Executive Summary

The modern Indian financial ecosystem operates on a dual-axis framework: the regulatory rigidity of banking norms and the restorative flexibility of insolvency laws. At the heart of this intersection lies a critical paradox affecting Micro, Small, and Medium Enterprises (MSMEs). While the Insolvency and Bankruptcy Code, 2016 (IBC) was amended—specifically through Section 240A—to allow MSME promoters to retain control of their entities post-insolvency and ensure business continuity, the credit reporting infrastructure governed by the Reserve Bank of India (RBI) often fails to reflect this revival in the MSME CIBIL score after insolvency.

This report provides an exhaustive examination of two distinct but interconnected pillars of commercial finance. First, it dissects the official mechanisms available for challenging Commercial Credit Information Reports (CCR) and CIBIL Ranks. It explores the statutory framework of the Credit Information Companies (Regulation) Act, 2005 (CICRA), detailing the granular procedures for rectifying data inaccuracies, ownership conflicts, and duplication errors. It further analyzes the recently introduced RBI compensation framework for delayed dispute resolution, positioning it as a tool for borrower leverage.

Second, the report addresses the complex legal conundrum faced by MSMEs undergoing the Corporate Insolvency Resolution Process (CIRP). When an MSME promoter successfully submits a resolution plan and retains management, they often encounter a “credit deadlock.” Banks, adhering to Income Recognition and Asset Classification (IRAC) norms, frequently refuse to upgrade the company’s account from “Non-Performing Asset” (NPA) to “Standard” because there has been no “change in ownership”—a standard prerequisite for upgradation. As a result, the legally revived MSME may have a “Written Off” or “Settled” status on their CIBIL report, restricting access to working capital and affecting the company’s MSME CIBIL score after insolvency.

Through a detailed analysis of landmark jurisprudence—principally the Ramesh D. Shah v. Vijay Pitamber Lulla and Shreenathji Rasayan judgments—this report establishes the legal remedy. It elucidates how the “Clean Slate” doctrine, when invoked through specific NCLT directions, creates a “legal fiction” of fresh management, overriding standard banking circulars and mandating the restoration of creditworthiness.

Part I: The Architecture of Credit Information and Dispute Resolution

The integrity of the financial system relies heavily on the accuracy of data maintained by Credit Information Companies (CICs). In India, four major CICs—TransUnion CIBIL, Equifax, Experian, and CRIF High Mark—act as the repositories of credit history. For commercial entities, particularly MSMEs, the Commercial Credit Report (CCR) and the CIBIL Rank (CMR) are not merely administrative records; they are determinative factors for the cost of capital and market survival.

1.1 The Legal and Regulatory Framework

To understand how to challenge a CIBIL score, one must first grasp the legal architecture that governs it. The system is underpinned by the Credit Information Companies (Regulation) Act, 2005 (CICRA), which defines the triangular relationship between the Borrower, the Credit Institution (CI), and the Credit Information Company (CIC). For MSMEs emerging from insolvency, this framework is particularly critical, as it provides the legal foundation to ensure that their CIBIL score and credit history accurately reflect approved resolution plans and repayment settlements, safeguarding access to working capital and preserving the company’s financial credibility.

1.1.1 The Principle of Data Ownership

A fundamental tenet of CICRA is that CICs like TransUnion CIBIL are custodians, not owners, of the data. Section 21 of the Act mandates that a CIC cannot unilaterally alter data in its database. The data is “furnished” by Member Credit Institutions (Banks/NBFCs).1

• Implication for Disputes: When a commercial entity challenges its CIBIL score, CIBIL acts as an intermediary platform. It does not adjudicate the dispute. It transmits the dispute to the furnishing bank, which then verifies the records against its Core Banking Solution (CBS). Only upon confirmation from the bank can CIBIL modify the record.1 This “Maker-Checker” model ensures data integrity but often prolongs the dispute resolution process if the bank is unresponsive.

1.1.2 The CIBIL Rank (CMR) and Its Impact

For MSMEs, the CIBIL Rank (CMR) is a probabilistic score ranging from CMR-1 (lowest risk) to CMR-10 (highest risk). This rank is derived from a complex algorithm that weighs repayment history, credit utilization, and the “vintage” of credit facilities.2

• Delinquency vs. Default: Data analysis indicates that a significant proportion of MSMEs may be delinquent (late on payments) without being classified as NPA. However, even minor data inaccuracies—such as a delayed reporting of a payment—can trigger a downgrade in rank, pushing the MSME into a high-risk bracket and triggering higher interest rates from lenders.2

1.2 Categorization of Commercial Disputes

Commercial disputes are far more complex than consumer disputes due to the multiplicity of credit facilities (term loans, working capital, bank guarantees, letters of credit) and the intricate structures of corporate ownership. Disputes generally fall into three primary categories.3

1.2.1 Data Inaccuracy Disputes

These are the most common disputes, arising from clerical errors, system migration issues during bank mergers, or failure to update “closed” accounts.

• Account Details: Errors in the ‘Sanctioned Amount’ or ‘Current Balance’ fields artificially inflate the company’s leverage ratio. For instance, a term loan that has been fully repaid might still show a residual balance of a few rupees due to interest calculation errors, keeping the account “Active” rather than “Closed”.5
• Status Flags: Crucial fields like “Suit Filed” or “Wilful Defaulter” have severe consequences. A “Suit Filed” tag, often left remaining after a settlement has been reached and the suit withdrawn, acts as a hard stop for automated underwriting systems.5
• Asset Classification: An account might be classified as ‘Sub-Standard’ or ‘Doubtful’ in the CIBIL report even after it has been regularized. This mismatch often occurs because the bank’s system updates the balance instantly but the asset classification flag is updated only during the quarter-end reporting cycle.5

1.2.2 Ownership and Linkage Disputes

Ownership disputes strike at the identity of the corporate entity.

• Guarantor Linkages: A major source of CMR degradation is the erroneous linkage of the MSME as a guarantor for a defaulting third party. If Company A guaranteed a loan for Company B years ago, and Company B defaults, Company A’s credit report will reflect this default. Disputes often arise when the guarantee was revoked or discharged, but the bank failed to delink the entities in the reporting format.3
• Sister Concern Mapping: Credit institutions often group companies based on common directors. If one sister concern defaults, the “Group Exposure” logic may taint the reports of profitable entities within the group. Disputing this requires proving that the entities are legally distinct and no cross-guarantee exists.4

1.2.3 Duplicate Account Errors

This is a technical error where a single credit facility is reported multiple times.

