How can a registered MSME recover payment delayed beyond 45 days from a buyer?

Question

I run a small manufacturing unit registered as an MSME and a large buyer has not paid my invoice for months. I want to know my legal remedy. I have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

How can a registered MSME recover payment delayed beyond 45 days from a buyer? is governed in India primarily by Micro, Small and Medium Enterprises Development Act 2006, Section 15, MSMED Act 2006, Section 16 and MSMED Act 2006, Section 18. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact relief available to you turns on the facts you can prove on paper.

Section 15 of the MSMED Act 2006 requires a buyer to make payment to a registered MSME supplier within the period agreed in writing, and in any case not later than forty-five days from the day of acceptance of goods or services.

Section 16 makes the buyer liable to pay compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India on the delayed amount, and this interest is not waivable by any agreement between the parties.

Section 18 allows the MSME to file a reference before the Micro and Small Enterprises Facilitation Council, which first attempts conciliation and, if that fails, refers the dispute to arbitration or itself acts as an arbitrator.

MSMEs can file such claims directly on the government's Samadhaan portal, which routes the case to the appropriate state Facilitation Council for time-bound resolution.

Section 19 requires any buyer seeking to challenge the Council's award in court to first deposit seventy-five per cent of the awarded amount, making this route significantly favourable to MSME suppliers.

What to do next: 1) Confirm your Udyam registration is active and covers the transaction period before filing; 2) File the delayed payment claim on the Samadhaan MSME portal with invoice and delivery proof; 3) Attend the Facilitation Council's conciliation proceedings and press for compound interest under Section 16; 4) Pursue arbitration through the Council if conciliation fails within the prescribed period.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — most remedies under Micro, Small and Medium Enterprises Development Act 2006, Section 15 carry limitation periods, and a delay you cannot explain weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in this practice area.