2 in this act, unless the context otherwise requires, - definitions, (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 of the period of thirty days from the day of acceptance or the day of deemed acceptance ofs" any goods or any services by a buyer from a supplier explanation—for the purposes of this clause— (i) "the day of acceptance" means,— (@) the day of the actual delivery of goods or the rendering of services; or 10 (8) where any objection is made in writing by the buyer regarding acceptance of goods or services within thirty 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; ("the day of deemed acceptance" means, where no objection is made in (5° writing by the buyer regarding acceptance of goods or services within thirty 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 small and medium enterprises board established under section 3; (d) "buyer" means whoever buys any goods or receives any services from a supplier for consideration; (c) "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 specified in the first 2" schedule to the industries (development and regulation) act, 1951 or engaged in 65 of 1951 providing or rendering of any service or services in relation thereto; o's ;oods" means every kind of movable property other than actionable claims and mone} (g) "medium enterprise" means an industrial enterprise classified as such under 30 sub-clause (if) of clause (a) or sub-clause (i) of clause (6) of sub-section (1) of section 7; (a) "national bank" means the national bank for agriculture and rural development established under section 3 of the national bank for agriculture and rural development act, 1981; 3661 of 1981 (i) "notification" means a notification published in the official gazette; (f "prescribed" means prescribed by rules made under this act; (i) "reserve bank" means the reserve bank of india constituted under section 3 of the reserve bank of india act, 1934; 2 of 1934 (i) "small enterprise" means an industrial enterprise classified as such under 40 sub-clause (i) of clause (a) or sub-clause (i) of clause (8) of sub-section (1) of section 7; (mm) "supplier" means a small enterprise, which has filed a memorandum with the 'authority referred to in clause (a) of sub-section (1) of section 8, and includes,— (i the national small industries corporation, beinga company, registered us under the companies act, 1956; 1 of 1956 | i             | of    | 1956,    ||---------------|-------|----------|| (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;         |       |          || 39            | of    | 1989,    || (x)           |       |          || "small        |       |          || industries    |       |          || bank"         |       |          || means         |       |          || the           |       |          || small         |       |          || industries    |       |          || development   |       |          || bank          |       |          || of            |       |          || s             |       |          || india         |       |          || established   |       |          || under         |       |          || sub-section   |       |          || (1)           |       |          || of            |       |          || section       |       |          || 3             |       |          || of            |       |          || the           |       |          || small         |       |          || industries    |       |          || development   |       |          || bank          |       |          || of            |       |          || india         |       |          || act,          |       |          || 1989;         |       |          || (0)           |       |          || "state        |       |          || government",  |       |          || in            |       |          || relation      |       |          || to            |       |          || a             |       |          || union         |       |          || territory,    |       |          || means         |       |          || the           |       |          || administrator |       |          || thereof       |       |          || appointed     |       |          || under         |       |          || article       |       |          || 239           |       |          || of            |       |          || the           |       |          || constitution, |       |          | chapter ia 'national small and mepium enrererises boarn establishment of board 3 (j) with effect ftom such date as the central government may, by notification, appoint, there shall be established, for the purposes of this act, a board to be known as the national small and medium enterprises board (2) the head office of the board shall be at delhi 1s (3) the board shall consist of the following members, namely:— (a) the minister in charge of the ministry or department of the central government having administrative control of the small and medium enterprises who shall be the ex officio chairperson of the boards (6) the minister of state or a deputy minister, if any, in the ministry or 20 department of the central government having administrative control of the small and medium enterprises who shall be ex officio vice-chairperson of the board, and where there is no such minister of state or deputy minister, such person as may be 'appointed by the central government to be the vice-chairperson of the board; (c)five ministers of the state governments having administrative control of the af departments of small scale industries or, as the case may be, small and medium enterprises, to be appointed by the central government to represent such regions of the country as may be notified by the central government in this behalf, ex offici (d) the administrator of a union territory to be appointed by the central government, ex officio; 30 (2) the secretary to the government of india in charge of the ministry or department of the central government having administrative control of the small and medium enterprises, ex officio; (/) four secretaries to the government of india, to represent the ministries of the central government dealing with commerce and industry, finance, food processing 35° industries, abour and planning to be appointed by the central government, ex officio; (s) the chairman of the board of directors of the national bank, ex officio; i director of the board of directors of the small (a) the chairman and mana; industries bank, ex officio; (0 the chairman, indian banks association, ex offici yo w) one officer of the reserve bank, not below the rank ofan executive director; to be appointed by the central government to represent the reserve bank; () ten persons to represent the associations of small enterprises and medium enterprises, at least three of whom shall be representatives of associations of women's enterprises, to be appointed by the central government; ys" () two persons of eminence, one each from the fields of economies and industry, atleast one of whom shall bea woman, to be appointed by the central government; and (m) one officer not below the rank of joint secretary to the government of india in the ministry or department of the central government having administrative control ofthe mall and medium enterprises to be appointed by the central government, who shall be the member-secretary of the board, ex officio (4) the term of office of the members of the board, other than ex officio members ofthe 5 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 jong 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 - lo (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 of the board; or (c) any irregularity in the procedure of the board not affecting the merits of the case, is (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 of this act and a person so associated shall have the ht to take part in the discussions of the board relevant to the purposes for which he has 22 been associated but shall not have the right to vote (8) without prejudice to sub-section (7) the chairperson of the board may, for not more 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, asthe case may be, the small and medium enterprises, or the administrators of union territories 257 and representatives of such other associations of small and medium enterprises, as he may deem necessary for carrying out the purposes of this act removal of 4, (j) the central government may remove a member of the board from it, fhe— member from board, (@) is, or at any time has been, adjudged as insolvent; or (0) is, or becomes, of unsound mind and stands so declared by a competent 30 court; or (©) 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 (©) has so abused, in the opinion of the central government, his position asa 357 member of the board as to render his continuance in the board detrimental to the interests of the general public (2) notwithstanding anything contained in sub-section (/), no member shall be removed from his office on the grounds specified in clauses (c) to (e) ofthat sub-section untess he has been given a reasonable opportunity of being heard in the matter, ie: functions of 5, the board shall, subjectto the general directions ofthe central government, perform board all or any ofthe following functions, namely: (a) examine the factors affecting the promotion and development of 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 4s" 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 goverment which, in the opinion of that government, is necessary or expedient for facilitating the promotion and development and enhancing the competitiveness of the small and medium enterprises; and s (c) advise the central government on the use of the fund or funds constituted under section 12, powers and functions of 6 subject to other provisions of this act, the member-secretary of the board shall exercise such powers and perform such fuctions as may be prescribed  chapter iil lo classification of enterprises, advisory commitee and memorandum of small and medium enterprisesclassification of enterprises 7 (1) notwithstanding anything contained in section 11b of the industries 65 of 1951, (development and regulation) act, 1951, the central government may, for the purposes of this act, by order, notified and having regard to the provisions of sub-sections (4) and (5), [¢- classify any class or classes of enterprises, 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 20 (development and regulation) act, 1951, as— (i) a small enterprise, where the investment in plant and machinery does not exceed five crore rupees; or (ii) a medium enterprise, where the investment in plant and machinery is more than five crore rupees but does not exceed ten crore rupees; as (6) in the case of the enterprises engaged in providing or rendering of services in relation to any industry specified in the first schedule to the industries (development 65 of 1951 and regulation) act, 1951, as— (ha small enterprise, where the investment in equipment does not exceed two crore rupees; or 30 (ii) amedium enterprise, where the investment in equipment is more than two crore rupees but does not exceed five crore rupees, explanation—for the removal of doubt itis hereby declared that the investment in land and building or equipment, as the case may be, shall not be taken intoaccount while determining the investment in plant and machinery or, as the case may be, equipment for the 4s- purposes of this sub-section, (2) the central government shall, by notification, constitute an advisory committee consisting of the secretary to the government of india in the ministry or department of the central government having administrative control of the small and medium enterprises, who shall be the chairperson of the advisory committee, not more than five officers of the yo central government possessing necessary expertise in matters relating to small and medium enterprises and not more than two representatives of the state governments to be appointed by the central government, (3) the member-secretary of the board shall also be the ex officio member-secretary of the advisory committee ys (4) the central government shall, prior to classifying any class or classes of enterprises under sub-section (/), obtain the recommendations of the advisory committee, (5) the advisory committee shal, after considering the following matters, communicate its recommendations to the central government, namely:— (a) the level of employment in a class of classes of enterprises; (6) the level of investments in plant and machinery or equipment, land and building, in a class or classes of enterprises; ze (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: (a) the possibility of promoting and diffusing entrepreneurship in a small or 'medium enterprises; lo (e)the international standards for classification of small and medium enterprises; and (f such other matters as the advisory committee may think fit (6) notwithstanding anything contained in section 11 of the industries (development 'and regulation) act, 1951 and clause (h) of section 2 of the khadi and village industriesh§6s of 1951 commission act, 19$6, the central government may, while classifying any class or classes of 61 of 1956 enterprises undet sub-section (1), vary, from time to time, the criterion of investment and also sonaider eriteria 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 20 memorandum 8, (1) any person who intends to establish, - of small and medium (a) a small enterprise, may, at his discretion; ot ceterprises (5) amedium enterprise, shall, file the memorandum of small enterprise or, as the case may be, medium enterprise with such authority as may be specified by the state government under sub-section (4) or 25" the central government under sub-section (3): provided that any person who, before the commencement of this act, ed - (a) a small enterprise, whether he had or had not obtained a registration certificate, may after the commencement of this act, at his discretion, file the 30 memorandum; (byamedium enterprise, whether he had or had not, in pursuance of the notification of the government of india in the erstwhile ministry of industry (department of industrial development) no s0 477 (e) dated the 25th july, 1991, filed an industrial entrepreneur's memorandum shall, within ninety days from the commencement of 357 this act, file the memorandum, in accordance with the provisions of this act (2) the form ofthe memorandum, the procedure ofits filing and other matters incidental theréto shall be such as may be notified by the central government after obtaining the recommendations of the advisory committee in this behalf we (3) the authority with which the memorandum shall be filed by a medium enterprise shall be such as may be specified by notification, by the central government, (4) the state government shall, by notification, specify the authority with which a small enterprise may file the memorandum(5) the authorities specified under sub-sections (3) and (4) shall follow, for the purposes of this section, the procedure