• Scenario: This frequently happens when a loan is sold to an Asset Reconstruction Company (ARC). The original bank might fail to mark the account as “Sold/Closed,” while the ARC starts reporting the same debt as a new account.
• Impact: This duplication doubles the debt burden on paper, destroying the Debt-to-Equity ratio and plummeting the CIBIL score.4

1.3 The Procedural Mechanism for Challenging Scores

The industry has standardized the dispute resolution process to ensure traceability. The procedure can be initiated through online or offline channels.

1.3.1 The Online Dispute Resolution (ODR) Process

The ‘myCIBIL’ portal is the primary interface for commercial disputes.

1. Authentication and Access: The authorized signatory must log in using the company’s credentials. The system requires authentication to ensure that only legitimate representatives can view sensitive credit data.3
2. Navigation to Dispute Center: Within the ‘Credit Reports’ section, the user navigates to the ‘Dispute Center’. The interface is segmented by data types: ‘Company Details’, ‘Account Details’, and ‘Ownership’.3
3. Initiating the Challenge: The user selects the specific line item (e.g., a specific Term Loan account). The system allows the user to flag the value that is incorrect (e.g., “Date of Last Payment reported as 01/01/2023, actual is 01/01/2024”).
4. Dispute ID Generation: Upon submission, a unique Dispute ID is generated. This ID is the legal anchor for the timeline of the dispute.3

1.3.2 The Offline Dispute Mechanism

For complex commercial cases involving legal documents (like court orders or settlement decrees), the online portal’s character limits and upload restrictions may be insufficient.

• Form Submission: The entity must download the ‘Commercial Dispute Resolution Form’ from the CIBIL website.
• Documentation: A formal letter on the company letterhead, accompanied by the Dispute Form and supporting evidence (e.g., NCLT Order, No Dues Certificate), must be physically mailed to TransUnion CIBIL’s registered office in Mumbai.5
• Verification: CIBIL digitizes this request and initiates the same verification loop with the bank as the online process.

1.3.3 The Verification Loop and Timeline

Once a dispute is raised, the clock starts ticking on a strictly regulated timeline.

• Transmission: CIBIL transmits the dispute details to the Nodal Officer of the relevant Credit Institution (CI).
• CI Action: The bank is legally obligated to verify the data against its internal ledgers. If the data is incorrect, the bank must submit a correction file (usually in the ‘CDU’ or Consumer Data Update format) to CIBIL.8
• Closure: Upon receipt of the correction, CIBIL updates the master database and sends a “Dispute Resolution Summary” to the MSME. The entire process is mandated to be completed within 30 days.4

1.4 The RBI Compensation Framework (2023)

Recognizing the rampant delays in this verification loop, the Reserve Bank of India issued a landmark circular (RBI/2023-24/72) in October 2023, operationalizing a compensation framework.

• The Penalty: If a CI or CIC fails to resolve a dispute within 30 calendar days, they are liable to pay the complainant ₹100 per day for every day of delay.9
• Mechanism: This compensation is not theoretical; it must be credited directly to the borrower’s bank account. This framework has significantly shifted the leverage in favor of the borrower, forcing banks to take CIBIL disputes seriously rather than treating them as low-priority administrative tasks.6
• Strategic Use: For MSMEs, citing this circular in the initial dispute letter can act as a powerful accelerant, signaling that the entity is aware of its rights and ready to escalate.9

Part II: The MSME Insolvency Paradox

The second dimension of this report addresses a sophisticated conflict between insolvency resolution and credit reporting, highlighting the challenges MSMEs face in ensuring their CIBIL score accurately reflects post-insolvency outcomes. To understand the remedy, we must first deeply analyze the statutory conflict that necessitates it.

2.1 The IBC and the “Fresh Start” Mandate

The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted to maximize the value of assets and revive distressed entities. A central pillar of this revival is the “Clean Slate” doctrine.

• The Doctrine: Articulated by the Supreme Court in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta and reaffirmed in Ghanshyam Mishra & Sons v. Edelweiss Asset Reconstruction Company, this doctrine holds that once a Resolution Plan is approved by the Adjudicating Authority (NCLT), the Corporate Debtor is “reborn.” All past claims not part of the plan are extinguished. The successful resolution applicant (buyer) takes over the company on a “Clean Slate,” free from the “hydra head” of past liabilities.10

2.2 Section 240A: The MSME Exception

In the general corporate world, Section 29A of the IBC prohibits defaulting promoters from bidding for their own companies to prevent moral hazard. However, the legislature recognized that MSMEs are different. They are often dependent on the personal expertise and goodwill of their promoters. Excluding the promoter often means liquidation, which destroys value and jobs.

• The Amendment: Section 240A was introduced to exempt MSMEs from the disqualifications under Section 29A(c) and (h).12
• The Effect: This allows the original promoter (the old management) to submit a resolution plan. If the Committee of Creditors (CoC) approves it, the promoter retains control of the company, but the debt is restructured (often with significant “haircuts” or waivers).

2.3 The Conflict with RBI IRAC Norms

Here lies the paradox. While the IBC allows the promoter to retain control to ensure business continuity, the RBI’s banking norms penalize this continuity in the context of credit rating.

• IRAC Norms: The RBI Master Circular on Income Recognition and Asset Classification (IRAC) governs how banks classify loans. A loan classified as NPA can typically be upgraded to “Standard” only if:

1. All arrears of interest and principal are fully paid; OR
2. The account is restructured and there is a change in ownership.15

• The MSME Deadlock: In a Section 240A resolution, the debt is restructured (the plan is approved), but there is no change in ownership (the promoter remains). Therefore, strictly applying IRAC norms, banks continue to classify the account as NPA or “Sub-Standard” even after the Resolution Plan is approved.17
• Consequence: The MSME emerges from CIRP with a legally binding “Fresh Start” but a credit report that screams “Defaulter.” The CIBIL report will likely show the account as “Written Off” or “Settled” (derogatory statuses), preventing the MSME from obtaining the fresh working capital needed to implement the very resolution plan the court just approved.19

2.4 The “Zombie Entity” Problem

This regulatory mismatch creates a “Zombie Entity”—a company that is legally alive and solvent under the IBC but financially dead in the credit market.

