Should the Limitation Act be applicable? The MSMED Act is aimed at the expeditious resolution of purely commercial disputes where the terms of engagement are decided by private parties and government intervention is intended to secure an efficacious remedy for timely payment. Consequently, the MSMED Act should not be interpreted in a manner that provides remedies that have specifically been...
Statutory Limitation on Claims under the Micro, Small and Medium Enterprises Development Act – Part I
[Shinoj Koshy and Purvi Khanna are at L&L Partners, Delhi] One of the foremost requirements for the Micro, Small and Medium Enterprise (MSME) industry is the availability of credit and shorter working capital cycles. The working capital cycle of an MSME is the time taken to convert its receivables into cash, which is essential to run their small-scale operations. The Interest on Delayed...
Filing of Return for Delayed Payment to MSMEs
[Simran Jalan is an Executive at Vinod Kothari & Co] The Government of India enacted the Micro, Small and Medium Enterprises Development Act, 2006 (the “Act”) to ensure timely and smooth flow of credit to micro, small, and medium enterprises (“MSMEs”) and minimize sickness among them. The Act strengthens the provisions relating to delayed payments to the MSMEs by specifying the maximum credit...
Section 29A of the Insolvency and Bankruptcy Code, 2016: The Ambit Narrows
[Rudresh Mandal is a 4thyear student at NALSAR University of Law and Mallika Sen is a 3rdyear student at National Law School] Section 29A of the Insolvency and Bankruptcy Code, 2016, (‘IBC’) has been heavily criticised for casting a net exceedingly wide for preventing maximisation of pay-outs to creditors merely because the bidder is the promoter of the corporate debtor, or for ignoring the...
What Should the Insolvency and Bankruptcy Code for SMEs be Like?
[Guest post by Rishi A, who is a Legal Analyst at Spotdraft.com] The Insolvency and the Bankruptcy Code (“IBC”), 2016 was a much-needed legislation in India for hastening the process of bankruptcy filing and to provide for a framework that would incorporate globally recognised standards for both creditors as well as debtors. However, right from its inception, there has been some discussionabout...
Is the Alternate Listing Platform for Start-Ups Really an Alternative?
[The following guest post is contributed by Geeta Dhania, Partner and Abhyuday Bhotika, Associate at Luthra & Luthra Law Offices. Views are personal.] For any business to grow it is pertinent that it has access to capital and is able to complete the capital formation cycle. Companies should be able to access the funding they need for their growth and the investors should be able to smoothly...
Institutional Trading Platform for SMEs
Background Earlier this week, SEBI issued the Securities and Exchange Board of India (Listing of Specified Securities on Institutional Trading Platform) Regulations, 2013 (the Regulations), which enables small and medium enterprises (SMEs) to list on the stock exchanges without going through an initial public offering (IPO). This represents another step in creating special avenues for SMEs to...
Subsistence Allowance during Adjudication
The Industrial Disputes Act, 1947 [“IDA”], provides for an elaborate system of adjudication of disputes between employers and workmen, and litigation over “subsistence allowance” is by no means uncommon, not only for tactical reasons, but also because it is often the only means of survival for an employee facing disciplinary proceedings. In this context, a single judge of the Bombay High Court...
FDI in the Small Scale Sector
Historically, there have been limited options for small-scale undertakings in India to obtain FDI. For instance, FDI was limited to 24%. FDI beyond this limit was permissible only if the unit deregistered itself as a small-scale unit. This policy has been relaxed by way of Press Note 6 of 2009, which permits micro and small enterprises to obtain FDI subject to the normal sectoral caps. Where an...
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