notified by the central government under sub-section (2),  chapteriv| measures        | for    ||------------------|--------|| promotion        | and    || development      |        || measures         |        || for              |        || promotion,       |        || development      |        || and              |        || enhancement      |        || of               |        || competitiveness  |        || of               |        || small           |        || and              |        || medium           |        || enterprises      |        || 9,               |        || (j)              |        || the              |        || central          |        || government       |        || may, from        |        || time             |        || to               |        || time,            |        || for              |        || the              |        || purposes         |        || of               |        || facilitating     |        || the              |        || promotion        |        || and              |        || development      |        || and              |        || enhancing        |        || the              |        || competitiveness  |        || of               |        || small            |        || enterprises      |        || and              |        || medium           |        || enterprises,     |        || particularly     |        || of               |        || the              |        || former,          |        || by               |        || way              |        || of               |        || development      |        || of               |        || skill            |        || in               |        || the              |        || employees,       |        || management       |        || end              |        || entrepreneurs,   |        || provisioning     |        || for              |        || marketing        |        || assistance       |        || or               |        || infrastructure   |        || facilities       |        || and              |        || cluster          |        || development      |        || of               |        || such             |        || enterprises      |        || with             |        || a                |        || view             |        || to               |        || strengthening    |        || backward         |        || and              |        || forward          |        || linkages,        |        || specify,         |        || by               |        || notification,    |        || such             |        || programmes,      |        || guidelines       |        || or               |        || instructions,    |        || as               |        || it               |        || may              |        || deem             |        || fit             |        || 24               | of     || 'notwithstanding |        || anything         |        || contained        |        || in               |        || the              |        || provisions       |        || of               |        || the              |        || employers'       |        || liability        |        || act,             |        || 1938,            |        || the              |        || weekly           |        || holidays         |        || act,             |        || 1942,            |        || the              |        || employment       |        || exchanges        |        || (compulsory      |        || hf               |        || of               |        || jada             |        || is"              |        || notification     |        || of               |        || vacancies)       |        || act,             |        || 1959             |        || and              |        || the              |        || apprentices      |        || act,             |        || 1961,            |        || a                |        || state            |        || government       |        || 31               | of     || 52               | of     || may,             |        || by               |        || notification,    |        || with             |        || a                |        || view             |        || to               |        || facilitating     |        || the              |        || graduation       |        || of               |        || small            |        || enterprises      |        || to               |        || medium           |        || enterprises      |        || provide          |        || that             |        || provisions       |        || of               |        || those            |        || acts             |        || shall            |        || not              |        || apply            |        || to               |        || small            |        || and              |        || medium           |        || 'enterprises     |        || employing        |        || up               |        || to               |        || fifty            |        || employees        |        || in               |        || that             |        || state,           |        || credit           |        || facilities      |        || 10,              |        || the              |        || credit           |        || facilities       |        || to               |        || the              |        || small            |        || and              |        || medium           |        || enterprises      |        || shall            |        || be               |        || progressive      |        || and              |        || such             |        || as               |        || may              |        || be               |        || specified        |        || in               |        || the              |        || guidelines       |        || or               |        || instructions     |        || issued           |        || by               |        || the              |        || reserve          |        || bank,            |        || from             |        || time             |        || to               |        || time,            |        || to               |        || ensure           |        || timely           |        || and              |        || smooth           |        || flow             |        || of               |        || credit           |        || to               |        || such             |        || enterprises,     |        || minimise         |        || the              |        || incidence-of     |        || sickness         |        || aniang           |        || and              |        || enhance          |        || the              |        || competitiveness  |        || of               |        || such             |        || enterprises     |        || procwrement      |        || preference       |        || policy           |        || as               |        || u1,              |        || for              |        || facilitating     |        || promotion        |        || and              |        || development      |        || of               |        || small            |        || enterprises,     |        || the              |        || central          |        || government       |        || or               |        || the              |        || state            |        || government       |        || may,             |        || by               |        || order            |        || notify           |        || from             |        || time             |        || to               |        || time,            |        || preference       |        || policies         |        || in               |        || respect          |        || of               |        || pracurement      |        || of               |        || goods            |        || and              |        || services,        |        || produced         |        || and              |        || provided         |        || by               |        || sinall           |        || enterprises,     |        || by               |        || its              |        || ministries       |        || or               |        || departments,     |        || as               |        || the              |        || case             |        || may              |        || be,              |        || or               |        || its              |        || aided            |        || institutions     |        || and              |        || public           |        || sector           |        || enterprises      |        || funds            |        || 30               |        |12, there shall be constituted, by notification, one or more funds to be called by such name as may be specified in the notification and there shall be credited thereto any grants made by the centra! government under section 13 | grants     ||------------|| central    || government |13, the central government may, after due appropriation made by parliament by law in this behalf, credit to the fund or funds by way of grants for the purposes of this act, such sums of money as that government may consider necessary to provide | id or          | funds      ||----------------|------------|| 14,            |            || (7)            |            || the            |            || central        |            || government     |            || shall          |            || have           |            || the            |            || power          |            || to             |            || administer     |            || the            |            || in             |            || such           |            || manner         |            || as             |            || may            |            || be             |            || prescribed    |            || administration |            || and            | vtilistion || of             | fund       || funds,         |            |(2) the fund or funds shall be utilised exclusively for the measures specified in subsection (7) of section 9, (3) the centrat government shall be responsible for the coordination and ensuring timely utilisation and retease of sums in accordance with such criteria as may be prescribed  chapterv inspection of small and medium enterprises and related matters| inspection    ||---------------|| small and     || medium        || enterprises   |15, notwithstanding anything in relation to inspection contained in the payment of wages act, 1936, the employees' state insurance act, 1948, the factories act, 1948, the inds and miscellaneous provisions act, 1952, the maternity benefit act, 1961, the payment of bonus act, 1965 and the payment of gratuity act, 1972, the inspection of small and medium enterprises shali be carried out in such manner and by such authority as may be prescribed: 4 of 1936, m4 of 1948 us employees' provident 63 of 1948, 19 of 1952 53 of 1961 21 of 1965, 30 of 1972, provided that while prescribing the manner of inspection under this section, the central government shall have regard to the promotion of self-regulation or self-certification by the small enterprises and medium enterprises maintenance 16 notwithstanding anything contained in any enactment specified in section 15, raeeorés 4 every small and medium enterprise shall maintain such records, file such returns with such 5° felurne by authority and in such forms as may be prescribed enterprises  chapter vi delayed payments to small enterprisesliabiity of 17, where any supplier, supplies any goods or renders any services to any buyer, the 'buyer to make buyer shall make payment therefor on or before the date agreed upon between him and the | 0 la ies supplier in writing or, where there is no agreement in this behalf, before the appointed day' provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed seventy-five days from the day of acceptance or the day of deemed acceptance date from 18, where any buyer fails to make payment of the amount to the supplier, as required | whieh and rate under section 17, the buyer shall, notwithstanding anything contained in any agreement auwhich between the buyer and the supplier or in any law for the time being in force, be liable to pay aye interest to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at nine per cent plus the bank rate notified by the reserve bank 20 recovery of 19, the amount due from a buyer, together with the amount of interest calculated in amount due accordance with the provisions of section 18, shall be recoverable by the supplier from the buyer by way ofa suit or other proceeding under any law for the time being in force reference to 20 notwithstanding anything contained in section 19, any party to a dispute may bee make a reference to the industry facilitation council for acting as an arbitrator or conciliator 2 $— council iftfespect of the matters referred to in that section and the provisions of the arbitration and conciliation act, 1996 shall apply to such dispute as ifthe arbitration or conciliation were 26 of 199 pursuant to an arbitration agreement referred to in sub-section (1) of section 7 of that act appeal 21, no appeal against any decree, award or other order shall be entertained by any court or other authority unless the appellant (not being a supplier) has deposited with it 30 seventy-five per cent of the amount in terms of the decree, award or, as the case may be, other order in the manner directed by such court or, as the case may be, such authority establishment 22, the state government shall, by notification, establish one or more industry ores facilitation councils, at such places, exercising such jurisdiction and for such areas, as faclioaion ay bespesiied in the notification as 'composition 23 the industry facilitation council shall consist of not less than three but not more gf inusty than five members to be appointed from among the following categories, namely:— council (@ director of industries, by whatever name called, or any other officer not below the rank of such director, in the department of the state government having administrative control of the small scale industries or, as the case may be, small and 4 © medium enterprises; and (ii) one or more office-bearers or representatives of small industry or enterprise associations in the state; or (gi) one or more representatives of banks and financial institutions lending to | small enterprises; or ms (iv) one or more persons having 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 of the industry facilitation council (3) the composition of the industry facilitation council, the manner of filling vacancies of its members and the procedure to be followed in the discharge of their functions by the 5 members shall be such as may be prescribed by the state government, 24, where any buyer is required to get his annual accounts audited under any law for requirement the time being in force, such buyer shall furnish the following additional information in hist specify annual statement of accounts, namely:— pai amount (0 the principal amount and the