SMALL SECTOR BLUES

The MSME sector contributes 30 per cent to India's GDP but delayed payments-courtesy public and private enterprises have been its bane, impeding efforts to raise capital and scale up

- Sonal Khetarpal

Dressed in a white linen shirt, Dinesh Singhal, the founder of power transformers manufacturing company Kanohar Electricals, is carrying an unusual document, a copy of the Arbitration and Conciliation Act, 1996. Ask him about it and he says, "A businessman cannot do business in India if he doesn't know the law. I can recite the entire Indian Contract Act verbatim now." The 67-year-old entrepreneur was in Delhi to attend a high court hearing in a case he had filed against the Central Organisation for Railway Electrification (CORE). They had cancelled a railway electrification contract worth Rs 49 crore with his company after just nine months without even giving his firm a hearing. CORE has denied these statements, saying they were factually incorrect and claimed that both notices of seven days and 48 hours were given.

Kanohar has made several representations to the Railways, but got no response. On appeal, the Punjab and Haryana High Court ruled in his favour in December 2017 and asked the railways to give the firm a hearing. However, the latter not only did not comply, but also encashed the Rs 3 crore in BG (buyer's guarantee, the amount a supplier has to deposit with the buyer), and issued a new tender for the same work at 25 per cent higher cost and a longer tenure. Today, five years and 30 hearings later, Singhal is still fighting the case. And it isn't the only one: he has two others in the Delhi HC, and one each in the Nainital and Lucknow HCs (all against state electrical utilities and PSUs).