We are a registered MSME Unit. One of our past customer(Pvt. Ltd. Company) has not paid our dues which as per terms of the PO were payable by 10th February 2014 against a bill raised on 15 Dec. 2013. The customer had agreed in writing to settle the dues. However, subsequently, the customer reneged on his commitment & informed in writing that the dues are held back as a deposit towards guarantee & will be paid after conclusion of guarantee period. Under the PO the guarantee period was 3 years. The material was supplied in Dec. 2013, so the guarantee period got over in Dec. 2016.
All Our requests to the customer have not yielded any favourable response or action & there is a continous correspondence till Nov. 2017. Since litigation would be prolonged & expensive, we decided to make an application to MSEFC Arbitration Council for recovery of dues under MSME Act & applied accordingly in first week of Dec. 2017, after receiving last letter from customer on 30 Nov. 2017 that they will not entertain any correspondence in this matter.
However, our application was rejected. No reason has been officially conveyed, but we were told informally that it is due to limitation period of 3 years. Which means that we should have moved for arbitration by Dec. 2016. We were also told that the rejection is on the basis of a very recent judgement by the Hon. Supreme Court. However, my search has not yielded any such order.
My reading of the MSMED Act 2017 section 16 &18, gives an understanding that provisions of any other prevailing law do not apply for recovery of delayed payment under MSME Act. Moreover, since the client promised us payment after completion of guarantee period, we chose the option of waiting. Since the customer's last refusal to pay up was received on 30 Nov. 2017, it is not clear as how even the Limitation Act is applicable.
A clarification / opinion on this point would be highly appreciated.