interest due thereon (to be shown separately) im the annual lo remaining unpaid to any supplier as at the end of each accounting year; satement of accounts id the amount of interest paid by the buyer in terms of section 18, along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year; (if) the amount of interest due and payable for the period of delay in making 15 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 (9) the amount of further interest remaining due and payable even in the zo succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 25 43 of 1961 25, notwithstanding anything contained in the income-tax act, 1961, the amount of interest not 10 interest payable or paid by any buyer, under or in accordance with the provisions of this act, be alfowed as 2s shall not, for the purposes of computation of income under the income-tax act, 1961, be edustion allowed as deduction 26 the provisions of sections 17 to 25 shall have effect notwithstanding anything over-riding inconsistent therewith contained in any other law for the time being in force effect  chapter vil|               |              |          |               |             |              |            |             |              |            |            |          | 30         | 'miscentancous    ||---------------|--------------|----------|---------------|-------------|--------------|------------|-------------|--------------|------------|------------|----------|------------|-------------------|| 27           | (j)          | the      | central       | government  | or           | the        | state       | government   | may        | appoint    | such     | officers   | appointment       || with such     | designations | and      | such          | other       | employees    | asit       | thinks      | fit          | for        | the        | purposes | ofthis     | act               || and           | may          | entrust  | fo            | themsuch    | ofthe        | powersand  | functions   | under        | this       | actasitmay | deem     | ft        | st                || (2)           | the          | officers | appointed     | under       | suby-section | (j)        | may,        | for          | the        | purposes   | ofthis   | act,       | by                || 35"           | order        | require  | any           | person      | to           | furnish    | such        | information, | in         | such       | form,    | as         | may               || 28           | (j)          | whoever  | intentionally | contravenes | or           | attempts   | to          | contravene   | or         | abets      | the      | penalty    | for               || contravention | of           | any      | of            | the         | provisions   | contained  | in          | sub-section  | (j)        | of         | section  | 8          | or                || or            |              |          |               |             |              |            |             |              |            |            |          |            |                   || sub-section   |              |          |               |             |              |            |             |              |            |            |          |            |                   || (2)           |              |          |               |             |              |            |             |              |            |            |          |            |                   || of            |              |          |               |             |              |            |             |              |            |            |          |            |                   || section       |              |          |               |             |              |            |             |              |            |            |          |            |                   || 27            |              |          |               |             |              |            |             |              |            |            |          |            |                   || shall be      |              |          |               |             |              |            |             |              |            |            |          |            |                   || punishable    |              |          |               |             |              |            |             |              |            |            |          |            |                   || -             |              |          |               |             |              |            |             |              |            |            |          |            |                   || selevleor    |              |          |               |             |              |            |             |              |            |            |          |            |                   || (@)           | in           | the      | ease          | of          | the          | first      | conviction, | with         | fine       | which      | may      | extend     | to                || yo            |              |          |               |             |              |            |             |              |            |            |          |            |                   || thousand;     |              |          |               |             |              |            |             |              |            |            |          |            |                   || and           |              |          |               |             |              |            |             |              |            |            |          |            |                   || sestion       |              |          |               |             |              |            |             |              |            |            |          |            |                   || 27           |              |          |               |             |              |            |             |              |            |            |          |            |                   || (6)           | inthe        | case     | of            | any         | second       | or         | subsequent  | conviction,  | with       | fine       | which    | shall      | not               || be            | less         | than     | rupees        | one         | thousand     | but        | may         | extend       | to         | rupees     | ten      | thousand,  |                   || (2)           | where        | a        | buyer         | contravenes | the          | provisions | of          | section      | 24,        | he         | shall    | be         | punishable        || with          | a            | fine     | which         | shall       | not          | be less    | than        | rupees       | ten        | thousand  |          |            |                   || s             | 29,          | no       | court         | inferior    | to           | that       | ofa         | metropolitan | magistrate | or         | a        | magistrate | of                || class         | shall        | try      | any           | offence     | punishable   | under      | this        | act,         | sourts     |            |          |            |                   |power to make rules 30 (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 of the following matters, namely:— (a) the term of office of the members of the board, the manner of filling vacancies, and the procedure to be followed in the discharge of functions by the members of