MSME Samadhaan: How to File a Delayed-Payment Case Against a Buyer

If a buyer has not paid your micro or small enterprise within the agreed period, never more than 45 days from acceptance, the MSMED Act lets you claim the money plus compound interest at three times the RBI bank rate. You file online. The MSME Samadhaan portal now sends new applications to the MSME ODR Portal (odr.msme.gov.in). Your State's Micro and Small Enterprises Facilitation Council (MSEFC) then tries to settle the dispute and, if that fails, decides it by arbitration.

Sources checked: 20 October 2026

Facts checked on 20 October 2026 against the MSMED Act, 2006 (Chapter V), the MSME Samadhaan portal and its FAQ, the Ministry of MSME's ODR scheme guidelines and the MSMED (Amendment) Act, 2026.

Key facts

Item	What the official text says
Payment deadline	Date agreed in writing, never more than 45 days from acceptance or deemed acceptance; 15 days if there is no written agreement (MSMED Act s.15)
Interest on late payment	Compound interest with monthly rests at 3 times the RBI bank rate (s.16)
Who decides	The State's MSE Facilitation Council (MSEFC): conciliation, then arbitration (s.18)
Time for the council	90 days from the reference (s.18(5))
Buyer's appeal	A court will not hear a challenge unless the buyer deposits 75% of the award (s.19)
Who can file	Micro and small enterprises with Udyam Registration dated before the disputed invoice
Not admitted	Trading registrations (NIC codes 45, 46, 47) and units registered as trading units (Samadhaan FAQ)
Where to file	MSME ODR Portal (odr.msme.gov.in), as the Samadhaan portal now directs
Filing support	One-time help with MSEFC documentation and application fees, up to ₹4,000 per MSE (ODR scheme)

What does the law say about paying an MSE supplier?

Chapter V of the MSMED Act, 2006 sets three rules:

• Section 15, when to pay. The buyer must pay on or before the date agreed in writing. That period can never exceed 45 days from the day the goods or services are accepted, or deemed accepted. If nothing was agreed in writing, payment is due before the "appointed day", which the ODR guidelines restate as 15 days from acceptance.
• Section 16, interest. A buyer who pays late owes compound interest with monthly rests at three times the bank rate notified by the Reserve Bank, from the date the payment fell due. This applies whatever the contract says.
• Section 17, recovery. The buyer is liable for the amount with that interest.

The Samadhaan FAQ adds some useful points. You can claim interest alone if the principal was paid late. A legal notice to the buyer is not required before you file. A buyer can reject goods only genuinely, within 15 days of receipt, and must tell you at once. A breach of contract is not something the council decides.

Who can file a delayed-payment case?

• A micro or small enterprise (the Act's "supplier"). The Samadhaan FAQ says a unit that grew from small to medium keeps these rights for three years after the upward change, under the Ministry's notification S.O. 4926(E) of 18 October 2022.
• With Udyam Registration in place before the invoice date. The FAQ says the benefit cannot be taken retrospectively. If you hold an old Udyog Aadhaar, migrate it to Udyam first (see our Udyam guide).
• In manufacturing or services. The FAQ says councils do not admit trading registrations (NIC codes 45, 46 and 47) or units registered as trading units.
• Against an Indian buyer. The FAQ says the delayed-payment provisions do not apply to overseas companies. A government department can be a respondent.
• Not already claimed in a civil court. If you have claimed the amount in a civil court, you cannot claim it again before the council.
• Within limitation. The FAQ says the Limitation Act applies, citing the Supreme Court in Silpi Industries. Do not let old invoices sit.

How do I file, step by step?

1. Go to the MSME ODR Portal (odr.msme.gov.in). The Samadhaan portal now says all new delayed-payment applications are filed there. Create an e-login.
2. Your details fill in from Udyam. The system picks up your key information from your Udyam Registration (or Udyam Assist Platform) record, and you can add another e-mail and mobile number.
3. Enter the buyer's details: full name, mobile number and e-mail (if available), and confirm they are correct.
4. State the claim: the brief facts, the work order or agreement, the invoices, any payment already received (date and amount) and the amount still due, with the due date and the interest under the Act.
5. Sign and attach identification proof. If a representative acts for you, attach their signature, identification and power of attorney.
6. Choose how to start. The ODR guidelines offer a voluntary, out-of-court pre-MSEFC stage first: a Digital Guided Pathway (which predicts a probable outcome from both sides' claim forms) and/or Unmanned Negotiation between the parties. Either side can opt out. The buyer gets automated SMS and e-mail notices and three days to reply.
7. Council stage. If there is no settlement, or a party opts out, the case moves to the MSEFC stage: conciliation or mediation, then arbitration, as the MSMED Act requires.
8. Follow up with the council. The council, not the Ministry, decides. The Samadhaan FAQ says the Ministry does not intervene in a council's work.

