | 6.75 % | 20.25 % |
| 7-Dec-2022 | 7-Feb-2023 | 6.5 % | 19.5 % |
| 30-Sep-2022 | 6-Dec-2022 | 6.15 % | 18.45 % |
| 5-Aug-2022 | 29-Sep-2022 | 5.65 % | 5.65 % |
| 8-Jun-2022 | 4-Aug-2022 | 5.15 % | 15.45 % |
| 4-May-2022 | 7-Jun-2022 | 4.65 % | 13.95 % |
| 22-May-2020 | 3-May-2022 | 4.25 % | 12.75 % |
Section 17 of MSME Act – What is Section 17 of MSME Act
MSME Law Notes by NB Associates
Section 17 of MSME Act or MSMED Act deals with and provides for the buyer’s liability to pay interest to the supplier.
The interest amount also comes under the provision of ‘recovery of dues’ against the buyer.
The interest amount is also recoverable due as per section 17 of the MSME Act.
We are the leading Law firm / Lawyers providing comprehensive MSME legal consultancy to our clients. We also help and legally assist our clients in the recovery of dues or outstanding.
Clients may contact us at the given number for any legal consultancy or through email id.
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Section 17 of the MSME Act reads as under:
17. Recovery of the amount due.—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.
Section 17 of the MSME Act starts with the tile or heading ‘Recovery of the amount due’. It further provides that
For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon. Such interest is as per the provisions of section 16.
Section 17 of the MSME Act imposes the liability of the buyer to pay interest as per the provisions of section 16 of the Act and also provides that such interest amount is recoverable.
The above also signifies that such interest alone can also be recoverable. Thus when the amount was made however with delay, the supplier can claim interest on such delayed payment.
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MSME Award Appeal – Appeal against MSME Arbitration Award
MSME Law Notes by NB Associates
MSME Award Appeal here we mean and discuss Appeal against the order, decree or Award arising out of the statutory arbitration proceeding under MSME Act
An appeal against an Award, order or decree arising from a statutory arbitration proceeding under the MSME Act refers to the process of challenging a decision made during arbitration in accordance with Section 18(3) of the MSMED Act.
We are the leading Law firm / Lawyers providing comprehensive MSME legal consultancy to our clients. We also help and legally assist our clients in the recovery of dues or outstanding.
Clients may contact us at the given number for any legal consultancy or through email id.
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In the MSME claim proceeding, which is initiated under the MSMED Act, the dispute between the parties is eventually resolved through an arbitration proceeding.
This arbitration can be conducted by the MSME Facilitation Council or delegated to an alternative dispute resolution institution. The institution appoints an arbitrator to adjudicate the dispute.
If a party involved in the arbitration proceeding is dissatisfied with the final award, order or decision, they have the option to file an appeal. The appeal seeks to challenge the decision made during the arbitration process and requests a review of the order by a higher authority or court.
So what is MSME Award Appeal.
A Micro and Small enterprise can file an MSME claim against its buyer, if the buyer fails to make payment of the dues within a period of 15 (Fifteen) days of the date of the delivery of the goods or services.
Such a claim can be filed before the concerned MSME facilitation council through online portal MSME Samadhan.
We have already published an article on MSME claim / court procedure and you can visit it by clicking here.
So, the MSME claim is finally adjudicated in an Arbitration proceeding conducted either by MSME facilitation council or an arbitrator appointed.
A party aggrieved with any order, decree or award passed under this arbitration proceeding can file an MSME Award Appeal under section 19 of the MSME Act.
Section 19 of the MSME Act provides that an application for setting aside decree, award or order made by the council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the council, can be filed.
Section 18(3) of the Act provides 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.
Section 18(3) of the Act further provides that the provisions of the Arbitration and Conciliation Act, 1996 applies 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.
Under the provisions of Arbitration and Conciliation Act, 1996 an objection or appeal against the award passed by the arbitrator can be filed under section 34 of the Arbitration and Conciliation Act, 1996.
Thus, an MSME Award Appeal can be filed under section 34 of the Arbitration and Conciliation Act, 1996 read with section 19 of the MSMED Act.
19. Application for setting aside decree, award or order.—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.
Section 19 of the MSMED Act provides that no application for setting aside any decree, award or other order made under the provisions of section 18(3) can be filed unless the appellant (who is not a supplier) has deposited with the court 75 % of the award amount.
Thus no MSME Award Appeal can be entertained in court, unless 75% of award amount is deposited in the court.
Section 19 of the MSMED Act further provides that court can order such deposited amount to he paid to the supplier. Such order by the court can be made if court thinks it is reasonable under circumstances and such order can be passed subject to such conditions as the court think fit.
Thus, section 19 of the MSMED Act provides the followings:
1. An appeal against the order, decree or award under the proceeding started under section 18(3) / Arbitration proceeding can be filed.
2. No such appeal can be entertained by court unless the appellant (not being supplier) deposit with such court a sum equivalent to 75 % of the award amount.
3. Such deposited amount can be released to the respondent / supplier on such terms as the court may deem fit.
In an arbitration proceeding started under section 18(3) of the MSMED Act, the provision of Arbitration and Conciliation Act, 1996 applies 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.
Section 18(3) reads as under:
18.Reference to Micro and Small Enterprises Facilitation Council.—
(1)
(2)
(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 (26 of 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.
Under the provisions of Arbitration and Conciliation Act, 1996 an objection or appeal to the award passed by the arbitrator can be filed under section 34 of the Arbitration and Conciliation Act, 1996.
Thus, an MSME Award Appeal can be filed under section 34 of the Arbitration and Conciliation Act, 1996 read with section 19 of the MSMED Act.
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