the board under sub-section (4) of section 3; (6) the powers and functions of the member-secretary under section 6; jo (c) the manner in which the fund may be administered under sub-section (1) of section 14; (@) the criteria based on which sums may be released under sub-section (3) of section 14; (@) the manner in which and the authority by which inspection shall be carried under section 15; (f) the records which may be maintained and the form in which returns be filed, the method of filing of returns, and the authority with whom the returns be filed under section 16; (g) the information to be furnished and the form in which it is to be furnished under sub-section (2) of section 27; and re (h) any other matter which is to be or may be prescribed under this act as" ze (3) every notification issued under sub-section (/) of section 9 and every rule made by the central government under this section shall be laid, as soon as may be after itis made, before each house of parliament, while itis in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both houses agree in making any modification in the notification or rule or both houses agree that the notification or rule should not be made, the notification or rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything, previously done under that notification or rule 31 (j) the state government may, by notification, make rules to carry out the provisions of this act |            | power    | to    ||------------|----------|-------|| make       | rules    | by    || state      |          |       || government |          |       |(2) in particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: (a) the composition of the industry facilitation council, the manner of filling vacancies of the members and the procedure to be followed in the discharge of their functions by the members of the industry facilitation council under sub-section (3) of section 23; (6) any other matter which is to be or may be, prescribed under this act (3) the rule made 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 | power      ||------------|| uticulies, || 4s         |32 (1) ifany difficulty arises in giving effect to the provisions of this act, the central government may, by order published in the official gazette, make such provisions not inconsistent with the provisions of this act as may appear to be necessary for removing the difficulty: provided that no order shall be made under this section after the expiry of two years from the commencement of this act (2) every order made under this section shall, as soon as may be after it is made, be laid before each house of parliament, ey repeal of act 32 of 1993, 33 (j) the interest on delayed payments to small scale and ancillary industrial undertakings act, 1993 is hereby repealed (2) notwithstanding such repeal, anything done or any action taken under the act so repealed under sub-section (/) shall be deemed to have been done or taken under the corresponding provisions of this act  statement of objects and reasonssmall scale industry is at present defined by notification under section 1b of the industries (development and regulation) act, 1951, section 29b of the act provides for notifying reservation of items for exclusive manufacture in the small scale industry sector except for these two provisions, there exists no legal framework for this dynamic and vibrant sector of the country's economy many expert groups or committees appointed by the government from time to time as well asthe small scale industry sector itself have emphasised the need for a comprehensive central enactment to provide an appropriate legal framework for the sector to facilitate its growth and development emergence ofa large services sector assisting the small scale industry in the last two decades also warrants a composite view of the sector, encompassing both industrial units and related service entities the world over, the emphasis has now been shifted from "industries" to "enterprises", added to this, a 'growing need is being felt to extend policy support for the small enterprises so that they are enabled to grow into medium ones, adopt better and higher levels of technology and achieve higher productivity to remain competitive in a fast globalisation area thus, as in most developed and many developing countries, it is necessary that in india too, the concerns of the entire small and medium enterprises sector are addressed and the sector is provided with asingle legal framework as ofnow, the medium industry or enterprise is not even defined in any law 2, in view of the above-mentioned circumstances, the bill aims at facilitating the promotion and development and enhancing the competitiveness of small and medium enterprises and seeks to— (a) provide for statutory definitions of "small enterprise" and "medium enterprise" (5) provide for the establishment of national smal! and medium enterprises board, a high-level (cram consisting of stakeholders for participative review of and making recommendations on the policies and programmes for the development of small and medium enterprises (0) provide for classification of small and medium enterprises on the basis of investment in plant and machinery, or equipmont and establishment of an advisory committee to recommend on the related matter (d) empower the central government to notify programmes, guidelines or instructions for facilitating the promotion and development and enhancing the competitiveness of small and medium enterprises (c) empower the state governments to specify, by notification, that provisions ofthe labour laws specified in clause 9(2) will not apply to small and medium enterprises employing up-to fifty employees with a view to facilitating the graduation of small enterprises t0 medium enterprises; (y) make provisions for ensuring timely and smooth flow of credit to small and medium enterprises,to minimise the incidence of sickness among and enhancing the competitiveness of such enterprises, in accordance with the guidelines or instructions of the reserve bank of india, (g) empower the central and state governments to notify preference policies in respect of procurement of goods and services, produced and provided by small enterprises, by the ministries, departments and public sector enterprises () empowering the central government to create a fund or funds for facilitating promotion and development and enhancing the competitiveness of small enterprises and medium enterprises (h empower to prescribe harmonised, simpler and streamlined procedures for inspection of small and medium enterprises under the labour laws enumerated in clause 15, having regard to the need to promote self-regulation or self-certification by such enterprises () prescribe for maintenance of records and filing of returns by small and medium enterprises with a view to reduce the multiplicity of often-overlapping types of returns tobe filed; (4) make further improvements in the interest on delayed payments to small seale and ancillary industrial undertakings act, 1993 and making that enactment a part of the proposed legislation and to repeal that enactment 3 the bill seeks to achieve the above objects new dewi; mahabir prasad the 6th may, 2005,  president's recommendation under article 117 of the constitution of india[copy of letter no, 2(3)/2005-ssi bd & pol vol-li, dated the 10th may, 2005 from shri mahabir prasad, minister of small scale industries and agro & rural industries to the secretary-general, lok sabha] 'the president, having been