Amendment to the Interest on Delayed Payments to
     the Small   Scale   and   Ancillary   Industrial
     Undertakings Act,1993.
        One  of  the major difficulties faced by  Small
     Scale and Ancillary industrial units is in respect
     of timely receipt of their dues.  In order to help
     SSI  and Ancillary industrial units get payment in
     time  for the supplies made by them and to provide
     for  and  regulate  payments  to  &  for   matters
     connected  therewith, or incidental thereto an Act
     had came inot operation from 2nd April, 1993.  The
     salient features of the Act are as under:
     i)   Where  on  SSI  unit supplies  any  goods  or
          renders  any services to any buyer, the buyer
          shall  make payment therefor on or before the
          date agreed upon between him and the SSI unit
          in  writing or where there is no agreement in
          this  behalf, within 30 days from the date of
          delivery of goods/services.
     ii   Where  the buyer fails to make payment in the
          preceding  paragraph  he  is  liable  to  pay
          interest  to the supplier on that amount  for
          the  over  due period at such rate  which  is
          five  percent points above the floor rate for
          comparable  lending.   Floor rate here  means
          the  minimum rate stipulated by Reserve  Bank
          according to the size of loan.
     iii) The  interest is payable on compounded  basis
          (with monthly rests) at the rate mentioned at
          (ii) above.
     iv)  The  amount as above shall be recoverable  by
          the  supplier from buyer by way of suits.  No
          appeal   against   any    decree   shall   be
          entertained by any court unless the appellant
          has  deposited  with the court sevently  five
          percent of the amount in terms of decree.
     v)   The  buyer is required to specify the  amount
          together   with   interest  in   his   annual
          statement  of  accounts as remains uppaid  to
          any  SSI  unit at the end of each  accounting
          year.   The  interest payable or paid by  any
          buyer  on  the  above account  shall  not  be
          treated as deductible expense for the purpose
          of computation of his income under Income Tax
          Act,1961.
        However,  this  act  could not  be  effectively
     implemented.   Hence  Govt.   of India  have  made
     amendment  to  the  original Act on  10th  August,
     1998.   The  most important change that  has  been
     brought about by the Amendment Act is that the SSI
     suppliers   can   now    approach   the   Industry
     Facilitation Council (IFC) for settlement of their
     disputes  with  the buyers in regard to  delay  in
     payment  etc.   of the supplies made by them.   As
     provided  under  7(a)  of the amendment  Act,  the
     State  Govt.   have been empowered  to  constitute
     such   councils   with     the   composition   and
     jurisdiction  as provided under Secion 7(a),(b)  &
     (c)  of the amended Act.  The Councils shall first
     make efforts to bring bount conciliation cannot be
     reached,  the  IFC shall act as an Arbitrator  for
     settling  disputes following the provisions of the
     Arbitration & Conciliation Act,1996.
        Another  important  change  introduced  by  the
     amendment  is that no agreement between the  buyer
     and  the  seller shall exceed 120 days.  This  has
     been  done  to  eliminate   the  widely  prevalent
     practive  among  buyers to force SSI suppliers  to
     renew  the  agreement  and extend  the  period  of
     payment  before  the  expiry of the  agreement  in
     order  to avoid payment of interest on the  amount
     dut.   As a result of the amendments to Sections 3
     and  4,  the buyers are now legally bound to  make
     payment  of interest at the rate of 1.5 times  the
     prime  lending  rate charged by the State Bank  of
     India  for any delay beyond the agreed period  not
     exceeding 120 dyas.
        In  pursuance to Section 6 of the amended  Act.
     Govt.   of  Orissa vide its  Notification  No.3/94
     dated 17th Feb., 1999 have constituted an Industry
     Facilitation  Council  (IFC) at Cuttack  with  the
     following members:
     1.   Director of Industries, Orissa,      Chairman
          Cuttack.
     2.   Managing Director,OSFC,Cuttack       - Member
     3.   Managing Director, OSIC,Cuttack      - -do-
     4.   Director,Export Promotion & 
          Marketing, Orissa,Bhubaneswar.         -do-
     5.   Representative/SBI (Circle Credit 
          Officer) H.O ,SBI, Bhubaneswar.        -do-
     6.   Representative/Uco Bank (Chief 
          manager. Regional Office).             -do-
     7.   Representative of Orissa Small Scale   -do-
          Industries Association
     8.   Representative of Utkal Chambers of    -do-
          Commerce & Industry
     9.   Representative of Orissa Assembly of   -do-
          Small Scale  and Medium Enterprises
     10.  Joint  Director,           Member Secretary
          Industries, Orissa, 
          Cuttack.
        This Committee shall have jurisdiction over the
     entire State.
        Any  SSI  unit which has not  received  payment
     within  120  days from any buyer - whether in  the
     public  or  the private sector - may write to  the
     Director,   Industries-cum-Chairman,   IFC,  Killa
     Maidan,  Cuttack-753001  alongwith  the  following
     documents:
     i)   Copy of the purchase order/contract.
     ii)  Copy of the receipt challans.
     iii) Details of the pending bills.
     iv)  In  case raw materials have been supplied  by
          the buyer or if the work is a works contract,
          then  the  final   reconcilitation  statement
          indicating  the  material   account  is  also
          required to assess the clarity of the claims.
     v)   Statement  of  accounts indicating details  of
          part  bills/final bills/running bills vis-avis
          part  payments received with dates etc.   This
          will  help  in assessing the date  from  which
          balance payments are due.
     vi)  If  possible, copies of MOMs drawn from  time
          to  time  to  cover  deviations  in  purchase
          orders/extra   quantities    ordered   /other
          problems  faced/Acceptance of works  executed
          etc.  as and where applicable.
     vii) Copy  of  the orders, if any,  extending  the
          delivery date of the P.O.  to the supplier.
                                  .......
line3.gif (1636 bytes)