MSME Case Filing – Step-by-Step Procedure

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Author- admin
Date:March 29, 2023

MSME Case Filing – Step-by-Step Procedure

Law Article by NB Associates

Micro and small enterprises (MSEs) can file MSME case to recover their dues or outstanding by using the provisions of sections 15 to 18 of the MSME Act.

These provisions are an effective solution for the MSEs dues recovery.

Here we are going to discuss the step-by-step procedure for MSME case filing.

So how can one go for MSME case filing?

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Step 1. MSME case filing through MSME Samadhan Portal

MSEs can file cases through MSME Samadhaan portal.

The Government of India launched the MSME Samadhaan portal in 2017. This portal allows MSMEs to file cases against buyers to recover their dues.

Access the MSME Samadhan Portal by following link:

https://samadhaan.msme.gov.in/MyMsme/MSEFC/COM_MSEFC_EntLogin.aspx

Required Documents for MSME case filing

While filing an MSME case through the MSME Samadhaan portal, MSEs must upload relevant documents, including the contract or work order and invoices,

Once the MSE files the case online, they receive an acknowledgment of receipt and a unique case number to track the case’s progress.

Eligibility for MSME case filing

The complainant or claimant should be a micro or small enterprise (MSE) as per the definition provided in the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

The Ministry of Micro, Small, and Medium Enterprises (MSMEs) provides a valid Udyog Aadhaar Number (UAN), a 12-digit identification number, to MSEs, which the complainant or claimant must have.

Read More – Who is eligible for MSME Samadhan?

What happens after MSME case filing

After filing an MSME case through the MSME Samadhaan portal, the system forwards the MSME complaint to the concerned buyer. The buyer has 15 days to respond to the complaint to the concerned complainant.

What happens if buyer does not respond or pay after MSME case filing

If an MSE files a case on the MSME Samadhaan portal and the buyer does not respond or pay, the system forwards the case to the respective MSME facilitation council.

MSME facilitation council then convert this complaint into an MSME case.

MSME facilitation council then start proceedings under section 18(2), which is a mandatory conciliation proceeding between the parties. If conciliation fails MSME facilitation council refers the matter to statutory arbitration.

Tracking of MSME case filing status

MSME Samadhan portal has a dashboard that enables MSMEs to track the status of their complaints online. The portal also provides information related to the various schemes and policies of the Government related to MSMEs

Thus, a complainant can always track the MSME case filing status.

You can track your MSME case filing status by following links :

Tracking your case status here :

https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_Entrepreneur_status.aspx

Is prior legal notice required to file an MSME case?

MSEs can issue a legal notice to the buyer demanding the payment of dues.

A legal notice serves as a warning to the buyer. It may prompt them to make the payment to avoid litigation.

However, it is not mandatory by law to issue a legal notice.

Step 2 . Conciliation proceeding under section 18(2)

MSME facilitation council converts the complaint into an MSME case, when buyer does not pay or respond to the notice issued after complaint filing.

Once the case becomes an MSME case, Section 18(2) requires conciliation between the parties.

The council can itself conduct conciliation proceedings or it may seek the assistance of an institution by making a reference to such an institution or centre for conducting conciliation.

Sections 65 to 81 of the Arbitration & Conciliation Act, 1996 apply to such a dispute as if the parties had initiated conciliation under Part III of the Arbitration & Conciliation Act, 1996

Step 3 . Arbitration proceeding under section 18(3)

If conciliation under section 18(2) is not successful or is terminated without a settlement, the MSME facilitation council refers the dispute to arbitration for adjudication as per the law.

The council can itself take the dispute for arbitration or refer the dispute to any institution or centre providing alternate dispute resolution services for such arbitration.

The provisions of the Arbitration & Conciliation Act, 1996 apply to such arbitration proceeding or disputes.

Appeal against decree, award or order under section 19

Section 19 of the MSME Act, provides for an application for setting aside a decree, award or order arising out of an arbitration proceeding can be filed.

The Arbitration and Conciliation Act, 1996 applies to any alternate dispute resolution or arbitration initiated under this Act.

Hence, a party can file an objection or application to set aside the decree or award order as per the provisions of Section 34 of the Arbitration and Conciliation Act, 1996, read with Section 19 of the MSME Act..

Arbitral decree, award or order – Execution

Parties can execute the decree, award, or order as per the provisions of Section 36 of the Arbitration and Conciliation Act, 1996..

Certain states have formulated their own rules allowing the recovery of the decree amount as arrears of land revenue, such as Rule 5 of the Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006.

MSME case filing provisions a significant step

MSME case filing provisions as provided under the MSME Act, and Govt of India initiative in the form of MSME Samadhan portal is a significant step towards creating a more business-friendly environment and improving the ease of doing business in the country.

The provisions of filing case through MSME Samadhan reduces the need for physical visits to government offices, saves time and resources, and provides greater transparency and accountability in the MSME dispute resolution process.

Conclusion

MSME case filing process is a significant step. It has made the recovery process easy for MSME.

MSME case filing through the MSME Samadhan portal awareness is gaining moment. However, we need to raise more awarenes.

Both the State and Central Governments need to make improvements in certain areas.

Hopefully, the Government is ensuring that it takes more and more improvement initiatives.