• Written Off Status: When a resolution plan involves a haircut (e.g., paying 40% of the debt), the bank writes off the remaining 60%. In standard banking practice, a “Write Off” is a negative indicator, signaling that the bank gave up on recovery.
• The Trap: The bank, fearing RBI audits, refuses to upgrade the account to “Standard” until it sees a “satisfactory performance” over a “monitoring period” (usually 1 year). During this year, the MSME is starved of capital, increasing the likelihood of a second default.17

Part III: Legal Remedies for CIBIL Score Upgradation Post-Corporate Insolvency Resolution Process

The remedy for this deadlock is not administrative; it is judicial. Since the automated banking algorithms cannot process the nuance of a “Section 240A Fresh Start,” the MSME must obtain a specific judicial order to ensure their CIBIL score post-insolvency accurately reflects the approved resolution plan, effectively forcing the system to override the default IRAC logic.

3.1 Judicial Intervention: The “Legal Fiction” of Fresh Management

The National Company Law Tribunals (NCLTs) have recognized this conflict and have stepped in to enforce the spirit of the IBC over the letter of the IRAC norms.

3.1.1 Landmark Precedent: Ramesh D. Shah v. Vijay Pitamber Lulla

The definitive remedy stems from the judgment of the NCLT Mumbai Bench in Ramesh D. Shah vs. Vijay Pitamber Lulla & Ors. (IA No. 1100/2022 in CP(IB) No. 1111/MB/2019).18

• Case Facts: Etco Industries Pvt. Ltd. (an MSME) underwent CIRP. The promoter, Mr. Ramesh D. Shah, submitted a resolution plan under Section 240A, which was approved. The plan involved a settlement of dues. Post-approval, the Union Bank of India refused to upgrade the account status to “Standard,” citing the RBI circular requirement for a “change in ownership.”
• The Promoter’s Argument: The applicant argued that the “Clean Slate” doctrine implies a rebirth of the corporate debtor. To deny “Standard” status is to deny the “fresh start” promised by the Code.
• The Tribunal’s Ruling: The NCLT ruled in favor of the MSME, creating a legal fiction. It held:”The objective of this is to provide a clean start to the unit/Corporate Debtor. Therefore, once the resolution plan is approved by the Adjudicating Authority, the management/ownership of the Corporate Debtor shall be considered as fresh, even if the directors/promoters of the Corporate Debtor (MSME) remain the same.” 18
• The Remedy Granted: The Tribunal directed the bank to “change the asset classification of the company’s accounts to ‘Standard'” immediately, bypassing the monitoring period.

This judgment provides the blueprint for the remedy: An NCLT order declaring that the retention of management under Section 240A constitutes “fresh management” for the purposes of asset classification.

3.1.2 The Shreenathji Rasayan Confirmation

The NCLT Ahmedabad Bench in Shreenathji Rasayan Pvt Ltd v. Reliance Asset Reconstruction Company further solidified this position.23

• The applicant specifically prayed for directions to update CIBIL.
• The Tribunal directed the respondents to “inform and update all Credit Information Companies… regarding the corrected and upgraded status… so as to reflect a clean credit record.”
• Key Takeaway: This confirms that the NCLT views the CIBIL record as an integral part of the “assets” and “viability” of the Corporate Debtor, bringing it within its jurisdiction under Section 60(5) of the IBC.

3.2 Distinguishing the Madras High Court View

It is vital to address a counter-narrative to manage legal risk. The Madras High Court, in a recent ruling, held that the “Clean Slate” doctrine does not protect continuing promoters (under s. 240A) from undisclosed liabilities.10

• The Distinction: The High Court differentiated between a third-party buyer (who gets total immunity) and a continuing promoter (who cannot benefit from their own suppression of facts).
• Implication for CIBIL: While this ruling specifically targeted hidden operational debts (like electricity dues), banks might try to use it to argue that the “stigma” of default also survives for promoters.
• Rebuttal: The remedy in Ramesh D. Shah is distinct. It does not absolve the promoter of hidden crimes; it classifies the disclosed and restructured debt as “Standard” to enable business viability. The asset classification (Standard vs. NPA) is a regulatory tag, not a moral judgment, and the NCLT has jurisdiction to modify it to save the company.

3.3 The “Disjoint Sets” Argument

In some cases, banks argue that NCLT orders cannot override RBI circulars because they operate in “disjoint sets” (one governs insolvency, the other banking regulation).25

• The Override: Section 238 of the IBC contains a “non-obstante” clause, stating that the IBC prevails over any other law in force. NCLTs have consistently held that if an RBI circular prevents the implementation of a resolution plan (by starving the company of credit), the IBC’s mandate for revival overrides the circular’s mandate for classification.

Part IV: MSME CIBIL Score Upgradation (Post-Insolvency)

Based on the legal landscape analyzed above, the following is the step-by-step remedy for an MSME promoter to upgrade their CIBIL score post-Corporate Insolvency Resolution Process (CIRP).

Step 1: Embedding the Remedy in the Resolution Plan

Prevention is better than cure. The remedy should be baked into the Resolution Plan document itself before it is even voted on by the CoC.

• Drafting Requirement: The Resolution Plan must contain a specific section titled “Regulatory Compliances and Reliefs.”
• Specific Clause: “Upon the approval of this Plan, the Financial Creditors shall reclassify the account of the Corporate Debtor as ‘Standard’ in their books and report the same to all Credit Information Companies (CIBIL, Equifax, etc.). The status ‘Written Off’ or ‘Settled’ shall be removed, and the account shall reflect as ‘Standard’ with the restructured balance. The ‘Monitoring Period’ requirement under RBI Circulars is waived in light of the ‘Fresh Start’ nature of this Plan.”
• Effect: Once the NCLT approves the plan, this clause becomes a court order.

Step 2: The Post-Approval Legal Notice

If the plan was approved without such a specific clause, or if the bank ignores it:

• Action: Send a formal legal notice to the bank’s Nodal Officer and Legal Head.
• Content: Cite the NCLT Approval Order and the Ramesh D. Shah judgment. Explicitly state that maintaining an NPA status is a violation of the “Clean Slate” doctrine and constitutes “Unjust Enrichment” (taking the settlement money while denying the credit benefit).26
• Ultimatum: Give a 15-day window for rectification before initiating contempt proceedings.

Step 3: Filing the Interlocutory Application (IA)

If the bank refuses (often citing “System constraints”):

• Filing: File an IA under Section 60(5) of the IBC before the NCLT.
• Prayer: Seek a specific direction to the bank to:

1. Upgrade the account to “Standard”.
2. Remove “Written Off” remarks.
3. File a correction update with CIBIL immediately.

