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Action Taken Against BHEL for Delayed Payment for MSMEs

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In a much needed action towards delayed payments, Bharat Heavy Engineering Limited (BHEL) was 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.

Shishir Gupta is the Director of Teknow Consultants & Engineers Pvt Ltd. This company have taken the case against BHEL. He explained the scenario to FISME’s KNN Media in an interaction.

Gupta informed that it is not new that a PSU is observed denying payment to the MSME, there are thousands of such cases that already exists in the country wherein the MSME is denied its payment. However it is for the first time in the country that the plea of an MSME is heard and a legal notice is served by the National Company Law Tribunal (NCLT) to the PSU giant.

“We have been approaching from pillar to post at BHEL to seek the pending payment. We have sent multiple notices to the company, earlier under the MSME act followed by the notice under section 8 of the IBC. BHEL didn’t respond to any of the notices” explained Gupta.

Following which the entrepreneur decided to take the case to the court and it is for the first time ever that a PSU is 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.

Explaining the problem of delayed payments that the MSMEs face, Gupta added that the country’s big giants stand because of the small and micro units, If the MSMEs in the country cease to exist, the economy will come to a standstill.

Raising question over the matter, the Counsel appearing from the side of the entrepreneur asked the jury in the court whether it is a crime to ask for payment in return of goods and services that were served. The Counsel also raised concern over the fact that when the PSU’s indulge in delayed payments, how will an MSME feel safe to operate in such an environment.

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SMEStreet Desk

SMEStreet is fast growing platform dedicated to entrepreneurs from small and medium sized businesses (SMEs). Committed to facilitate Knowledge & Networking for Business Growth, SMEStreet offers value added content which shows the actual voice of Indian MSMEs.

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