The Micro, Small and Medium Enterprises Development Act, 2006

(1) This Act may be called the Micro, Small and MediumEnterprises Development Act, 2006. (2) It shall come into force on such date1 as the Central Government may, by notification, appoint; and different dates may be appointed for different provisions of this Act and any reference in any suchprovision to the commencement of this Act shall be construed as a reference to the coming into force ofthat provision.

In this Act, unless the context otherwise requires,-- (a) "Advisory Committee" means the committee constituted by the Central Government undersub-section (2) of section 7; (b) "appointed day' means the day following immediately after the expiry of the period of fifteendays from the day of acceptance or the day of deemed acceptance of any goods or any services by abuyer from a supplier. Explanation.--For the purposes of this clause,-- (i) "the day of acceptance" means,-- (a) the day of the actual delivery of goods or the rendering of services; or (b) where any objection is made in writing by the buyer regarding acceptance of goods orservices within fifteen 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; (ii) "the day of deemed acceptance" means, where no objection is made in writing by thebuyer regarding acceptance of goods or services within fifteen days from the day of the deliveryof goods or the rendering of services, the day of the actual delivery of goods or the rendering ofservices; (c) "Board" means the National Board for Micro, Small and Medium Enterprises establishedunder section 3; (d) "buyer" means whoever buys any goods or receives any services from a supplier forconsideration; (e) "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 Schedule to the Industries (Development andRegulation) Act, 1951 (55 of 1951) or engaged in providing or rendering of any service or services; (f) "goods" means every kind of movable property other than actionable claims and money; (g) "medium enterprise" means an enterprise classified as such under sub-clause (iii) of clause (a)or sub-clause (iii) of clause (b) of sub-section (1) of section 7; (h) "micro enterprise' means an enterprise classified as such under sub-clause (i) of clause (a) orsub-clause (i) of clause (b) of sub-section (1) of section 7; (i) "National Bank" means the National Bank for Agriculture and Rural Development establishedunder section 3 of the National Bank for Agriculture and Rural Development Act, 1981 (51 of 1981); (j) "notification" means a notification published in the Official Gazette; (k) "prescribed" means prescribed by rules made under this Act; (l) "Reserve Bank" means the Reserve Bank of India constituted under section 3 of the ReserveBank of India Act, 1934 (2 of 1934); (m) "small enterprise" means an enterprise classified as such under sub-clause (ii) of clause (a) orsub-clause (ii) of clause (b) of sub-section (1) of section 7; (n) "supplier" means a micro or small enterprise, which has filed a memorandum with theauthority referred to in sub-section (1) of section 8, and includes,-- (i) the National Small Industries Corporation, being a company, registered under theCompanies Act, 1956 (1 of 1956); (ii) the Small Industries Development Corporation of a State or a Union territory, bywhatever name called, being a company registered under the Companies Act, 1956 (1 of 1956); (iii) any company, co-operative society, trust or a body, by whatever name called, registeredor constituted under any law for the time being in force and engaged in selling goods produced bymicro or small enterprises and rendering services which are provided by such enterprises; (o) "Small Industries Bank" means the Small Industries Development Bank of India establishedunder sub-section (1) of section 3 of the Small Industries Development Bank of India Act, 1989 (39of 1989); (p) "State Government", in relation to a Union territory, means the Administrator thereofappointed under article 239 of the Constitution.

