The MSMED Act, 2006 provides strong statutory mechanisms to prevent liquidity distress and ensure timely payment recovery for Micro and Small Enterprises.
Key Legal Takeaway
Buyers must pay MSMEs within 45 days; failure attracts mandatory monthly compound interest at three times the RBI bank rate, enforceable through the MSME Facilitation Council.
1. Mandatory Statutory Payment Timelines (Section 15)
Payment must be released on or before the agreed date, which cannot exceed 45 days from delivery of goods or services.
2. Statutory Compound Interest (Section 16)
The buyer is statutorily liable to pay compound interest with monthly rests at 3 times the RBI repo rate for every day of delay.
3. Online Filing on MSME Samadhaan Portal
MSMEs can submit reference applications online with supply invoices, purchase orders, and delivery challans.
4. Mandatory Pre-Deposit for Appeals (Section 19)
If a buyer challenges an MSME Facilitation Council award in court, they must pre-deposit 75% of the awarded amount before the appeal can be entertained.
Frequently Asked Questions
Legal Guidance Note | RCS & Associates (Advocates & Lawyers in Roorkee & Haridwar)
Founder: Ramesh Chand Saini (Ex-Senior Prosecuting Officer, UP | M.A., MBA, LL.M.) | Member: Amardeep Saini (Notary & Advocate)
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