Identify the entity (proprietorship, partnership, LLP, private or public company) from the GST and MCA records. Send a legal demand notice through an advocate; most companies settle here. If not, choose: MSME Samadhaan if you are a Udyam-registered micro or small supplier; Section 138 if a cheque bounced; a summary suit for a clear invoice debt; arbitration if the contract provides; insolvency only as a last resort for large undisputed debts. Act within 3 years of the due date.
Step 1: know what kind of company owes you
| Entity | Who is liable | Where to check |
|---|---|---|
| Proprietorship | The proprietor personally | GST registration (constitution of business) |
| Partnership firm | The firm and every partner, jointly and severally | GST, partnership deed, Registrar of Firms |
| LLP | The LLP; partners generally not personally liable except for their own acts | MCA portal |
| Private or public limited company | The company; directors personally for bounced cheques (s.141 NI Act) and certain misconduct | MCA portal: status, directors, registered office |
This decides who the notice is addressed to and who can be pursued if the entity has no assets. See buyer company shut down if the status is not “active”.
Step 2: the legal notice
Every route starts with a notice from an advocate to the registered office, marked to the directors or partners, sent as an e-notice and by registered post. It states the contract, the debt, the interest and the specific next step. FundRaksha sends it within 24 hours of receiving your documents, and 60% of its cases settle at this stage. India's No.1 B2B payment recovery company, trusted by 1,000+ businesses. See how to send a legal notice for payment.
Step 3: the six routes
- MSME Samadhaan (MSMED Act ss.15-18). For Udyam-registered micro and small suppliers of goods or services. Online reference to the Facilitation Council in your state; conciliation then arbitration; 90-day target; interest at three times the bank rate; the company must deposit 75% of the award to appeal. See MSME Samadhaan filing.
- Section 138, NI Act. For bounced cheques. Criminal complaint before a magistrate; directors in charge personally liable; up to 2 years’ imprisonment or fine up to twice the cheque amount. Strict 30-day notice window. See cheque bounce recovery.
- Summary suit (CPC Order XXXVII). For a fixed sum on invoices or a written contract. The company must obtain leave to defend by showing a genuine triable issue. See trade debt recovery.
- Regular civil suit. Where amounts or facts are genuinely disputed.
- Arbitration. Where the contract has a clause; the award is enforced like a decree.
- Insolvency (IBC). An operational creditor can initiate insolvency against a company for an undisputed debt above the statutory threshold. It is a drastic remedy that can end the company; used for leverage in large, clear cases and only on advice.
Step 4: enforcement
An award or decree is enforced by execution: attachment of the company’s bank accounts, receivables from its customers, movable or immovable property, and other steps. Knowing the company’s bank (from earlier payments or cheques) and its major customers shortens this. For Section 138, the conviction and compensation order are enforced as a fine. Most companies pay before execution reaches their bank accounts.
Cost, time and how to start
Nothing upfront: FundRaksha Legal charges 30% of what is recovered, and court fees, where a matter is filed, are told to you in advance. The notice goes in 24 hours; settlements typically follow within weeks; Samadhaan targets 90 days; suits and complaints depend on the court. Book a free consultation with your invoices, delivery proof and the buyer’s details, and the advocate will tell you the route and the realistic timeline. For the settlement-first approach, see how to recover money without court.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.