MSME Delayed payment recovery
The MSMED Act, 2006 provides payments against the supply of the goods or services to be made to MSME within a period of 15 days or a maximum of 45 days from the date on which such claim accrues, for example, the date of the invoice. If money is not received within such days, a claim for such MSME payment of money along with interest can be filed before the MSME Facilitation council established by State Govt. Such a claim is filed at the Facilitation council where such MSME is registered. Section 16 contains the provision of statutory interest rate i.e. the 3 times the bank rate notified by RBI. And this interest rate is compounding at monthly intervals as per law.
NCLT under IBC Code, 2016
Insolvency and Bankruptcy Code, 2016 (referred to as IBC, 2016) has been proved as a set of Laws “Turnaround” for the Entities. On one hand, where it has created a big fear for defaulting entities, it has also created a time-bound reform strategy. IBC was introduced in the year 2016 with the aim to identify the default.
- Any Operational creditor, where default is more than Rs. 1 Crs (increased from Rs. 1 Lac to 1 Crs w.e.f. 24th March 2020), can file a petition before Hon’ble NCLT against the corporate Debtor under Section 9 of the IBC Code,2016.
- NCLT (National Company Law Tribunal) is the adjudicating Authority under IBC Laws.
- IBC Laws provide for a time-bound resolution process by which the defaulting corporate debtor is turned around, and the resolution process is implemented.
DRT (Debt-Recovery Tribunal)
In case of a bank or financial institution, the creditor can also approach Debts Recovery Tribunal (“DRT”) and file an Original Application for recovery of trade debt under Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (“RDDB Act”).
Arbitration & Conciliation Act, 1996
In case where there is an arbitration agreement between the parties, the debt can be recovered through arbitration proceedings to be conducted as per Arbitration & Conciliation Act, 1996.
Commercial Courts under Commercial Courts Act,2015
A creditor can file a commercial suit for recovery under Commercial Courts Act, 2015 read with Code of Civil Procedure, 1908 (“CPC”) before a competent civil commercial court. Under the Commercial Courts Act there is a provision of pre- institution mediation for resolving the disputes amicably between the parties.