• Precedent: Attach the Ramesh D. Shah order as a precedent. The NCLT is likely to follow its own coordinate bench’s reasoning.

Step 4: The CIBIL Dispute with Court Order

Once the NCLT issues the specific direction:

• Direct Dispute: Raise a dispute on the CIBIL Commercial portal.
• Evidence Upload: Upload the NCLT Order.
• Mechanism: While CIBIL relies on bank confirmation, a Court Order is a “Public Record.” CIBIL’s compliance team can be compelled to act on a court order even if the bank drags its feet.
• RBI Ombudsman: Simultaneously, file a complaint with the RBI Ombudsman attaching the NCLT order. The Ombudsman can penalize the bank under the Compensation Framework (Rs 100/day) for failing to update credit information despite a court directive.9

Step 5: Handling the “Written Off” Remark

Specific attention must be paid to the “Written Off” flag.

• The Issue: Even if the score improves, a “Written Off” flag scares away future lenders.
• The Fix: The bank must file a data update changing the “Account Status” field.

• If the debt is fully settled: Status should be “Closed” or “Post-Write-Off Settled” (less ideal, but accurate).
• If debt continues (restructured): Status should be “Standard”.

• No Dues Certificate (NDC): The MSME must aggressively pursue the issuance of a “No Dues Certificate” or “Satisfaction of Charge” from the bank. This document is the golden ticket for any future offline disputes.28

4.1 The Pre-Packaged Insolvency (PPIRP) Alternative

For MSMEs currently facing stress but not yet in CIRP, the Pre-Packaged Insolvency Resolution Process (PPIRP) offers a potentially smoother path to ensuring their CIBIL score accurately reflect the restructuring, helping protect their creditworthiness even before formal insolvency proceedings

• Mechanism: PPIRP is a debtor-in-possession model where the promoter negotiates with creditors before going to court.
• Benefit: Since it is a consensual restructuring, banks are often more willing to agree to “Standard” classification terms as part of the negotiation to avoid the value destruction of a full CIRP.31
• Reporting: The resolution plan in a PPIRP can be structured to look more like a commercial restructuring than a default, potentially mitigating the damage to the CIBIL Rank compared to a Section 7 or Section 9 admission.14

Conclusion

The challenge of upgrading a CIBIL score for an MSME where the old management retains control is a battle between the static nature of banking data and the dynamic nature of insolvency law.

The “official” mechanism—the online dispute form—is necessary but insufficient for this specific problem. A standard dispute will be rejected by the bank’s automated backend because, technically, the ownership hasn’t changed.

The remedy, therefore, is to create a “legal exception” that forces the bank’s hand. This is achieved by obtaining an NCLT order that explicitly characterizes the post-resolution management as “fresh” for asset classification purposes, relying on the ratio of Ramesh D. Shah.

MSMEs must view the CIBIL report not as a post-facto scorecard, but as a core asset of the company. The fight for a “Standard” tag and for restoring their MSME CIBIL score after insolvency is as important as the fight for the haircut itself. Without a correctly updated credit record, the “revival” promised by the IBC remains a legal fiction; with it, leveraging the specific remedies outlined above, it becomes a commercial reality and ensures the company’s creditworthiness post-CIRP is fully recognized.

Summary of Key Tables

Table 1: Comparative Analysis of Dispute Types

Table 2: The MSME CIBIL Remedy Matrix

The post MSME CIBIL Score Upgradation After Insolvency: Insolvency Law, Credit Reporting Disputes, and MSME Remediation Under IBC appeared first on Bhatt & Joshi Associates.

Introduction

The Insolvency and Bankruptcy Code, 2016 (IBC) represents a paradigm shift in India’s approach to corporate insolvency resolution, prioritizing the revival of distressed companies as going concerns over mere debt recovery. At the heart of this legislative framework lies Section 29A, arguably one of the most debated and frequently amended provisions of the Code. This provision establishes a restrictive framework that delineates who cannot participate as resolution applicants in the corporate insolvency resolution process (CIRP), thereby ensuring that the very individuals or entities responsible for the corporate debtor’s financial distress are prevented from regaining control without adequately addressing their past defaults [1]. Section 29A of IBC 2016 serves as a gatekeeper provision, embodying the legislature’s intent to maintain the integrity of the insolvency resolution process by excluding persons with questionable financial conduct or those who have contributed to the corporate debtor’s financial predicament. The provision operates on the fundamental principle that those who have willfully defaulted or engaged in financial misconduct should not be permitted to benefit from the insolvency process without first making good their past defaults [2].

Legislative Framework and Constitutional Basis

The statutory foundation of Section 29A of IBC 2016 rests within Chapter III of the IBC, which deals with the insolvency resolution process for corporate persons. The provision was inserted through the Insolvency and Bankruptcy Code (Amendment) Act, 2018, responding to concerns that the original framework allowed defaulting promoters to regain control of their companies through the resolution process without addressing their past defaults.

The constitutional validity of Section 29A has been upheld by the Supreme Court, which recognized that the provision serves the legitimate purpose of preventing abuse of the insolvency process. The Court has consistently held that the provision does not violate Article 14 of the Constitution, as the classification it creates is based on reasonable grounds and serves the public interest in maintaining a clean and efficient insolvency resolution mechanism.

Detailed Analysis of Disqualification Criteria

Undischarged Insolvents

The first category of disqualification under Section 29A(a) pertains to undischarged insolvents. An undischarged insolvent refers to a person or entity that has been declared insolvent by a competent court and continues to remain under insolvency proceedings without obtaining a discharge order. This disqualification ensures that individuals who themselves are financially distressed and have not resolved their own insolvency matters cannot participate in the resolution of another entity’s financial distress.

The rationale behind this disqualification is straightforward – a person who cannot manage their own financial affairs effectively should not be entrusted with the responsibility of reviving a distressed corporate entity. This provision aligns with the broader objective of the IBC to ensure that only financially sound and credible entities participate in the resolution process.

Willful Defaulters

Section 29A(b) excludes willful defaulters as defined under the Reserve Bank of India guidelines issued under the Banking Regulation Act, 1949. The RBI’s Master Circular defines a willful defaulter as a borrower who, despite having the capacity to honor debt obligations, willfully refuses to pay or diverts funds for purposes other than those for which they were borrowed.

The definition encompasses several categories of misconduct, including the non-payment of dues despite adequate cash flows and net worth, diversion of funds without the knowledge of the lending institution, and disposal of pledged assets without the bank’s consent. The identification of willful defaulters follows a structured process involving the formation of an Identification Committee by banks, which examines cases based on specified criteria and provides opportunities for the borrower to present their case.

