THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006
ARRANGEMENT OF SECfiONS
SECTIONS
CHAPTER I
PRELIMINARY
1. Short title and commencement.
2. Definitions.
CHAPTERII.
NATIONAL BOARD FOR MICRO, SMALL ANDMEDIUM ENTERPRISES
3. Establishment ofBoard.
4. Removal ofmember from Board.
5. Functions of Board.
6. Powers and functions ofMember-Secretary of Board.
CHAPTER Ill
CLASSIFICATION OF ENTERPRISES, ADVISORY COMMITTEE AND MEMORANDUM
OF MICRO, SMALL AND MEDIUM ENTERPRISES
7. Classification Qf enterprises.
8. Memorandum ofmicro, small and medium enterprises.
CHAPTERN
MEASURES FOR PROMOTION, DEVELOPMENT AND ENHANCEMENT OF COMPETITIVENESS OF MICRO,
SMALL AND MEDIUM ENTERPRISES
9. Measures for promotion and development.
10. Credit facilities.
11. Procurement preference policy.
12. Funds.
13. · Grants by Central Government.
14. Administration and utilisation of Fund or Funds.
:CHAPTERV
DELAYED PAYMENTS TO MICRO AND SMALL ENTERPRISES
15. Liability ofbuyer to make payment.
16. Date from which and rate at which interest is payable.
17. Recovery of amount due. ·
18. Reference to Micro and Small Enterprises Facilitation Council.
19. · Application for setting aside decree, award or order.
20. Establishment of Micro and Small Enterprises Facilitation Council. '
21. Composition of Micro and Small Enterprises Facilitation Council.
356
Arrangement ofSections 357
22. Requirement to specify unpaid amount with interest in the annual statement of accounts.
23. Interest not to be allowed as deduction from income.
24. Overriding effect.
25. Scheme for closure ofbusiness of micro, small and medium enterprises.
CHAPTERVI
MISCELLANEOUS
26. Appointment ofOfficers and other employees.
27. Penalty for contravention of section 8 or section 22 or section 26.
. 28. Jurisdiction ofcourts.
29. Power to make rules.
30. Power to make rules by State Government.
31. Power to remove difficulties.
32. Repeal ofAct 32 ofl993.
THE MICRO, SMALLANDMEDIUM ENTERPRISES DEVELOPMENT ACT, 2006
No. 27 oF 2006
[16thJune, 2006.]
AnAct to provide for facilitating the promotion and development and enhancing the competitiveness ofmicro, smalland medium enterprises iiDd for matters connected therewith or incidental thereto.
WHEREAS a declaration as to expediency ofcontrol of certain industries by the Union was made under section 2 of the Industries (Development and Regulation) Act, 1951;
AND WHEREAS it is expedient to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and mediumenterprises and for matters connected therewith or incidental thereto;
BE it enacted by Parliament in the Fifty-seventh Year of the Republic of India as follows:-
CHAPTER I
PRELIMINARY
Short title and 1. (/) This Act may becalled the Micro, Small and Medium Enterprises Development commencement. Act, 2006.
(2) It shall come into force on such date* as the Central Government may, by notification, appoint; and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. '
*02-10-2006, Vide Notification No. S.O. ll54(E) daled 18.07.2006.
358
55 of 1951.
51of198l.
~ of 1934.
I of 1956.
(ACT 27 OF 2006] Micro, Small and Medium Enterprises Development 359
2. In this Act, unless the context otherwise requires,-
(a) "Advisory Committee" means the committee constituted by the Central Government under sub-section (2) of section 7;
(b) "appointed day" means the day following immediately after the expiry ofthe period offifteen days from the day ofacceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.
0
Explanation.-For the purposes of this clause,-
(i) ''the day ofacceptance" means,-
(a) the day of the actual delivery of goods or the rendering of 0
services; or
(b) where any objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which· such objection is removed by the supplier;
(ii) ''the day ofdeemed acceptance" means, where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services;
(c)"Board" means the National Board for Micro, Small and Medium Enterprises established under section 3;
(d) "buyer" means whoever buys any goods or receives any services from a supplier for consideration;
(e) "enterprise" means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry ~pecified in the First Schedule to the Industries (Development and Regulation) Act/ 1951 or engaged in providing or rendering of any service or services;
(j) "goods" means every kind ofmovable property oth~~ than actionable claims and money;
(g) ''medium enterprise" means an enterprise classified1aS such under sub-clause (iit) of clause (a) or sub-clause (iii) of clause (b) of sub-section (1) of section 7;
(h) "micro enterprise" means an enterprise classified as such under sub-clause (1) of clause (a) or sub-clause (1) ofclause (b) ofsub-section (1) ofsection 7;
(i) "National Bank" means the National .Bank for Agriculture and Rural Development established under section 3 of the National Bank for Agriculture and Rural DevelopmentAct, 1981;
(;)"notification" means a notification published in the Official Gazette;
(k) "prescribed" means prescribed by rules made under this Act;
(I) "Reserve Bank" means the Reserve Bank oflndia constituted under section 3 ofthe Reserve BankoflndiaAct, 1934; .
(m) "small enterprise" means an enterprise classified as such under sub-clause {it) of clause (a) or sub-clause (ii) of clause (b) of sub-section (1) of section 7;
(n) "supplier" means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of section 8, and includes,-
(i) the National Small Industries Corporation, being a company, registered under the Companies Act, 1956;
Definitions.
Establishment of Board.
360 Micro, Small and Medium Enterprises Development [ACT 27
(ii) the Small Industries Development Corporation of a State or a Union territory, by whatever name called, being a company registered under the Companies Act, 1956; 1 of 1956.
(iii) any company, co-operative society, trust or a body, by whatever name called, registered or constituted under any la~ for the time being in force and
· engaged in selling goods produced by micro or small enterprises and rendering services which are provided by such enterprises;
(a) "Small Industries Bank" means the Small Industries Development Bank of India established under sub-section (/)ofsection 3 ofthe Small Industries Development Bank oflndiaAct, 1989; 39 of 1989.
(p) "State Government", in relation to a Union territory, means the Administrator thereof appointed under article 239 of the Constitution.
CHAPTERII
NATIONAL BOARD FOR MICRO, SMALL AND MEDIUM ENTERPRISES
3. (/) With effect from such date as the Central Governltlent may, by notification, appoint, there shall be established, for the purposes of this Act, a Board to be known as the National Board for Micro, Small and Medium Enterprises,
(2) The head office of the Board shall be at Delhi. ·
(3) The Board shall consist ofthe following members, namely:-
(a) the Minister in charge ofthe Ministry or Department ofthe Central Government having administrative control of the micro, small and medium enterprises who shall be the ex officio Chairperson of the Board; .
(b) the Minister ofState or a Deputy Minister, ifany, in the Ministry or Department oftheCentral G0vemment having administrative control ofthe micro, small and medium enterprises who shall be ex officio Vice-Chairperson of the Board, and where there is nosuch Minister of State or Deputy Minister, such person as may be appointed by the Central Government to be the Vice-Chairperson ofthe Board;
(c) six Ministers of the State Governments having administrative control ofthe departments of small scale industries or, as the case may be, micro, small and medium enterprises, to be appointed by the Central Government to.represent such regions of the country as m1y be notified by the Central Government in this behalf, ex officio;
(d) three Members ofParliament of whom two shall be elected by the House of the People and one by the Council of States; ·
(e) the Administrator of a Union territory to be appointed by the Central Government, ex officio;
(f) the Secretar:;r to the Government of India in charge of the Ministry or Department ofthe Central Government having administrative control of the micro, small and medium enterprises, ex officio;
(g) four Secretaries to the Government oflndia, to represent the Ministries ofthe Central Government dealing with commerce and industry, finance, food processing industries, labour and planning to be appointed by the Central Government, ex officio;
(h) the Chairman of the Board ofDirectors ofthe National Bank, ex officio;
(i) the Chairman and managing director ofthe Board of Directors ofthe Small Industries Bank, ex officio;
(j) the Chairman, Indian Banks Association, ex officio;
(k) one officer ofthe Reserve Bank, not below the rank ofan Executive Director, to be appointed by the yentral Government to represent the Reserve Bank;
OF 2006] Micrt;J, Small and Medium Enterprises Development 361
(f) twenty persons to represent the associations of micro, small and medium enterprises, including not less than three persons representing associations ofwomen's enterprises and not less than three persons representing associations of micro enterprises, to be appointed by the Central Qovernment;
(m) three persons of eminence, one each from the fields of economics, industry and science and technology, not less than one of whom shall be a woman, to be appointed by the Central Government;
(n) two representatives of Central Trade Union Organisations, to be appointed by the Central Government; and
(o) one officer not below the rank of Joint Secretary to the Government of India in the Ministry or Department ofthe Central Government having administrative control of the micro, small and medium enterprises to be appointed by the Central Government, who shall be the Member-Secretary of the Board, ex officio.
(4) The term ofoffice ofthe members ofthe Board, other than ex officio members of the Board, the manner of filling vacancies, and the procedure to be followed in the discharge of their functions by the members of the Board, shall be such as may be prescribed:
Provided that the term of office ofan ex officio member of the Board shall continue so long as he holds the office by virtue of which he is such a member.
(5) No act or proceedings of the Board shall be invalid merely by reason of-
(a) any vacancy in, or any defect in the constitution of, the Board; or
(b) any defect in the appointment of a person acting as a member ofthe Board; or
(c) any irregularity in the procedure of the Board not affecting the merits of the case.
(6) The Board shall meet at least once in every three months in a year.
(7) The Board may associate with itself, in such manner and for such purposes as it may deem necessary, any person or persons whose assistance or advice it may desire in complying with any of the provisions ofthis Act and a person so associated shall have the right to take part in the discussions ofthe Board relevanttothe purposes for which he has been associated but shall not have,the right to vote.
(8) Without prejudice to sub-section (7) the Chairperson of the Board shall, for not less than two of the meetings of the Board in a year, invite such Ministers of the State Governments having administrative control of the departments of small scale industries or, as the case may be, the micro, small and medium enterprises, or the Administrators of Union territories and representatives of such other associations of micro, small and medium enterprises, as he may deem necessary for carrying out the purposes of this Act.
(9) It is hereby delcared that the office of member of the Board shall not disqualify its holder for being chosen as, or for being, a member of either House of Parliament.
4. (I) The Central Government may remove a member ofthe Board from it, ifhe-
(a) is, or at any time has been, adjudged as insolvent; or
(b) is, or becomes, of unsound mind and stands so declared by a competent court; or
(c) refuses to act or becomes incapable of acting as a member of the Board; or
(d) has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or
(e) has so abused, in the opinion of the Central Government, his position as a member of the Board as to render his continuance in the Board detrimental to the interests ofthe general public.
. Removal ot member from Board.
362 Micro, Small and Medium Enterprises Development [ACT 27
(2) Notwithstanding anything contained in sub-section(/), no member shall be removed from his office on the grounds specified in clauses (c) to (e) of that sub-section unless he has been given a reasonable opportunity of being heard in the matter.
Functions of 5. The Board shall, subject to the general directions ofthe Central Government, perform Board. all or any of the following functions, namely:~ ·
Powers and functiOnS of Member- Secretary of Board.
(a) examine the factors affecting the promotion and development ofmicro, small and medium enterprises and review the policies and programmes of the Central Government in regard to facilitating the promotion and development and enhancing the competitiveness of such enterprises and the impact thereof on such enterprises;
(b) make recommendations on matters referred to in clause (a) or on.any other matter referred to it by the Central Government which, in the opinion ofthat Government, is necessary or expedient for facilitating the promotion and development and enhancing the competitiveness of the micro, small and medium enterprises; and
(c) advise the Central Government on the use of the Fund or Funds constituted under section 12.
6. Subject to other provisions of this Act, the Member-Secretary of the Board shall exercise such powers and perform such functions as may be prescribed.
CHAPTER Ill
CLASSIFICATION OF ENTERPRISES, ADVISORY COMMITIEE AND MEMORANDUM OF
MICRO, SMALL AND MEDIUM ENTERPRISES
Classification. 7. (!). Notwithstanding anything contained in section ll B of the Industries of enterprises. (Development and Regulation) Act, 1951, the Central Government may, for the purposes of 65 of 1951.
this Act, by notification and having regard to the provisions of sub-sections (4) and. (5), classifY any class or classesofenterprises, whether proprietorship, Hindu undivided family, association of persons, co-operative society, partnership firm, company or undertaking, by whatever name called,-
(a) in the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951, as- 65 of 1951.
as-
(i) a micro enterprise, where the investment in plant and machinery does not exceed twenty-five lakh rupees;
(ii) a small enterprise, where the investment in plant and machinery is more than twenty-five lakh rupees but does not exceed five crore rupees; or
(iii) a medium enterprise, where the investment in plant and machinery is more than .five erne rupees but does not exceed ten crore rupees;
(b) in the case ofthe enterprises engaged in providing or rendering of services,
(i) a micro enterprise, where the investment in equipment does not exceed ten lakh rupees; ·
(ii) a small enterprise, where the investment in equipment is. more than ten lakh rupees but does not exceed two crore rupees; or
(iiz) a medium enterprise, where the investment in equipment is more than two crore rupees but does not exceed five crore rupees.
Explanation 1.-For the removal ofdoubts, it is hereby clarified that in calculating the investment in plant and machinery, the cost ofpollution control, research and development,·
of 1951.
5 of 1951.
I of 1956.
OF 2006] Micro, Small and Medium Enterprises Development 363
industrial safety devices and suc,h other items as may be specified, by notification, shall be excluded.
Explanation 2.-It is clarified that the provisions of section 29B of the Industries (Development and Regulation) Act, 1951, shall be applicable to the enterprises specified in sub-clauses (i) and (ii) of clause (a) of sub-section (1) of this section.
(2) The Central Govern~ent shall, by notification, constitute an Advisory Committee consisting ofthe following members, namely:-
(a) the Secretary to the Government oflndia in the Ministry or Department ofthe Central Government having administrative control ofthe small and medium enterprises · who shall be the Chairperson, ex officio;
(b) not more than five officers ofthe Central Government possessing necessary expertise in matters relating to micro, small and medium enterprises, members, ex officio;
(c) not more than three representatives of the State Governments, members, ex officio; and
(d) one representative each of the associations of micro, small and medium enterprises, members, ex officio,
(J) The Member-Secretary ofthe Board shall also be the ex officio Member-Secretary of the Advisory Committee. ·
(4) The Central Government shall, prior to classifYing any class or classes ofenterprises under sub-section (1), obtain the recommendations of the Advisory Committee.
(5) The Advisory Committee shall examine the matters referred to it by the Board in connection with any subject referred to in section 5 and furnish its re<(ommendations to the Board.
(6) The Central Government may seek the advice ofthe Advisory Committee on any of the matters specified in section 9, 10, 11, 12 c1r 14 ofChapter IV.
(7) The State Government may seek advice of the Advisory Committee on any of the matters specified in the rules made under section 30.
(8) The Advisory Committee shall, after considering the following matters, communicate its recommendations or advice to the Central Government or, as the case may be, State Government or the Board, namely:-
(a) the level of employment in a class or classes ofenterprises;
(b) the level of investments 'in plant and machinery or equipment in a class or classes of enterprises;
(c) the need of higher investment in plant and machinery or equipment for technological upgradation, employment generation and enhanced competitiveness of the class or classes of enterprises;
(d) the possibility ofpromotingand diffusing entrepreneurship in micro, small or medium enterprises; and
(e) the international standards for classification ofsmalland medium enterprises.
(9) Notwithstanding anything contained in section 118 ofthe Industries (Development and Regulation) Act, 1951 and clause (h) of section 2 of the Khadi and Village Industries Commission Act, 1956, the Central Government may, while classifYing any class or classes of enterprises under sub-section (J), vary, from time to time, the criterion of investment and also consider criteria or standards in respect of employment or turnover of the enterprises and include in such classification the micro or tiny enterprises or the village enterprises, as part of small enterprises.
364 Micro, Small and Medium Enterprises Development
Memorandum 8. (I) Any person who intends to establish,--,- of micro, small and (a) a micro or smaHenterprise, may, at hisdiscretion; ot medium enterprises.
Measures for promotion and development.
Credit facilities.
(b) a medium enterprise engaged in providing or rendering ofservicesmay, at discretion; or · ·
. . ~
(c)amediumenterprise engaged in the manufacture or productionofgoo8s pertaining to any industry specified in the First Schedule to the Industries (Developmeri,t, . and Regulation) Act, I951,
shall file thememorandum ofmicro, small or, as the case may be, ofmedium enterprise with·. such authority as may be sp_ecified by the State Government under sub-section (4) or the. Central Government under sub-section(3):
Provided that any person who, before the commencement of this Act, established-
. ..
(a) a small scale industry and obtained a registrati<:m certificate, may, at his discretion; and
(b) an industry engaged in the manufacture or production ofgoods pertaining to . any industry specified in the FirstSchedule to the Industries (Development and
. Regulation) Act, 1951, having investmentin plant and machinery of more than one 65 of 19,5: crore rupees but not exceeding ten crore rupee~ and, in pursuance of the notification ofthe Government of India in the erstwhile Ministry ofl11dustry (Department of Industrial Development) number S.O. 477(E), dated the 25th July, 1991 filed an Industrial Entrepreneur's Memorandum,
shall within one hundred and eighty days from the comrr(encement of this Act, file the memorandum, inaccordance with the provisions of this Act.
(2) The form ofthe memorandum, the procedure ofits filing andother matters incidental thereto shall be such as may be notified by the Central.Government after obtaining the recommendations of the Advisory Committee in this behaJf. .
(3)The authority with which the memorandum shaU _be filed by amedium enterprise ~hall be such as maybe specified, bynotification, by the Central Goverimwnt.
(4) The. ~tate Government shall, by notification, specifythe authority withwhich a micro orsmall enterprise may file the memorandum. .
(5)T~e authorities specified under sub-sections (3) and (4) shall follow, for the purposes ofthis section, the procedure notified by the Central G()vernmtmt under sub~section (2).
CHAPTERIV
MEASURESFOR PROMOTION, DEVELOPMENT AND ENHANCEMENT ()F
COMPETITIVENESS OF MICRO, SMALL AND MI':DIUM ENTERPRISE~
.•• 9.Jhe CeritralGovernment may, from timeto time, for thepurposes offacilitating the promotion anddevelopment and enhancing the competitiveness ofmipro, small and medium ente,rprises, particu·larly of the micro and small enterprises, by way of developmentofskiHinthe employees, management and entr.eprent)urs, pr,9visioning for technological upgradation, marketing assistance or infrastructurefacil_ities and cluster development ofsl!ch enterprises with a view to strengthening backward and forward linkages, specify, by notification, such programmes, guidelines or instructions; as it may deem fit; · · ·· ·
10. The policies and practices in respect of credit to the micro, slllall andmedium enterprises shall be prog~essive and.such as may bespecified in the guidelines ori?~tructions issued by the Reserve Bimk, from time to time, to ensure timely and smoothflow ofcreditto
26 ofl996.
. . .. -
:()F2006] Micro, Small andM~dium Enterptises Deve/Jptne~t 365 . '
such enterprises, minimise the incidence ofsickness amorig' find ~nhartt~ the competitiveness ofsuch enterprises. ·
._ . . 11. For facilitating promotion arid development ofmicfti arid small enterprises, the · C~nttalGovernment or the StateGovernm~ntmay;byorderl')otify from time to time, preference policies il')respectof procurement ofgoods and service~,.produced and provided by micro
Procurement preference . policy.
· >an<f SP1all enterprises, by its Ministries or departments, as the case may be, or its aided il')stitutions and public sector enterprises. ·
.. h. Thereshall be constituted, by notification, o~eor more Funds to be called by such mtllle as may be specified in the notification and there shall be credited thereto any grants
Funds.
made by the Central Government under section 13~.
. . 13. l'heCentral Government may, after due app~optiation ni~de by Parliament by law in this b~half, credlt to the Fund or Funds by wayof grants for the, purposes of this Act, such sums of money as that Government may consider necessary to provide.
14. (1) The Central Government shall have the po"Wer to administerthe Fund or Funds in such manner as may be prescribed..
(2)l;be Fund or Funds shall be utilised exclusivelyfor the measures specified in sub- section ( J)of section 9~... . - . - '
(.3);The CeritralGovernment shall beresponsibl~f0rthe coordination and ensuring tim~ly utilisation and release ofsums in accordance wi~b such crit~ria as may be prescribed.
DELAYED PAYMENTS TO MICRO AND .SMALL ENTERPRISES
·ts. Where any supplier supplies any goods or re~ders flny services to any buyer, the buyershal! make paYlllerit therefor on or before the dat~ agr~ed upon between himand the supplier in writing or, where there is no agreement in this behalf, before the appointed day:
Provided that inn_o case the pe.riod ~greed upon between the supplier and the buyer in writing shall exceed forty-five days from the day ()facceptance or the day of deemed acceptance.
16. Where any buyerfailsto make payment ofthe amount to the supplier, as required under section 15, the buyer shall, notWit~standinfanything contained in any agreement between the buyer and the supplierorinanylawforthetime being in force, be liableto pay compoundiriterestwith monthlyrestst? the ~upplieron that amount from the appointed day or, as the case may be, ,from the date_ im~ediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank
17. For any goods SUPR!1~i(9tS~rviF~;r~ndered by the supplier, the buyer shall be liable to pay the amount with. irit~re~(thereon as provided under section 16.
. 18. (1) Notwithstanding aJl~ll~rtgi(:<}~tained in any other law for the time being in force, any Party to a dispute m~y, '\Yhh{~gard to any amount due. under section -17, make· a reference to the Micro and Sma,llJ_tnteterfses Facilitation Council.
(2)0n receipt ofa ..teferenc?ulldersub-section (/),the Council shall either itself conductconciliatioll. il') th~.~a~r Oi'Se~!<the assistance ofanyinstitution or centre providing alternate dispute r~s<)lutiqirservicesbymaking a reference to such an institution or centre, . .for co11ducting coll~iH~tionandthept;ovisi{)ns of sections.65 to 81 of the Arbitration a11.d Conciliation Act, 1996 ~hallapply t9 such a dispute as ifthe conciliation was initiatedunder Part Ill ofthat Act. · ' . ·
Grants by Central Government.
Administration and utilisation of Fund or Funds.
Date from which and rate at which· interest is payable.
Recovery of amount due. ·
Reference to Micro and Small Eri:terprises Faciiitatiqn CotirtciL.
Application for setting aside decree, award or order.
Establishment of · Micro and Small Enterprises Facilitation Council.
Composition of Micro and Small Enterprises Facilitation Council.
Requirement to specify unpaid amount with interest in the annual statement of accounts.
366 Micro, Small andMedium Enterprises Development (ACT 27
(3) Where the conciliation initiated under sub-secti~n (2) is not successful and stands terminated without any settlement between the parties,the Council shall either itselftake up the dispute for arbitration or refer it to any institution or centre providing altemate dispute resolution services for such arbitration and the provisions ofthe Arbitration and Conciliation Act, 1996 shall then apply to the dispute as ifthe arbitration was in pursuance ofan arbitration 26 of 1996. agreement referred to in sub-section (I) of section 7 of that Act.
(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing altemate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and abuyer located anywhere in India.
(5) Every reference made under this section shall be' decided within a period ofninety days from the date of making such a reference.
19. No application for setting aside any decree, award or other order made 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 seventy-five per cent.ofthe amount in terms of the decree, award or; as the case may be, the other order in the manner directed by such court:
Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case, subject to such conditions as it deems necessary to impose.
io. The State Government shall, by notification, establish one or more Micro and Small Enterprises Facilitation Councils, at such places, exercising such jurisdiction and for such areas, as may be specified in the notification.
21. (1) The Micro and Small Enterprises Facilitation Council shall consist of not less than three but not more than five members to be appointed from amongst the following categories, namely:.......:
(i) Director of Industries, by whatever name called, or an)l other officer not below the rank of such Director, in the Department of the State Government having administrative control ofthe small scale industries or, as the case may be, micro, small and medium enterprises; and
(ii) one or more office-bearers or representatives of associations of micro or small industry or enterprises in the State; and
(iii) one or more representatives of banks and financial institutions lending to micro or small enterprises; or ·
(iv) one or more persons hav~ng special knowledge in the field of industry, finance, law, trade or commerce.
(2) The person appointed under clause (i) of sub-section (1) shall be the Chairperson ofthe Micro and Small Enterprises Facilitation Council.
(3) The composition ()fthe Micro and Small Enterprises Facilitation Council, the manner offilling vacancies ofits members and the procedure to be followed in the discharge oftheir functions by the members shall be such as may be prescribed by the State Government
22. Where any buyer is required to get his annual accounts audited under any law for. the time being in force, such buyer shall furnish the following additional information in his annual statement of accounts, namely::-- ·
. .
(i) the principal amount and the interest due thereon (to be showri separately) remaining unpaid to any supplier as at the end of each accounting year;
43 of 1961.
I of 1956.
OF 2006] Micro, Small and Medium Enterprises Development 367
(ii) the amount of interest paid by the buyer in terms ofsection 16, along with the amount of the payment made to the supplier beyond the appointed day during .each accounting year;
(iii) the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act;
(iv) the amount of interest accrued and remaining unpaid at the end of each accounting year; and
(v) the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose ofdisallowance as a deductible expenditure under section 23. ·
23. Notwithstanding anything contained in the Income-tax Act, 1961, the amount of interest payable or paid by any buyer, under or in accordance with the provisions ofthis Act, shall not, fQr the purposes of computation of income under the Income-tax Act, 1961 , be allowed as deduction. ·
24. The,provisions of sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
25. Notwithstanding anything contained in any law for the time being in force, the Central Government may, with a view to facilitating closure ofbusiness by a micro, small or medium enterprise, not being a company registered under the Companies Act, 1956, notifY a Scheme within one year from the date ofcommencement ofthis Act.
CHAPTER VI
. MISCELLANEOUS
26. {1) The Central Government or the State Government may appoint such officers with such designations and such other employees as it thinks fit for the purposes of this Act and may entrust to them such of the powers and functions under this Act as it may deem fit.
I
(2) The Officers appointed under sub-section {1) may, for the purposes onhis Act, by order require any person to furnish such information, in such form, as may be prescribed.
27. {1) Whoever intentionally contravenes or attempts to contravene or abets the contravention of any of the provisions contained in sub-section (1) of section 8 or sub- section (2) of section 26 shaH be punishable-
{a) in the case ofthe first conviction, with fine which may extend to rupees one thousand; imd
(b) in the c~e of second or subsequent conviction, with fine which shall notbe less than rupees one thousand but may extend to rupees ten thousand.
(2) Where a buyer contravenes the provisions of section 22, he shall be punishable with fine which shall not be less than rupees ten thousand.
28. No court inferior to that of a Metropolitan Magistrate or a Magistrate ofthe first <;lass shall try any offence punishable under this Act.
29. {1) The Central Government may, by notification, make rules to carry out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any ofthe following matters, namely:-
(a) the term ofoffice ofthe members of the Board, the manner offilling vacancies, and the procedure to. be followed in the discharge offunctions by the members of the Board under sub-section (4) ofsection3;
Interest not to be allowed as deduction from income
Overriding effect.
Scheme for closure of business of micro, small and medium enterpnses.
Appointment of officers and othe'r employees.
Penalty. for contravention of section 8 or sect ion 22 or section 26.
Jurisdiction of courts.
Power to make rules.
368 . Micro, Small and Medium Entetpris_~s_peveldpmeht [AcT :hoF 2006] . ' . ~ -. . .
(b) the,ppwers and functions of the Memb~r~Secretiuyunder sectimt~;· (c)the maQner inwbich the Fund may be administered under sub-secti~n (1) of·
secti()n 14;_ ·· · · · · · ·
(d) the criteria based onwhich suins inay be released under sub~section(J)pf section 14; · · · · ·
(e) the informationto be furnished and the form in which it is to be .furnished under sub~section {2) of section 26; and
(/) any other matter which is to be or maybe prescribed under thisAct.
(J) Every notification issued under section 9 and every rule made by the Central Government under this section shall be laid, as soon as may be after it is made, before each House ofParliament, wbile it is in session,for atotal period of thirty days which may be comprised iri one session or in two or more successive sessions, and if, before the expiry ~f the session immediately following the session ot the successive sessions aforesaid, both Houses agree in making any modification in the O()tification or rule or both Houses agree that the notification or rule should notbe made, the notification or rule shall thereafterhave effect . only in such modified form or be ofno effect, as the case may be; so, however, thatany such modification or annulment shall be without prejudice to the validity of~ything previously done under that notification or rule. · ·
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Power to 30. (/)The State Government may, by notification, make rules to carryout the provisions make ruld by of this Act; · Slate Government.
Power to remove difficulties.
(2) In particular, and withoutprejudice to the generality ofthe for..:going power, such rules may providefor allor any oftbe following matters,namely:-
(a}the composition ofthe Micro and Small Enterprises Facilitation Council, the manner offilling vacancies ofthe members and the procedure to be followed in the discharge of their· functions by the members of the Micr9 and Small Enterprises Facilitation Council under sub~section (J) ofsection 21;
(b) any other matter which is to be, or may be, prescribed under thisAct
(J) The rule hnade under this section shall~ as soon as may be after it is made, be laid before each House of the State Legislature where there are two Houses, and where there is one House of the State Legislature, before that House. · ·
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31. (/)Ifany difficulty arises in giving effect to the provisions ofthis Act, the Central Government may, by order published in the Official Gazette, make such pro~isions not inconsistent with the. provisions of this Act as may appear to benecessary for removing the difficulty:
Provided thatno order shall be made under this section after the expiry of two years from th~~ommencementofthisAct.J
(2) Every order made under this section shall, as soon as maybeafter it is made, be laid before each House ofParliament.
Repeat of Acr 32; (I) The Interest on Delayed Payments to Small Scale and Ancillary Industrial 32 of 19.93. UndertakingsAct, 1993 is bereby repealed. .· .
(2) Notwithstanding such repeal, anything done or any aclion taken .under theAct so repealed under sub-section (1), shall be deemed to have been done or taken).mder the corresponding. provisions ofthis Act. · · · ·