informed of the subject matter of the small and medium enterprises development bill, 2005, has recommended the introduction and consideration of the bill in lok sabha under article 117(1) and (3) of the constitution of india  notes on clausesclause ? of the bill seeks to defines the various expressions used in the bill, clause 3 seeks to provide for the establishment of the national small and medium enterprises board with js head office in delhi, 1t further lays down that the minister in charge of the ministry or department of the central government having administrative control of the small and medium enterprises shall be the ex-officio chairperson, in addition, it lays down the composition of the board consisting of the vice-chairperson, member secretary, and 27 members representing various stakeholders this clause, inter alia, also contains provisions regarding the term of office af the members ofthe board, the manner of filling vacancies, frequency of meetings of the board, association of other persons with the board and invitation to ministers of the state governments to attend its meetings clause 4 secks to enumerates the grounds for remtoval ofa member of the board from it and also specifies the procedures to be followed in such cases clause $ seeks to specify the functions of the board, clause 6 seeks to empower the central government to prescribe the powers and functions of member-secretary of the board clause 7 seeks to classify "small enterprises" and "medium emierprises", based on investment in plant and machinery, equipment it also provides in detail for constitution of an advisory commitee, its composition, role and matters to be considered by it while communicating its recommendations to the central gov iment iealso empowers the central government, while classifying any class or classes of nterprises as small enerprise of medium enterprise, to vary the criterion of investment and to consider other criteria or slandards specified in this clause and include in such classification the micro or tiny enterprises or the village enterprises, as part of small enterprises clause 8 ceeksto tay down the requirement for filing of memorandum of small enterprise 'or medium enterprise with the authority specified by the state government or the central government under the provisions of this clause it also empowers the central government, to notify, the procedure of filing of the memerandum and the authority with which the 'memorandum shall be filed by a medium enterprise this clause also confers powers on the state government to notify the authority with which @ small enterprise may file the memorandum, italso enables the central gavernment to notify the procedure to be followed 'by the above-mentioned authorities for the purposes of this clause clause 9 seeks to enable the central government to notify programmes, guidelines or instructions for facilitating the promotion and development and enhancing the competitiveness of small enterprises and medium enterprises it also empowers a state government to provide, by notification, that the provisions of the employers' liability act, 1938, the weekly holidays act, 1942, the employment exchanges (compulsory notification 'of vacancies) act, 1959 and the apprentices act, 1961 shall not apply to small and medium ses employing up to fifty employees in that stare, clause 10 seeks to provide for the credit facilities tothe small and medium enterprises as may be specified in the guidelines or instructions issued by the reserve bank of india clause i seeks to empower the central government or the state government to notify preference policies in respect of procurement of goods and services, produced and provided by small enterprises, by its ministries, departments or its aided institutions and public sector enterprises clause 12 seeks to enable the central government to constitute, by notification, one or more funds and credit thereto any grants made to the central government under the provisions of clause 13 clause 13 seeks to empower the central government to credit to the fund or funds, such sums of money as the government may provide after due appropriation made by parliament by law in this behalf clause 14 seeks to empower the central government to administer the fund or funds in such manner, and also entrusts that government with the responsibility for the coordination and ensuring timely utilization and release of sums with such criteria, as may be prescribed clause 15 seeks to provide that notwithstanding anything in relation to inspection 'contained in the payment of wages act, 1936, the employees' state insurance act, 1948, the factories act, 1948, the employce's provident fund and miscellaneous provision act, 1952 the maternity benefit act, 1961, the payment of bonus act, 1965 and the payment of gratuity 'act, 1972, the inspection of a small and medium enterprises shall be carried out in such manner, with regard to the promotion of self-regulation or self-certifieation by the small and the medium enterprises, and by such authority, as may be prescribed clause 16 seeks to provide that every small and medium enterprise responsible for maintenance of such records, filing of such returns with such authority and in such forms, as may be prescribed clause 17 seeks to specify the liability of buyer of goods and services from a supplier to make payment therefor on or before the dated agree upon between the two parties in writing or, where there is no agreement in this behalf, before the appointed day the proviso to this clause seeks to limit the period agreed upon between the supplier and the buyer in writing to seventy-five days from the day of acceptance or the day of deemed acceptance clause 18 seeks to specify the date from which and the rate at which interests will be payable by the buyer to the supplier in ease of the former failing to make payments of the amount to the supplier, as required under section 17, clause 19 seeks to make the amount due from a buyer, together with the amount of interest calculated in accordance with the provisions of section 18, recoverable by way of a suit or other proceeding under law clause 20 seeks to provide for the jurisdiction of the industry facilitation council for acting 8 as an arbitrator or conciliator in respect of the matters referred to in clause 19, p clause 2/ seeks to debar any court or other authority from entertaining an appeal against any decree, award or any other order unless the appellant (not being a supplier) has deposited with it seventy-five per cent of the amount in terms of the decree, award or other order clause 22 seeks to makes it mandatory upon each state government to establish one 'or more industry facilitation councils for the purposes of this bill clause 23 seeks to lay down in detail the structure ofthe industry facilitation council consisting of not less than three but not more than five members further, it empowers the state government to prescribe the composition of the industry facilitation council, the 'manner of filling vacancies of its members and the procedure to be followed in the discharge of their functions, clause 24 seeks to provide details of the information required to be submitted by any buyer in this annual statement of accounts, where such buyer is required to get his annual accounts audited under any law for the time being in force clause 25 seeks to provide to disallow, for the purposes of computation of income under the income-tax act, 1961, the amount of interest payable or paid by