Non-Performing Asset (NPA) Related Disqualifications

Perhaps the most significant and frequently litigated aspect of Section 29A is clause (c), which disqualifies persons whose accounts or accounts of corporate debtors under their management or control have been classified as NPAs. This provision includes a temporal element, requiring that at least one year must have elapsed from the date of such classification to the commencement of the insolvency resolution process.

The Supreme Court in ArcelorMittal India Private Limited v. Satish Kumar Gupta [3] clarified that Section 29A(c) operates as a “see-through provision,” designed to prevent those in control of corporate debtors from regaining control in a different form without first clearing their dues. The Court emphasized that the provision must be interpreted broadly to prevent any circumvention of its intent.

The proviso to Section 29A(c) provides a pathway for such persons to become eligible by paying all overdue amounts, including interest, penalties, and charges related to the NPA accounts before submitting the resolution plan. This mechanism ensures that while past defaults create disqualification, there remains an opportunity for rehabilitation through the clearing of dues.

Criminal Convictions and Disqualifications

Section 29A(d) addresses persons convicted of offenses carrying specific imprisonment terms. The provision creates two categories: convictions for two years or more under Acts specified in the Twelfth Schedule of the IBC, and convictions for seven years or more under any law. The Twelfth Schedule includes various economic offenses and acts related to corporate governance, reflecting the legislature’s intent to exclude persons with a history of economic crimes.

The provision includes a rehabilitation mechanism through its proviso, which allows persons to become eligible after the expiry of two years from their release from imprisonment. This temporal limitation recognizes the principle of rehabilitation while ensuring that recent convicts are excluded from the resolution process.

Disqualified Directors Under Companies Act

Section 29A(e) extends the disqualification framework to include persons disqualified from being appointed as directors under the Companies Act, 2013. This provision creates a seamless integration between corporate governance norms and insolvency law, ensuring that persons deemed unfit to manage companies under general corporate law are similarly excluded from the insolvency resolution process.

The Companies Act provides various grounds for director disqualification, including unsoundness of mind, conviction for offenses involving moral turpitude, and failure to comply with statutory requirements. By incorporating these disqualifications into the IBC framework, Section 29A ensures consistency in corporate governance standards across different legislative frameworks.

SEBI-Related Disqualifications

Section 29A(f) addresses persons prohibited by the Securities and Exchange Board of India (SEBI) from dealing in securities or accessing securities markets. This disqualification recognizes the interconnected nature of corporate governance and securities market regulation, ensuring that persons who have violated securities laws are excluded from participating in the insolvency resolution process.

SEBI’s prohibition orders typically arise from violations of securities laws, including fraudulent trading practices, insider trading, and market manipulation. The inclusion of such persons in the disqualification framework reflects the legislature’s recognition that integrity in securities markets is crucial for maintaining confidence in the corporate insolvency resolution process.

Transactions Leading to Disqualification

Section 29A(g) creates a unique category of disqualification based on the involvement of persons in preferential transactions, undervalued transactions, extortionate credit transactions, or fraudulent transactions in relation to a corporate debtor. This provision requires that an order must have been made by the Adjudicating Authority under the IBC regarding such transactions.

The provision targets persons who have been in the management or control of corporate debtors and have engaged in transactions that have prejudiced the interests of creditors. The requirement of an adjudicating authority’s order ensures that the disqualification is based on judicial determination rather than mere allegations.

Guarantee-Related Disqualifications

Section 29A(h) addresses a specific scenario where a person has executed a guarantee in favor of a creditor regarding a corporate debtor against which an insolvency resolution application has been admitted. The disqualification applies when the guarantee has been invoked by the creditor and remains unpaid in full or part.

This provision prevents guarantors from potentially benefiting from the insolvency process while avoiding their guarantee obligations. The Supreme Court in various judgments has clarified that this disqualification is triggered only when the guarantee has been actually invoked, not merely upon its execution.

Judicial Interpretation and Landmark Cases

The ArcelorMittal Precedent

The Supreme Court’s judgment in ArcelorMittal India Private Limited v. Satish Kumar Gupta represents a watershed moment in the interpretation of Section 29A of IBC 2016. The case arose in the context of the Essar Steel insolvency proceedings, where both ArcelorMittal and Numetal were initially found ineligible under Section 29A(c) due to their connection with NPA accounts.

The Supreme Court’s analysis in this case established several important principles. First, the Court clarified that the phrase “acting jointly or in concert” in the opening line of Section 29A should not be confused with formal joint venture arrangements. Instead, it refers to persons working together toward a common objective, even if not bound by formal agreements.

Second, the Court emphasized the “see-through” nature of Section 29A(c), stating that considerable care must be taken to ensure that persons in control of corporate debtors do not return in some other form to regain control without first paying off their debts. This interpretation prevents creative structuring aimed at circumventing the disqualification provisions.

Third, the Court exercised its extraordinary powers under Article 142 of the Constitution to allow both applicants to submit fresh resolution plans after clearing their dues, demonstrating the rehabilitative intent underlying the provision while maintaining its restrictive character.

Connected Persons and Related Party Analysis

The interpretation of “connected persons” and “related parties” has been crucial in determining the scope of Section 29A disqualifications. The Courts have adopted a substance-over-form approach, looking beyond formal corporate structures to identify the real controllers and beneficiaries of resolution applicants.

In several cases, the judiciary has examined complex corporate structures involving multiple layers of subsidiaries, holding companies, and special purpose vehicles to determine whether a resolution applicant is connected to a disqualified person. This approach ensures that the spirit of Section 29A is maintained despite attempts at creative structuring.

Special Provisions for Micro, Small and Medium Enterprises

Regulatory Framework for MSMEs

The legislative framework provides special treatment for Micro, Small and Medium Enterprises (MSMEs) under Section 240A of the IBC. MSMEs are defined based on investment and turnover criteria established under the MSMED Act, 2006. Under the current definition, micro enterprises have investments up to Rs. 1 crore and turnover up to Rs. 5 crore, small enterprises have investments up to Rs. 10 crore and turnover up to Rs. 50 crore, while medium enterprises have investments up to Rs. 20 crore and turnover up to Rs. 100 crore.

Exemptions from Section 29A Disqualifications

MSMEs enjoy significant exemptions from Section 29A disqualifications, particularly under clauses (c) and (h). This means that MSME promoters with NPA accounts or those who have executed guarantees can still submit resolution plans for their companies, subject to meeting other eligibility criteria.

