How to File an MSME Delayed Payment Complaint (Step by Step)

If a buyer has not paid your micro or small enterprise within 45 days of accepting your goods or services, you can file a delayed payment complaint before your state's Micro and Small Enterprises Facilitation Council. Since 2025, new complaints are filed online through the MSME online dispute resolution portal, which replaced the older Samadhaan filing route for new cases. The council then tries conciliation and, if the buyer does not settle, decides the claim as an arbitration.

This guide walks you through the process, from checking that you qualify to the award. It is written for business owners and their accountants who want to file themselves or understand what their lawyer will do. In short: confirm your Udyam registration and the dates of your supplies; prepare an invoice-wise table with due dates and payments; calculate interest at three times the RBI bank rate, compounded monthly; gather your documents; file online; and attend every meeting.

A careful filing does most of the work. Councils decide quickly on claims that are clear and well documented.

Before you start: do you qualify?

The delayed payment protections in Chapter V of the MSMED Act apply to "suppliers", which means micro and small enterprises that have registered. Medium enterprises are not covered. Check your Udyam registration certificate: it shows your classification and the date of registration. From 1 April 2025, micro enterprises are those with investment in plant and machinery or equipment up to ₹2.5 crore and turnover up to ₹10 crore; small enterprises up to ₹25 crore and ₹100 crore.

Next, check the dates of your supplies against the registration date. Supplies made after registration are clearly covered. For supplies made before registration, the law is unsettled: the Supreme Court in NBCC v State of West Bengal (January 2025) referred the question to a larger bench because earlier decisions had suggested that a supplier must be registered at the time of the contract. You can still include such supplies, but expect the buyer to object, and consider separating them in your table.

Finally, check limitation. The arbitration stage before the council is subject to the Limitation Act, so claims more than three years old from their due date, without any acknowledgement or part payment, may be barred at arbitration. The Supreme Court in Sonali Power Equipments (2025) held that conciliation is not subject to limitation, so older dues can still be discussed in conciliation.

Filing, step by step

The invoice table: an example layout

Due dates here assume a 45-day credit period from delivery, with acceptance on delivery. Add a column for interest, calculated from each due date to the date of filing, and state the method used.

Documents checklist

Filing on the portal: practical tips

The ODR portal routes your case to the council for your state based on your Udyam details. Make sure your Udyam address and contact details are current; an outdated address can send the case to the wrong council or cause notices to go astray.

Enter the buyer's legal name exactly as it appears on its GST registration or company records, with its registered address. A wrong name or address delays notice to the buyer and gives it an argument later.

Upload clear PDF scans within the portal's size limits. Combine related documents into one file per invoice if you can, and name files clearly. If the portal rejects a file for size, compress it rather than leaving it out.

Use an email address and phone number that are checked daily. Notices of conciliation meetings are sent electronically, sometimes with short notice. Save the acknowledgement and reference number, and take screenshots of the submitted form.

What happens after you file

After filing, the council issues notice to the buyer and fixes a date for conciliation, often held online. The conciliator will ask you to explain the claim briefly and ask the buyer for its response. Many buyers pay or propose a plan at this stage, especially once they understand the interest under Section 16 and the 75% deposit they would need to challenge an award.

If a settlement is reached, it is recorded in writing and signed, and has the status of an arbitral award on agreed terms. If conciliation fails, the council takes up the dispute as an arbitration, or refers it to an institution. You will file a statement of claim, the buyer a defence and any counter-claim, and the council will hear both sides and pass a reasoned award.

The Act says the council should decide the reference within 90 days. In practice, it often takes several months. The award is enforceable as a decree. If the buyer wants to challenge it, it must deposit 75% of the amount first. See MSEFC conciliation and arbitration.

Preparing for the conciliation meeting

The conciliation meeting is your best chance of getting paid quickly. Prepare as you would for a business negotiation, not a court hearing. Have your invoice table and interest working open in front of you. Know the minimum you would accept today, comparing it with what you might get after an award and possibly a challenge, and the time each would take.

Expect the buyer to raise one of a few points: quality or quantity complaints, a longer credit period in its purchase terms, cash-flow difficulties, or a request to waive interest. Have answers ready: signed delivery challans and the absence of written complaints within 15 days; the 45-day cap in Section 15, which overrides longer contractual periods; and the fact that interest under Section 16 applies notwithstanding any agreement. On interest, decide in advance how much you are willing to reduce in return for prompt payment of the principal.

If you reach agreement, ask for it to be recorded in writing at once, with dates and amounts, and what happens on default. A verbal promise at a meeting is not enough.

