Date from which and rate at which interest is payable
Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 deals with date from which and rate at which interest is payable. Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests The Act came into force on 02 Oct 2006.
Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests 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 three times of the bank rate notified by the Reserve Bank.
Section 16, The Micro, Small and Medium Enterprises Development Act, 2006 (Act 27 of 2006).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
-
Dodal Electro Instruments v. Micro and Small Enterprises Facilitation Council, Daman & Mexim Adhesive Tapes Pvt. Ltd.
Court's Decision & Legal Precedent
Same as Dodale Electro: s.16 interest cannot rest on a procedurally void Council award and must be re-determined on remand.
On this section: Applies s.16 interest entitlement only after lawful re-adjudication of the twin Daman MSEFC reference.
-
Dodale Electro Instruments v. Micro and Small Enterprises Facilitation Council, Daman & Mexim Adhesive Tapes Pvt. Ltd.
Court's Decision & Legal Precedent
Interest liability under s.16 rides on a valid determination of the buyer’s delayed-payment debt; where the Council’s award is set aside for skipping mandatory procedure, the s.16 interest component cannot stand independently and must be re-adjudicated on remand with proper opportunity.
On this section: Ties s.16’s statutory compound-interest entitlement to a procedurally valid award—interest under s.16 is not self-executing where the underlying Council determination is void for want of s.18 process.
-
M.P. Poorv Kshetra Vidyut Vitaran Co. Ltd. v. Hi-Tek Powercon Pvt. Ltd.
Court's Decision & Legal Precedent
Section 15’s payment liability is the principal foundation of the MSEFC award; when computing the s.19 challenge deposit, the court treats the s.15 principal together with statutory interest as the award ‘amount’.
On this section: Gives operational effect to s.16 by holding that statutory compound interest is inseparable from the award quantum for pre-deposit compliance.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Made under this section, and citing it
2 instruments name this provision in its title or its text without being made under it.
- In exercise of the powers conferred by sub-section (1) of section 467 of the Companies Act, 2013 (18 of 2013), the Central Govt., hereby makes the following further alterations in Schedule III (hereinafter referred to as said Schedule) to the said Act, namely.Rule 2015
- Amendment in the Schdule VI of the Companies Act, 1956 (1 of 1956)Rule 2007
Questions about Section 16
What have the courts held on Section 16 of the Micro, Small and Medium Enterprises Development Act?
Dodal Electro Instruments v. Micro and Small Enterprises Facilitation Council, Daman & Mexim Adhesive Tapes Pvt. Ltd. (23 Sep 2025) is the leading judgment on this section among those set out below: Applies s.16 interest entitlement only after lawful re-adjudication of the twin Daman MSEFC reference. Another 2 judgments on this section are set out below.
How do I find court cases under Section 16 of the Micro, Small and Medium Enterprises Development Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Micro, Small and Medium Enterprises Development Act 16, section 16 Micro, Small and Medium Enterprises Development Act, section 16 of the Micro, Small and Medium Enterprises Development Act. People searching for it also type section 16 of micro small and medium enterprises. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with Dodal Electro Instruments v. Micro and Small Enterprises Facilitation Council, Daman & Mexim Adhesive Tapes Pvt. Ltd. (23 Sep 2025).
What should I read with Section 16 of the Micro, Small and Medium Enterprises Development Act, and has it changed?
Its own text turns on section 15 (Liability of buyer to make payment), so none of them can safely be read on its own. 2 other provisions in this corpus refer back to it. 2 instruments name it without being made under it, most recently In exercise of the powers conferred by sub-section (1) of section 467 of the Companies Act, 2013 (18 of 2013), the Central Govt., hereby makes the following further alterations in Schedule III (hereinafter referred to as said Schedule) to the said Act, namely. (2015), then Amendment in the Schdule VI of the Companies Act, 1956 (1 of 1956) (2007).
When did Section 16 of the Micro, Small and Medium Enterprises Development Act come into force?
Section 16 of the Micro, Small and Medium Enterprises Development Act, cited as Micro, Small and Medium Enterprises Development Act 16, came into force on 02 Oct 2006, having been enacted on 16 Jun 2006. It is in force as at the date shown on this page.
Other sections of this Act
- 3. Establishment of Board885 words
- 7. Classification of enterprises763 words
- 2. Definitions619 words
- 8. Memorandum of micro, small and medium enterprises349 words
- 29. Power to make rules313 words
- 18. Reference to Micro and small Enterprises Facilitation Council290 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.