The rationale for these exemptions recognizes the unique challenges faced by MSMEs, including limited access to formal credit markets and vulnerability to economic cycles. The legislature acknowledged that applying the full rigor of Section 29A disqualifications to MSMEs might unduly restrict their ability to revive their businesses through the insolvency process [4].

Pre-Packaged Insolvency Resolution Process

The Pre-Packaged Insolvency Resolution Process (PPIRP) represents a specialized mechanism available exclusively to MSMEs. Under this process, the promoters retain management control during the resolution period, subject to monitoring by a resolution professional. The process allows for a negotiated resolution between the debtor and creditors before formal initiation of insolvency proceedings.

The PPIRP framework continues to provide exemptions from Section 29A(c) and (h) disqualifications, despite recommendations from the Sub-Committee of the Insolvency Law Committee that such exemptions might undermine the purpose of Section 29A. The legislature’s decision to maintain these exemptions reflects a policy choice to support MSME revival while balancing creditor interests.

Procedural Aspects and Compliance Framework

Verification and Due Diligence Process

The implementation of Section 29A of IBC 2016 requires robust verification mechanisms to ensure compliance with disqualification criteria. The Insolvency and Bankruptcy Board of India (IBBI) regulations require resolution professionals to conduct thorough due diligence on resolution applicants to verify their eligibility.

The verification process involves examining various databases and records, including RBI’s willful defaulter database, court records for criminal convictions, SEBI prohibition orders, and corporate registry information. Resolution professionals must also verify the corporate structure of applicants to identify connected persons and related parties.

Affidavit Requirements and Self-Certification

The regulatory framework requires resolution applicants to submit affidavits confirming their eligibility under Section 29A. These self-certifications create legal obligations and expose applicants to potential perjury charges if false information is provided.

The affidavit requirement serves multiple purposes: it shifts the initial burden of disclosure to the applicant, creates legal accountability for false statements, and provides a documentary basis for verification by resolution professionals and creditors.

Role of Committee of Creditors

The Committee of Creditors (CoC) plays a crucial role in evaluating the eligibility of resolution applicants under Section 29A. While the initial screening is conducted by the resolution professional, the CoC has the authority to raise objections and seek additional verification if concerns arise regarding an applicant’s eligibility.

The CoC’s involvement ensures that creditor interests are protected and that any potential circumvention of Section 29A disqualifications is identified and addressed. The commercial wisdom of creditors serves as an additional layer of scrutiny beyond regulatory compliance.

Enforcement Mechanisms and Sanctions

Consequences of False Declarations

The IBC framework provides for severe consequences when resolution applicants make false declarations regarding their eligibility under Section 29A of IBC 2016. Apart from immediate disqualification from the current process, such conduct may lead to criminal prosecution for perjury and potential inclusion in future disqualification criteria.

The enforcement mechanisms are designed to maintain the integrity of the resolution process and deter attempts to circumvent Section 29A through false representations or concealment of material information.

Judicial Review and Appeal Mechanisms

Decisions regarding Section 29A eligibility are subject to judicial review through the established appellate hierarchy under the IBC. The National Company Law Tribunal (NCLT) serves as the adjudicating authority for initial determinations, with appeals lying to the National Company Law Appellate Tribunal (NCLAT) and subsequently to the Supreme Court.

The judicial review process ensures that Section 29A interpretations remain consistent with legislative intent while providing appropriate remedies for persons who may have been wrongly disqualified due to factual or legal errors.

Contemporary Challenges and Future Directions

Evolving Corporate Structures and Digital Assets

The rapid evolution of corporate structures, particularly in the digital economy, presents new challenges for the application of Section 29A. Complex ownership structures involving cryptocurrency holdings, digital assets, and cross-border arrangements require careful analysis to determine the true controllers and beneficiaries of resolution applicants.

The regulatory framework continues to evolve to address these challenges, with periodic amendments and clarificatory guidelines aimed at preventing circumvention of Section 29A through innovative structuring.

International Best Practices and Comparative Analysis

The Section 29A framework reflects international best practices in insolvency law, particularly the principle of excluding persons with poor financial conduct from participating in rescue proceedings. Comparative analysis with other jurisdictions reveals similar restrictions, though the specific criteria and mechanisms may vary.       

The Indian framework’s emphasis on rehabilitation through the clearing of dues represents a balanced approach that provides opportunities for redemption while maintaining the integrity of the process.                                                                         

Conclusion

Section 29A of the IBC 2016 represents a carefully crafted framework designed to maintain the integrity of India’s corporate insolvency resolution process. Through its detailed disqualification criteria and enforcement mechanisms, the provision ensures that persons with questionable financial conduct or those responsible for corporate distress cannot benefit from the insolvency process without first addressing their past defaults.

The judicial interpretation of Section 29A, particularly through landmark cases like ArcelorMittal, has established clear principles that guide its application while preventing circumvention through creative structuring. The special provisions for MSMEs demonstrate the legislature’s recognition of sector-specific needs while maintaining the overall integrity of the framework.

As India’s insolvency ecosystem continues to mature, Section 29A will undoubtedly face new challenges and require periodic refinements. However, its fundamental principle of excluding bad actors while providing pathways for rehabilitation through the clearing of dues remains sound and continues to serve the broader objective of corporate rescue and economic recovery.

The success of Section 29A in achieving its objectives will ultimately depend on robust enforcement, consistent judicial interpretation, and the continued evolution of the regulatory framework to address emerging challenges in the dynamic landscape of corporate insolvency and restructuring.