any buyer, under of in accordance with the provisions of the proposed legislation clause 26 seeks to give the provisions of clauses 17 to 25 an over-riding effect over anything inconsistent therewith in any other law for the time being in foree clause 27 seeks to empower the central government or the state government to appoint officers and other employees for the purposes of this act and to entrust co them such of the powers and functions as it may deem fit, 'this clause further empowers the sfficers s0 appointed to require, by order, any persons to furnish such information, in such form, as may be prescribed clause 28 seeks to lay down penalty for contravention of clause 8 or clause 16 or clause 24 or clause 27 clause 29 secks to specify that no court inferior to that of a metropolitan magistrate or a magistrate ofthe first class shall try any offence punishable under this legislation clause 30 seeks to empower the central government to make rules for carrying out the provisions of this act and also provide that every notification issued under sub-clause (1) of iause 9 and every rule made by the central government under this clause shall be laid before each house of parliament clause 31 seeks to empowers the state government to make rules for carrying out the provisions ofthis act and also specifies thatthe rule made under this elause shal be laid before the state legislature clause 32 seeks to empower the central government to remove difficulties which may arise in giving effect to the provisions of this bill and also provide that every order made 'under this clause be laid before each house of parliament, clause 33 seeks to repeals the interest on delayed payments to small seale and 'ancillary industrial undertakings act, 1993as the provisions of that act have been suitably incorporated in the bill  financial memorandumclause 3 of the bill provides for the establishment of national small and medium enterprises board the bill further provides that the board shall meet at least once in every three months in a year in addition, sub-clause (7) of the bill provides that board may associate itself with any person or persons whose assistance or advice it may desire this board will replace the currently existing non-statutory small scale industries (ssi) board consisting of one hundred and one persons, including forty-seven non-official members which normally meets once or twice in a year, the expenditure usually incurred on holding a meeting of this board is about four to five lakh rupees in view of the reduced size of the board under the bill, coupled with the increased frequency ofits meetings, itis expected that the total recurring expenditure on the board will be about fifteen lakh rupees ina year since the functions of the board consist of review and advice through its meetings only, no other recurring or non-recurring expenditure is likely to be incurred on the board in any case, the expenses of the board will be borne out of the usual budget grants of the ministry of small scale industries clause 9 of the bill empowers the central government to notify programmes, guidelines ot instructions as it may deem fit for facilitating the promotion and development and enhancing the competitiveness of small and medium enterprises, even now, government has been implementing a large number of programmes for the development of small scale sector for which adequate budget provision is made every year however, it is not possible at this juncture to give an exact estimate of the likely requirement of funds for the following years, 'as the amount required will depend on such programmes, guidelines or instructions as might bbe taken up ot issued from time to time in pursuance of this provision all such programmes, etc,, will be finalised following the procedures taid down by the government, including consultation with the integrated finance wing or the ministry of finance, as necessary clauses 12 and 13 contain provisions to enable the central government to constitute 'one or more funds and, after due appropriation made by parliament by law in this behalf, 'credit to the fund or funds by way of grants for the purposes of this legislation, such sums of money as the government may consider necessary to provide, again, it cannot be estimated in advance as to how much money will be required to create such fund or funds in fac, the size of the fund will be determined by its purpose and the quantum and the mode of disbursement required from it so as 10 meet the objects for which it will be created however, the concems of availability of budgetary resources, interest outgo, et, can be adequately addressed as and when such a fund is set up by the central government after due consultations with ministry of finance and after due-appropriation made by parliament by law in this behalf, clause 22 makes the state governments responsible to establish industry facilitation council in each state this clause is actually based on clause 7a of the interest on delayed payments to small scale and ancillary industrial undertakings act, 1993 (32 of 1993) which is sought to be amalgamated in the bill therefore, this clause is not likely to entail any additional financial expenditure for this purpose over and above what is being already incurred clause 27 empowers the central government or state government to appoint such officers and other employees as it thinks fit for the purposes of this act at present, both the central and state governments have ministries, departments, directorates, etc, dealing with promotion of small scale industries which can discharge the duties and functions provided under this act therefore, there would be no necessity to appoint any additional officers and staffdue to enactment of this bill hence, this provision is also not likely to lead to any additional financial burden to the government  memorandum regarding delegated legislationclause 30 ofthe bill empowers the central government to make rules o erry out the provisions ofthe bill the matters in respect of which rules may be made relate, among aioe ta the term of office ofthe members ofthe board the manner of filling vacancies, the procedures to be followed in discharge of functions by the members of the board and the powers and functions of the member-seeretary under the provisions "n clauses 3 and 6 ao alga be required to be framed under clause 14 for administration ofthe fund and era based on which sums may be released from it, the manner in which and the tuthorty by which inspection willbe carried out under seetion 15 and the records which may temaineained and the form inwhich the returns will have o be filed and other related maners vader classe 16 are also proposed to be prescribed through rules, rules will also have fo be roast an the information fo be furnished and the form in which is to be furnished under sub-clause (2) of clause 27, clause 31 seeks to empower the state government to make rules to carry out the provisions of the bill and in particular, such rules may provide forthe composition of the vr dustry facifitetion council, the manne of filing vacancies ofthe members and the proce aiures to be followed in the discharge of their funetion by the members of the industry facilitation council under sub-clause (3) of clause 23, "the matter in respect of which rules may be made are matters of procedure and adminsgtrative details and iti not practicable to provide forall the matters inthe bill, the delegation of legislative power is, therefore, of a normal character 