If a company does not have MSME registration gain it still file for receiving its outstanding under the MSME act?

Introduction 

The Micro, Small, and Medium Enterprises (MSME) sector plays a vital role in the economic growth and development of a country. In India, the MSME sector is governed by the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006. One significant provision of this act is the timely payment of dues to MSMEs by buyers. However, a common question arises: Can a company file for receiving its outstanding payments under the MSME Act if it does not have MSME registration? In this blog post, we will delve into this topic and explore the legal aspects surrounding the issue.

Understanding the MSME Act

The MSME Act was enacted to promote the development of micro, small, and medium enterprises in India. It provides various benefits and protections to MSMEs, including provisions for timely payment by buyers. As per the act, a buyer is required to make payment to an MSME supplier within a stipulated timeframe, failing which the buyer becomes liable to pay compound interest as well as face potential legal consequences.

MSME Registration and Its Significance

MSME registration is a voluntary process through which a company can obtain a certificate from the government confirming its status as an MSME. This registration provides several benefits to the enterprise, such as access to credit, subsidies, exemptions, and various government schemes. It also facilitates the ease of doing business and enhances the credibility of the enterprise.

Filing for Outstanding Payments without MSME Registration

While MSME registration provides additional advantages, it is not mandatory for filing outstanding payment claims under the MSME Act. The act mandates that any supplier, whether registered as an MSME or not, can file an application for the recovery of its dues. However, the registration process simplifies the process and provides certain advantages.

Advantages of MSME Registration for Filing Outstanding Payment Claims

1. Simplified Process: MSME registration streamlines the process of filing outstanding payment claims. The registered MSME can directly approach the Micro and Small Enterprises Facilitation Council (MSEFC) or the concerned authorities for resolution of their payment disputes.

2. Expedited Resolution: MSME registration can help in expediting the resolution of outstanding payment claims. The MSEFC has the authority to facilitate the conciliation and settlement of disputes, ensuring a quicker resolution.

3. Credibility and Evidence: MSME registration enhances the credibility of the enterprise and strengthens its position when claiming outstanding payments. It serves as evidence of the enterprise's status and strengthens the case against the defaulting buyer.

4. Legal Protection: Registered MSMEs have the added advantage of legal protection under the MSME Act. The act provides for penalties and legal recourse against non-compliant buyers, thereby ensuring a stronger position for the registered supplier.

Conclusion

Although MSME registration is not mandatory for filing outstanding payment claims under the MSME Act, it offers several advantages that can significantly benefit an enterprise. MSME registration simplifies the process, expedites resolution, enhances credibility, and provides legal protection to the registered supplier. However, even if a company does not possess MSME registration, it can still file for receiving its outstanding payments under the MSME Act. It is advisable for enterprises, especially those operating in the MSME sector, to consider obtaining MSME registration to avail the additional benefits and protections provided by the act.