References

[1] Insolvency and Bankruptcy Code, 2016, Section 29A. Available at: https://ibbi.gov.in/acts-rules 

[2] TaxGuru. (2022). Section 29A IBC 2016 Ineligibility criteria to submit Resolution Plan. Available at: https://taxguru.in/corporate-law/section-29a-ibc-2016-ineligibility-criteria-submit-resolution-plan.html 

[3] ArcelorMittal India Private Limited v. Satish Kumar Gupta, Civil Appeal Nos. 9402-9405 of 2018, Supreme Court of India. Available at: https://indiankanoon.org/doc/161012846/ 

[4] SCCOnline. (2023). Section 29A of IBC Disqualification of promotors applying for resolution plan not applicable to MSMEs: Supreme Court. Available at: https://www.scconline.com/blog/post/2023/12/09/section-29a-ibc-disqualification-promotors-applying-resolution-plan-not-applicable-to-msme-supreme-court/ 

[5] IBC Laws. Critical Analysis of Section 29A of the Code. Available at: https://ibclaw.in/critical-analysis-of-section-29a-of-the-code/ 

[6] IBBI Regulations. (2016). Insolvency Resolution Process for Corporate Persons Regulations. Available at: https://ibbi.gov.in/regulations 

[7] Reserve Bank of India. Master Circular on Willful Defaulters. Available at: https://www.rbi.org.in 

[8] IndiaCorpLaw. (2018). Essar Steel Case: Supreme Decodes Section 29A of the IBC. Available at: https://indiacorplaw.in/2018/10/07/essar-steel-case-supreme-decodes-section-29a-ibc/ 

[9] Companies Act, 2013, Section 164 – Disqualifications for appointment of director. Available at: https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf

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Introduction

The Micro, Small and Medium Enterprises Development Act, 2006 represents a landmark legislation addressing one of the most persistent challenges faced by India’s MSME sector – delayed payments. This Act established a robust legal framework for ensuring timely payments to micro and small enterprises, addressing the chronic working capital constraints that have historically impeded the growth of these enterprises. The legislation goes beyond mere policy declarations by creating enforceable rights and establishing institutional mechanisms for dispute resolution. Enacted to promote and develop micro, small, and medium enterprises while enhancing their competitiveness, the MSMED Act’s most impactful contribution lies in Chapter V. This chapter provides a comprehensive legal remedy for delayed payments to MSMEs under the MSMED Act, driving a paradigm shift in buyer-supplier relationships across the Indian business ecosystem.

Legislative Framework and Statutory Provisions

Payment Obligations Under Section 15

Section 15 of the MSMED Act establishes the fundamental obligation on buyers to make timely payments to their MSME suppliers [1]. The provision mandates that where a supplier supplies goods or renders services to any buyer, the buyer shall make payment on or before the date agreed upon between the parties in writing. Crucially, the Act provides that even if there is no written agreement, payment must be made before the ‘appointed date’, which is defined as the day following immediately after the expiry of fifteen days from the day of acceptance or deemed acceptance of goods or services.

The Act places a statutory ceiling on credit periods, providing that the period of credit shall not exceed 45 days from the day of acceptance or deemed acceptance, regardless of any contrary agreement between the parties. This provision ensures that micro and small enterprises cannot be compelled to accept unreasonably extended payment terms that would adversely affect their cash flow and operational capabilities.

Interest Liability Under Section 16

Section 16 of the MSMED Act creates a penal framework for delayed payments to MSMEs by imposing compound interest liability on defaulting buyers. When a buyer fails to make payment within the stipulated timeframe, they become liable to pay compound interest with monthly rests on the outstanding amount at three times the bank rate notified by the Reserve Bank of India. This punitive interest rate serves both as a deterrent against delayed payments and as compensation to the affected MSME for the financial hardship caused by the delay.

The compound nature of the interest calculation significantly increases the financial burden on defaulting buyers. Unlike simple interest calculations, compound interest ensures that interest accrues not only on the principal amount but also on previously accumulated interest, creating an escalating liability structure that incentivizes prompt payment.

Dispute Resolution Through Micro and Small Enterprises Facilitation Council

The MSMED Act establishes a specialized dispute resolution mechanism to address delayed payments to MSMEs, through Micro and Small Enterprises Facilitation Councils (MSEFC) constituted under Sections 20 and 21. These councils are empowered to adjudicate disputes arising from delayed payments and possess both conciliation and arbitration powers. Section 18 of the Act provides that any dispute regarding amounts due under the Act shall be referred to the MSEFC, which shall first attempt resolution through conciliation.

If conciliation fails, the Council may either conduct arbitration proceedings itself or refer the matter to any institution or center providing alternative dispute resolution services. The arbitration provisions under Section 18 are deemed to operate as if there was an arbitration agreement between the parties under Section 7 of the Arbitration and Conciliation Act, 1996. Significantly, Section 24 provides that the MSMED Act’s provisions have an overriding effect over other laws, ensuring that MSME suppliers cannot be denied the benefit of this specialized forum.

MSME Samadhaan Portal: Digital Infrastructure for Enforcement

Portal Functionality and Access

The Ministry of MSME launched the MSME Samadhaan portal on October 30, 2017, creating a digital platform to address delayed payments to MSMEs[3]. This online system allows micro and small enterprises with valid Udyog Aadhaar Memorandum (UAM) or Udyam Registration to directly approach the respective state MSEFCs for dispute resolution. The portal represents a significant advancement in making the delayed payment resolution mechanism accessible and transparent.

The portal provides real-time case tracking capabilities, allowing MSMEs to monitor the progress of their applications throughout the resolution process. Additionally, it creates public visibility of pending payments, thereby applying moral pressure on defaulting buyers. Central Public Sector Enterprises, ministries, and state governments can monitor delayed payment cases through the portal, enabling proactive intervention.

Case Processing and Resolution Timeline

Under the MSMED Act, every reference made to an MSEFC must be decided within ninety days from the date of filing. The portal facilitates this timeline by automatically forwarding applications to the concerned MSEFC after fifteen days of online filing. The structured process includes notice to the respondent, conciliation proceedings, and if necessary, arbitration or adjudication by the Council.

The portal’s data indicates significant utilization since its launch, with thousands of applications filed involving substantial monetary claims. However, the resolution rate remains a concern, with a significant percentage of applications still pending disposal, highlighting the need for enhanced infrastructure and resources at the MSEFC level.

Disclosure Requirements and Compliance Framework

Annual Statement Disclosures Under Section 22

Section 22 of the MSMED Act imposes mandatory disclosure requirements on buyers whose annual accounts are subject to audit [4]. These buyers must furnish specific information in their annual statement of accounts regarding amounts due to MSME suppliers. The required disclosures include the principal amount and interest due remaining unpaid at the end of each accounting year, amounts of interest paid during the year, interest due for delayed payments, accrued but unpaid interest, and further interest due in succeeding years.

These disclosure requirements serve multiple purposes: they create transparency regarding payment practices, enable stakeholders to assess the buyer’s compliance with MSME payment obligations, and facilitate monitoring by regulatory authorities. The mandatory nature of these disclosures ensures that delayed payments cannot be hidden from public scrutiny.