If the buyer raises a counter-claim

Some buyers respond to a council complaint with a counter-claim: for defective goods, delays, or losses they say your supplies caused. The Supreme Court in Silpi Industries v Kerala State Road Transport Corporation (2021) held that a buyer can raise a counter-claim before the council in arbitration, if it falls within the contract.

Respond to a counter-claim on the evidence. Ask the buyer to produce rejection notes, inspection reports or complaints made at the time. Point out any continued orders after the alleged problems, which suggest the buyer was satisfied. If the buyer's losses are claimed, ask for proof of the loss and of a link to your supplies. Unsupported counter-claims often fail, but they must be answered in writing.

After the award: getting your money

If the council passes an award in your favour, send a copy to the buyer with a demand for payment. If the buyer does not challenge the award within three months and does not pay, you can file for execution in a court where the buyer has assets, attaching its bank accounts, receivables or property.

If the buyer challenges the award under Section 34, it must deposit 75% of the awarded amount in court. Apply to the court for release of part of the deposit to you while the challenge is pending; Section 19 allows the court to order this on conditions. Many small suppliers receive most of their money at this stage, long before the challenge is decided. See challenge an MSME award and enforcement of awards.

Changes under the 2026 amendment

The MSMED (Amendment) Act, 2026 received assent on 13 August 2026. From 15 October 2026, registration became free and voluntary through a notified national platform, with the Act's benefits, including recourse to the council, depending on registration. States can set up more councils to meet their caseloads. Central Public Sector Enterprises must route payment of MSME invoices through TReDS platforms. From 15 December 2026, councils must have three to five members, including at least one with a legal background.

The changes to the Section 18 procedure, including a 90-day mediation period, supplier-address jurisdiction for all cases, and statutory online proceedings, along with the new recovery provision and the requirement that at least 50% of an award be released if a challenge is pending more than six months, had not been brought into force as of this review. Complaints filed today follow the existing procedure described in this guide.

Calculating interest for the complaint

Interest under Section 16 is compound, with monthly rests, at three times the bank rate notified by the RBI. To calculate it for your complaint, take each invoice separately. Find its due date. Count the months from the day after the due date to the date of your calculation. Apply the monthly rate, which is three times the annual bank rate divided by twelve, compounding each month.

For example, with the bank rate at 5.50%, the annual rate is 16.5% and the monthly rate is 1.375%. ₹3 lakh overdue for six months grows to about ₹3.26 lakh, so the interest is about ₹25,600. After the RBI raised the bank rate to 5.75% on 7 October 2026, the annual rate became 17.25% and the monthly rate about 1.4375%.

Councils have not always been consistent on whether to apply the bank rate in force on the due date throughout, or to change it as the bank rate changes. State the method you have used in your complaint, and keep a working that shows both if the rate changed during the delay. The interest calculator gives a quick estimate using a single rate.

Mistakes that delay or weaken complaints

Councils see the same problems repeatedly. Complaints against the wrong entity, such as a brand name or a branch office instead of the buyer's legal name. Complaints without delivery proof, relying only on invoices. Complaints that include invoices from before the supplier's registration without separating them. Complaints that claim interest at a flat 18% or 24% instead of the statutory rate. Complaints filed years late, with no acknowledgement or part payment to keep them within time. And complaints where the supplier does not attend the conciliation meeting.

Each of these is avoidable with a little preparation. A supplier who files a clean, correct claim and attends every meeting is in a far stronger position than one whose claim needs repeated corrections.

When to use a lawyer, and when not to

Many small suppliers file their own complaints and handle conciliation themselves, especially for modest amounts and cooperative buyers. That is perfectly possible. The portal is designed for direct filing, and councils are used to dealing with business owners.

Professional help becomes more valuable when the amount is large, when the buyer is a large company or government body likely to resist, when there are registration or limitation complications, when the buyer raises a counter-claim, or when the case moves to arbitration. At the arbitration stage, a well-drafted statement of claim and proper handling of objections can make the difference between a full award and a reduced one. After the award, enforcement and opposing a challenge also benefit from legal handling.

A timeline you can expect

For a straightforward claim against a cooperative buyer, a realistic timeline looks like this. Filing on the portal takes a day once documents are ready. The council's notice to the buyer usually follows within a few weeks. The first conciliation meeting may be one to two months after filing. If the buyer settles, payment may follow within weeks. If conciliation fails after one or two meetings, the council moves to arbitration, with pleadings over a month or two and a hearing after that. An award may come three to nine months after filing, depending on the council.

If the buyer challenges the award, it must deposit 75% within the time the court directs, and you can apply for release of part of it. If the buyer neither pays nor challenges within three months of the award, you can file for execution. Most claims end well before the challenge stage, at conciliation or soon after the award.