WBMSEFC Kolkata: Recover Stalled MSME Payments & Dues

Introduction to WBMSEFC

For business owners in Kolkata, cash flow is the lifeline of operations. But when a buyer delays payment beyond the agreed credit period, it threatens the very survival of a Micro or Small Enterprise (MSE). You struggle to pay wages, purchase raw materials, and maintain operations.

However, you do not need to file expensive civil suits that drag on for years to recover your dues. In West Bengal, the WBMSEFC Kolkata (West Bengal Micro and Small Enterprises Facilitation Council) acts as a specialized tribunal designed specifically to resolve these disputes swiftly.

In this comprehensive guide, we will cover the entire legal landscape: from how to file a claim and the contact details of the council, to the powerful “75% Deposit Rule” that protects you even if the buyer tries to appeal the decision in the Calcutta High Court.

Part 1: Understanding the WBMSEFC

The WBMSEFC operates under the mandate of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. This central act was created to address the power imbalance between small suppliers and large buyers.

The Council is not just a mediator; it is a statutory body with the power to act as an arbitrator. Its primary function is to handle cases where a buyer has failed to pay a Micro or Small Enterprise (MSE) within 45 days of accepting goods or services.

This is a critical aspect of financial discipline. As we discussed in our article on Good Corporate Governance in Small Businesses, maintaining organized financial records and adhering to statutory timelines is essential for long-term stability.

The “Teeth” of the Law: Interest Penalties

Why should a buyer fear the WBMSEFC Kolkata? The answer lies in the penalty. Under Section 16 of the MSMED Act, if a buyer fails to make payment within the stipulated time, they are liable to pay compound interest with monthly rests.

The rate is substantial: three times the bank rate notified by the Reserve Bank of India (RBI). This interest is mandatory and is disallowed as a deduction for income tax purposes for the buyer.

Part 2: The Dispute Resolution Process

Unlike traditional courts, the Council follows a time-bound, two-step mechanism:

1. Step 1: Conciliation
   Upon receiving a valid reference, the Council first attempts to resolve the dispute amicably. They act as a neutral third party to help you and the buyer reach a settlement.
2. Step 2: Arbitration
   If conciliation fails, the Council steps in to arbitrate the dispute itself. The award passed in arbitration is final and binding, effectively acting as a court decree.

Part 3: What If the Buyer Appeals? (The Legal Framework)

This is where the MSMED Act truly shines for small business owners. Many buyers threaten to “drag the case to court” if they lose at the Council. However, the law has created a massive financial barrier to prevent this delay tactic.

No Separate Appellate Tribunal

It is important to note that there is no separate “Appellate Tribunal” specifically for MSME cases. Any challenge to an order or award made by the WBMSEFC Kolkata must be filed in a Civil Court. In Kolkata, this typically means the City Civil Court or the Calcutta High Court, depending on the valuation of the claim.

The 75% Mandatory Deposit Rule

The process of challenging a Council order is governed by Section 19 of the MSMED Act, read with Section 34 of the Arbitration and Conciliation Act, 1996.

The most critical hurdle for a buyer is the 75% Mandatory Deposit. No court will “entertain” (hear) an appeal by a buyer against a Council award unless the buyer first deposits 75% of the awarded amount with the court.

• Purpose: This rule exists specifically to prevent buyers from using the legal system to further delay payments to small businesses.
• Calcutta High Court Precedent: The Calcutta High Court has strictly upheld that without the 75% deposit by the buyer, an application for a stay on the Council’s award is “stillborn” and cannot be entertained.

Release of Funds to the Supplier

Even while the appeal is pending, the Court has the power to order that a portion of this 75% deposit be paid directly to you (the supplier). This ensures that your business remains viable and you are not starved of funds during the legal process.

Note for Suppliers: If you (the MSME) are unhappy with the Council’s decision and wish to challenge it, you are exempt from this 75% pre-deposit requirement. This privilege is reserved solely for the supplier.

Part 4: Eligibility & Filing Your Case

Before you approach the Council, ensure you meet the strict eligibility criteria:

1. Valid Udyam Registration

You must hold a valid Udyam Registration. The old Udyog Aadhaar Memorandum (UAM) is no longer sufficient.

2. The 45-Day Rule

The payment must be delayed beyond 45 days from the date of acceptance (or deemed acceptance) of goods or services.

3. Documentation and Evidence

You must possess digital copies of valid Tax Invoices and Proof of Delivery (Signed challans or delivery receipts). Maintaining these records is part of operational integrity, as outlined in our guide on Corporate Governance Structures.

WBMSEFC Kolkata: Contact Information

For business owners in West Bengal, the administrative machinery works out of the New Secretariat Building.

• Location: New Secretariat Building, 1, K.S. Roy Road, Kolkata – 700001.
• Key Floors: The Directorate typically operates from the 4th, 8th, 9th, and 12th floors.
• Helpline Numbers: 033-22622004 / 033-22622007.
• Official Email: dir.msse-wb@nic.in

How to File: The Process

Filing is a hybrid process involving both digital and physical steps.

• Step 1 (Online): File your application at the MSME Samadhaan Portal using your Udyam number.
• Step 2 (Physical): Submit a hard copy of the application along with a notarized Affidavit to the Kolkata office.
• Step 3 (Notice): The Council will issue a notice to the buyer, which often compels immediate settlement.