(1) With effect from such date as the Central Government may, bynotification, appoint, there shall be established, for the purposes of this Act, a Board to be known as theNational Board for Micro, Small and Medium Enterprises. (2) The head office of the Board shall be at Delhi. (3) The Board shall consist of the following members, namely:-- (a) the Minister in charge of the Ministry or Department of the Central Government havingadministrative control of the micro, small and medium enterprises who shall be the ex officioChairperson of the Board; (b) the Minister of State or a Deputy Minister, if any, in the Ministry or Department of the CentralGovernment having administrative control of the micro, small and medium enterprises who shall beex 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 ofthe Board; (c) six Ministers of the State Governments having administrative control of the departments ofsmall scale industries or, as the case may be, micro, small and medium enterprises, to be appointed bythe Central Government to represent such regions of the country as may be notified by the CentralGovernment in this behalf, ex officio; (d) three Members of Parliament of whom two shall be elected by the House of the People andone by the Council of States; (e) the Administrator of a Union territory to be appointed by the Central Government, ex officio; (f) the Secretary to the Government of India in charge of the Ministry or Department of theCentral Government having administrative control of the micro, small and medium enterprises, exofficio; (g) four Secretaries to the Government of India, to represent the Ministries of the CentralGovernment dealing with commerce and industry, finance, food processing industries, labour andplanning to be appointed by the Central Government, ex officio; (h) the Chairman of the Board of Directors of the National Bank, ex officio; (i) the chairman and managing director of the Board of Directors of the Small Industries Bank, exofficio; (j) the chairman, Indian Banks Association, ex officio; (k) one officer of the Reserve Bank, not below the rank of an Executive Director,to be appointedby the Central Government to represent the Reserve Bank; (l) twenty persons to represent the associations of micro, small and midium enterprises, includingnot less than three persons representing associations of women's enterprises and not less than threepersons representing associations of micro enterprises, to be appointed by the Central Government; (m) three persons of eminence, one each from the fileds of economics, industry and science andtechnology, not less than one of whom shall be a woman, to be appointed by the Central Government; (n) two representatives of Central Trade Union Organisations, to be appointed by the CentralGovernment; and (o) one officer not below the rank of Joint Secretary to the Government of India in the Ministry orDepartment of the Central Government having administrative control of the micro, small and mediumenterprises to be appointed by the Central Government, who shall be the Member-Secretary of theBoard, ex officio. (4) The term of office of the members of the Board, other than ex officio members of the Board, themanner of filling vacancies, and the procedure to be followed in the discharge of their functions by themembers of the Board, shall be such as may be prescribed: Provided that the term of office of an ex officio member of the Board shall continue so long as heholds 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-- (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. (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 deemnecessary, 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 right to take part in the discussions of theBoard relevant to the purposes for which he has been associated but shall not have the right to vote. (8) Without prejudice to sub-section (7)the Chairperson of the Board shall, for not less than two of themeetings of the Board in a year, invite such Ministers of the State Governments having administrativecontrol of the departments of small scale industries or, as the case may be, the micro, small and mediumenterprises, or the Administrators of Union territories and representatives of such other associations ofmicro, small and medium enterprises, as he may deem necessary for carrying out the purposes of this Act. (9) It is hereby delcared that the office of member of the Board shall not disqualify its holder forbeing chosen as, or for being, a member of either House of Parliament.

(1) The Central Government may remove a member of theBoard from it, if he-- (a) is, or at any time has been, adjudged as insolvent; or (b) is, or becomes, of unsound mind and stands so declared by a competent court; or (c) 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, involvesmoral turpitude; or (e) has so abused, in the opinion of the Central Government, his position as a member of theBoard as to render his continuance in the Board detrimental to the interests of the general public. (2) Notwithstanding anything contained in sub-section (1), no member shall be removed from hisoffice on the grounds specified in clauses (c) to (e) of that sub-section unless he has been given areasonable opportunity of being heard in the matter.

The Board shall, subject to the general directions of the CentralGovernment, perform all or any of the following functions, namely:-- (a) examine the factors affecting the promotion and development of micro, small and mediumenterprises and review the policies and programmes of the Central Government in regard tofacilitating the promotion and development and enhancing the competitiveness of such enterprisesand the impact thereof on such enterprises; (b) make recommendations on matters referred to in clause (a) or on any other matter referred toit by the Central Government which, in the opinion of that Government, is necessary or expedient forfacilitating the promotion and development and enhancing the competitiveness of the micro, smalland medium enterprises; and (c) advise the Central Government on the use of the Fund or Funds constituted under section 12.