How long the pre-MSEFC stage lasts: 15 days from filing. Both parties can agree to continue for up to 15 more days, so it ends within 30 days at most. The Act gives the council 90 days from the reference to decide.

Which documents do I need?

From the ODR guidelines (para 12.1.4) and the Samadhaan FAQ:

• Udyam Registration (dated before the disputed invoice)
• Work order, purchase order or agreement. If the order was oral, an affidavit saying so.
• Invoices. Several invoices can be combined into one PDF, with the affidavit in the same file.
• Proof of delivery or acceptance. The FAQ says acknowledgements on invoices, delivery challans, part-payment records and e-mails are all accepted as evidence.
• Statement of payments received and amounts due, with the due dates
• Your signature and identification proof, and your representative's power of attorney if you use one
• A signed hard copy, if your council asks for it. The Samadhaan FAQ says a signed and verified hard copy is necessary.

The ODR scheme also offers one-time financial help of up to ₹4,000 per MSE for documentation and application fees charged by councils, if any. You apply for it on the portal after the case ends.

What happens after the council's award?

The Samadhaan FAQ says an award is executed under the procedure in section 36 of the Arbitration and Conciliation Act, 1996. If the buyer wants a court to set the award aside, section 19 says no court will hear it unless the buyer has deposited 75% of the amount first. The court may pay part of that deposit to you while the case is pending.

What will change under the MSMED (Amendment) Act, 2026?

The MSMED (Amendment) Act, 2026 (13 August 2026) has been passed. It comes into force only on the dates the Central Government notifies, and different sections can start on different dates. Once in force, it will:

• give the council or mediator 90 days from the first appearance to complete mediation, and 90 days from the completion of pleadings to make an award;
• let a settlement or award be recovered as an arrear of land revenue through the District Collector where the buyer's assets are, and treat it as a debt recognised under the Insolvency and Bankruptcy Code;
• require a court to pay the supplier at least 50% of the buyer's deposit if a challenge has been pending for more than six months;
• give the council jurisdiction over a supplier whose official address in its registration is in the council's area, against a buyer anywhere in India, and allow online mediation and arbitration;
• require States to set up more councils where needed, and replace the penalty for a buyer who does not disclose dues to MSEs in its audited accounts (section 22) with a graded one: a warning first, then a penalty of ₹10,000 to ₹50,000 for a second contravention, then a fine of ₹50,000 to ₹1 lakh.

Until these sections are notified, the current Act applies. Watch government updates for the commencement notice.

What are the common mistakes?

• Registering on Udyam after the invoice. The claim fails on that alone.
• Filing as a trading unit. Councils do not admit these registrations.
• No proof of acceptance. Keep signed challans, e-mails and acknowledgements for every delivery.
• Waiting too long. Limitation applies.
• Claiming the same amount in a civil court and before the council.
• Ignoring the 45-day rule in your own contracts. A written term over 45 days does not stretch the buyer's legal deadline.

For large buyers who accept your invoices, a faster route to cash is TReDS, explained in our TReDS guide. For managing the cash gap meanwhile, see our working capital guide.

What should I do now?

1. Check that your Udyam Registration predates the unpaid invoices, and that your activity is manufacturing or services.
2. Collect the order, invoices, delivery proof and a statement of what is due.
3. File on the MSME ODR Portal, and keep the reference number.
4. Answer the council's notices on time and attend the hearings.

Subsidy Setu is not a law firm and does not file cases or appear before councils or courts. You can file on the official portal yourself. If you want a lawyer, read when you need an advocate: on request, the platform can introduce you to an independent advocate you choose and pay (see advocate services). For help organising invoices, ledgers and the claim statement, ask our expert team.