MSME Facilitation Council - Jurisdiction & Dispute Resolution

Author: Advocate Nishant Nigam and Associate Ankit Ahuja

1. Any Micro or small enterprise having valid EM Part -II /UAM can apply to a ‘Micro and Small Enterprises Facilitation Council’ of a the state having jurisdiction to entertain the matter regarding dispute resolution where where any buyer fails to make payment of the amount to the supplier the buyer and such amount to due to be paid shall be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day from the date immediately following the date agreed upon, at three times of the bank rate.

2. The State Government shall establish one or more MSME Dispute resolution

State / UT Notified MSEFC Rules (As of 19.03.2019)

2. On receipt of a reference to a ‘Micro and Small Enterprises Facilitation Council’, the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or center providing alternate dispute resolution services by making a reference to such an institution or center, for conducting conciliation and the provisions of sections 65-81 of the Arbitration and Conciliation Act, 1996 shall govern the proceedings.

3. Every State Council has different rules (as provided by the act) where mainly the common procedure followed by them is (Delhi):

1. The Council shall have a meeting at least once a month.

1. A seven days notice shall be given for any meeting. But in case of urgency, a meeting may be called at a shorter notice by the Chairperson.

1. The Council or the party to the dispute may apply to the court under section 27 of the Arbitration and Conciliation Act.

1. On receipt of a reference under section 18 of the Act, the Chairperson shall cause the reference and the buyer's response to be examined and on being satisfied, a prima facie case for delayed payment shall be made.

1. The Council shall either itself conduct conciliation in each reference played or seek the assistance of any institute or center providing ADR by making a reference to such institute.

1. Where the conciliation does not lead to a dispute settlement, the council shall itself act as an Arbitrator for final settlement of the dispute or refer it to an institute for arbitration of such dispute resolution.

1. Any decision made by the council shall be made by a majority of its members present at the meeting of the council.

3. MSME Council Delhi or the center providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator as may be required under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India and shall follow its own rules regarding the same.

4. Every reference made under this section shall be decided within a period of 90 days from the date of making such a reference.

5. No application for setting aside any decree/award/order by 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 75% of the amount in terms of the decree/award/order

The process to apply at a Facilitation Councils (Online)

The User has to Ensure that -

1. Enter a valid User Id.

2. Enter a valid Password.

3. Enter a valid verification code as given in captcha image.

4. Click at the Login button

5. Once Logged in with valid credential the person will be redirected to Dashboard where multiple action can be done.

Implementation

The provisions under the Act are implemented by MSEFC chaired by Director of Industries of every State /UT having administrative control of the MSEFC Rules appointed by the state governments. State Government are requested to ensure and provide that the MSE Facilitation Council hold meetings regularly and delayed payment cases are decided by the Councils within a period of 90 days as stipulated in the MSMED Act, 2006 and are complying with rest of the provisions of the Act

Ease of filing application under State Facilitation Council –An Initiative from Office of DC(MSME), to ensure speedy dispute resolution has taken an initiative for filing online application by the supplier MSE unit against the buyer of goods or services before the concerned Facilitation Council of his state.

Presently, the applicant MSE unit submits an application in writing to the MSEFC of his/her State/UT. If the applicant is not aware of the details to be submitted before MSEFC sometimes adds to the delay. Once the portal is operationalised, the supplier MSE unit can submit online application which will be viewed by the concerned MSEFC.

The process of Dispute Resolution through a Flow Chart: