MSME: DELAYED PAYMENTS First-ever Notice for Delayed Payment to MSME issued to Major PSU under IBC

In line with the frequent cases of delayed payments to the Micro, Small and Medium Enterprises (MSMEs) by the PSU’s, an online news portal of MSMEs has reported that the Bharat Heavy Engineering Limited (BHEL) has been served the first notice under Section 9 of IBC by NCLT in response to the plea filed by an MSME regarding pending payment for over 11 years.

According to the report, it is for the first time in the country that the plea of an MSME has been heard and a legal notice served by the National Company Law Tribunal (NCLT) to the PSU giant.

Apparently, the aggrieved MSME has sent multiple notices to the company, earlier under the MSME act followed by the notice under section 8 of the IBC.
The MSME did not receive any response from to any of the notices and following this the entrepreneur decided to take the case to the court and it is for the first time ever that a PSU has been reportedly served a notice under Section 9 which mandates BHEL to respond within a timeframe, i.e. by 21st August. In case BHEL fails to reply, a receiver will be appointed by the court and legal action will be initiated against the PSU.

The problem of delayed payments that the MSMEs face has been highlighted by industry bodies like PIA several times in various industry and official forums. The country’s big giants stand because of the small and micro units, and if the MSMEs in the country cease to exist, the economy will come to a standstill. There are thousands of such cases that already exist in the country wherein the MSMEs are denied payment, and the immediate need of the hour is a much stricter and wider time-bound enforcement of rules already in force for timely payments to MSME vendors under the MSMEDI Act.

The problem of delayed payments is further compounded for the victimized MSME as they don’t feel empowered since it is not feasible for a micro or a small unit to take the legal route as it would require a lot of money and time. This helplessness on the part of the MSMEs also leaves scope for the large companies to indulge in delayed payments.
In this context, the Insolvency and bankruptcy Code (IBC) can be seen as a hope for the MSMEs because of which in the case mentioned above the BHEL could be dragged to court.

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