Section 12 MSMED Act: Simplifying compliance and procedures

Section 12 of MSMED Act, 2006: Simplifying compliance and procedures

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation / Timeline Monetary Value

(1) The Central Government or the State Government may, with a view to facilitating closure of business by a micro, small or medium enterprise or simplifying procedures, notify progressive compliance schemes.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Enterprise Sec 2

Legal Commentary & Landmark Judgments: Section 12

Section 12 authorizes the Central Government to constitute one or more specialized statutory funds for the promotion, development, and enhancement of the competitiveness of micro, small, and medium enterprises.

Constitution of National MSME Funds: Empowers the Central Government to establish dedicated statutory funds (such as the National Small Enterprises Fund) through official gazette notifications.
Statutory Inflows & Credit Guarantee Schemes: Channelizes budgetary allocations, grants, donations, and statutory contributions into specialized credit guarantee and technology modernization corpus funds.
Targeted Sectoral Deployment: Directs the deployment of fund assets towards technological adaptation, market development, and mitigating credit risks incurred by lending institutions.

Key Landmark Precedents:

Consumer Education & Research Society v. Union of India (2000) 2 SCC 599: Upheld the validity of statutory developmental funds created for specialized public interest objectives, holding that their utilization must adhere strictly to statutory objectives.
State of H.P. v. Ganesh Wood Products (1995) 6 SCC 363: Emphasized that state funds earmarked for industrial development must balance economic expansion with sustainability and equitable access.

Courtroom Practice & Strategic Litigation Guidance:

Rely on Section 12 to establish the public-interest character of credit guarantee trust funds (CGTMSE) when arguing that banks cannot demand collateral security from micro and small borrowers for loans sanctioned under credit guarantee schemes.

Section 12: Simplifying compliance and procedures

Section 12 of MSMED Act, 2006: Simplifying compliance and procedures

Legal Commentary & Landmark Judgments: Section 12