Prior to promulgation of MSMED Act, 2006, the issues related to delayed payments to SSI were dealt in the then “The Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993 (as amended in 1998)”.

There was no law for interest on delayed payment prior to 1993 

Sir MSME act was enacted for helping the small and medium industries even before that there was procedure under CPC to recover the amount through civil suit along the interest. 

For interest the mutual agreement and terms between the parties has to be seen and it can be demanded if there is delayed payment the summary suit was the option.

Prior to promulgation of MSMED Act, 2006, the issues related to delayed payments to SSI were dealt in the then “The Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993 (as amended in 1998)”.

 In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:
(a) Manufacturing Enterprises- The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise are defined in terms of   investment in Plant & Machinery.
(b) Service Enterprises:  The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.

Dear Client,

Msme act is special act enacted to provide effective remedy to small medium enterprises, no previous act. It's first of this kind.

MSMED Act 2006, came into existence mainly to address the liquidity problems of SMEs and to facilitate their Promotion, Development and enhancing the Competitiveness.
Small Scale and Ancillary Ancillary Industrial Industrial Undertakings Undertakings
(SSI) Act, 1993 was abolished after the introduction of MSMED Act 2006.

regards

Hi 

1) The Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertaking Act 1993, came in to force from 22nd September 1992 and was applicable specific to SME AND MSME and with the introduction of this act, the statutory  liability of buyer to pay compound interest  and mode of recovery by Seller were prescribed under the new act. 

2) There was no prior  law for SME and MSME to claim interest for delayed payments.

3) However you should be aware that prior to 1993, all SME/MSME  had to rely on their individual contracts and their interpretation under

a) The Contracts Act, and

b) Sale of goods Act,

to recover principal monies and also the interest accrued for delayed payments.

 Hope this information is useful.