Half-Yearly Reporting Under Companies Act

Following the notification dated November 2, 2018, companies whose payments to micro and small enterprises exceed 45 days are required to file half-yearly returns with the Ministry of Corporate Affairs through e-form MSME-1. This return must specify outstanding amounts and reasons for delay. Non-compliance with this requirement attracts penalties under Section 405(4) of the Companies Act, 2013, including a basic penalty of Rs. 20,000 and additional daily penalties for continuing default.

Tax Implications Under Section 43B(h) of Income Tax Act

Deduction Restrictions for Delayed Payments to MSMEs

The Finance Act 2023 introduced Section 43B(h) to the Income Tax Act, creating additional financial incentives for timely payments to MSMEs [5]. This provision restricts tax deductions for payments made to micro and small enterprises beyond the timeline specified in Section 15 of the MSMED Act. Specifically, such payments are allowed as deductions only in the year when actual payment is made, regardless of the accounting method followed by the taxpayer.

This provision effectively increases the cost of delayed payments to MSMEs by denying immediate tax benefits to defaulting buyers. For businesses following accrual-based accounting, this represents a significant departure from normal practice and creates additional financial pressure to ensure timely payments.

Implementation and Scope

Section 43B(h) became effective from April 1, 2024, and applies to all payments due to micro and small enterprises registered under the MSMED Act. The provision specifically excludes medium enterprises from its scope, focusing protection on the most vulnerable segments of the MSME sector. Importantly, the provision does not apply to wholesale and retail traders, as clarified by government notifications that limit their MSME benefits to priority sector lending only.

Judicial Interpretation and Case Law Development

Supreme Court Precedents

The Supreme Court’s decision in Principal Chief Engineer v. M/s Manibhai and Bros (Sleeper) established crucial precedents regarding the MSMED Act’s application [6]. The Court upheld the Gujarat High Court’s interpretation that the MSMED Act, being special legislation with overriding effect, binds parties to follow the dispute resolution mechanism provided under Section 18, even when alternative arbitration agreements exist between the parties.

This judgment clarified that MSMEs cannot be compelled to forgo their statutory rights under the MSMED Act in favor of contractual arbitration clauses. The decision reinforced the protective intent of the legislation and ensured that the specialized forum created for MSME disputes cannot be bypassed through contractual arrangements.

High Court Decisions and Conflicting Views

Various High Courts have grappled with the interaction between the MSMED Act and general arbitration law. While the Gujarat High Court in the Manibhai case and several others have favored the supremacy of MSMED Act provisions, some decisions, particularly from the Bombay High Court in Steel Authority of India v. MSEFC, have taken different positions regarding the relationship between statutory arbitration under the MSMED Act and contractual arbitration agreements.

The Supreme Court’s recent decision in Silpi Industries v. Kerala State Road Transport Corporation addressed the maintainability of counterclaims in MSMED proceedings, holding that arbitral tribunals constituted under the MSMED Act serve as exclusive forums for all related disputes, including counterclaims by buyers.

Enforcement Challenges and Practical Issues

Infrastructure and Resource Constraints

Despite the robust legal framework, enforcement of MSMED Act provisions faces significant challenges. Many MSEFCs operate with limited infrastructure and resources, leading to delays in case disposal beyond the statutory ninety-day timeline. The lack of adequate administrative support and technical expertise at the state level has hampered the effective functioning of these councils.

Additionally, the enforcement of awards and orders passed by MSEFCs often requires recourse to civil courts, adding another layer of complexity and delay to the resolution process. While Section 19 of the Act provides that appeals against MSEFC orders require deposit of 75% of the awarded amount, ensuring actual recovery remains challenging.

Awareness and Utilization Gaps

A significant portion of the MSME sector remains unaware of their rights under the MSMED Act or the procedures for accessing relief through the MSME Samadhaan portal. This awareness gap is particularly acute among micro enterprises and those operating in rural areas. Educational initiatives and outreach programs are necessary to bridge this gap and ensure effective utilization of the legal framework.

Future Directions and Reform Proposals

Proposed Amendments to MSMED Act

The Ministry of MSME has initiated consultations for amending the MSMED Act 2006 to address current challenges and future-proof the legislation. Proposed amendments focus on four key areas: enhancing inclusivity, future-proofing provisions, improving coordination mechanisms, and enhancing ease of business. These amendments aim to grant statutory status to Udyam registration, expand credit guarantee coverage, and strengthen the institutional framework for MSME support.

Technology Integration and Process Improvements

Future reforms should focus on greater integration of technology in dispute resolution processes, including online hearing capabilities and digital evidence management. The establishment of dedicated fast-track courts for MSME matters and the creation of standardized procedures across states would significantly improve the effectiveness of the enforcement mechanism.

Conclusion

The delayed payments to MSMEs under the MSMED Act represent a significant milestone in protecting the interests of micro and small enterprises. The comprehensive framework created by the Act—encompassing payment obligations, penal interest, specialized dispute resolution, mandatory disclosures, and tax implications—demonstrates a multi-pronged approach to addressing this chronic issue.

However, the effectiveness of this framework depends heavily on proper implementation, adequate infrastructure, and awareness among stakeholders. The recent introduction of Section 43B(h) in the Income Tax Act provides additional financial incentives for compliance, while digital platforms like the MSME Samadhaan portal have improved accessibility to the dispute resolution mechanism.

Looking forward, continued reform efforts focusing on strengthening enforcement capabilities, improving procedural efficiency, and expanding awareness will be crucial for realizing the full potential of this beneficial legislation. The MSMED Act’s provisions, when effectively implemented, have the potential to significantly improve the financial health and sustainability of India’s vital MSME sector.

References

[1] The Micro, Small and Medium Enterprises Development Act, 2006, Section 15. Available at: https://www.dcmsme.gov.in/ 

[2] The Micro, Small and Medium Enterprises Development Act, 2006, Section 16. Available at: https://samadhaan.msme.gov.in/ 

[3] Ministry of MSME, Government of India. “MSME Samadhaan Portal.” Available at: https://samadhaan.msme.gov.in/ 

[4] The Micro, Small and Medium Enterprises Development Act, 2006, Section 22. Available at: https://www.lexology.com/library/detail.aspx?g=dc0c35e8-d98e-4e84-a05f-fa7a5213c3bd 

[5] Income Tax Act, 1961, Section 43B(h) as inserted by Finance Act, 2023. Available at: https://cleartax.in/s/section-43bh-of-income-tax-act 

[6] Principal Chief Engineer v. M/s Manibhai and Bros (Sleeper), Supreme Court of India.

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