An MSME supplier can recover dues through MSME Samadhaan: the buyer must pay within 45 days (15 if nothing was agreed), owes compound interest at three times the RBI bank rate thereafter, and the Facilitation Council aims to decide within 90 days. To appeal, the buyer must deposit 75 percent of the award. FundRaksha sends the notice within 24 hours, files the reference and appears before the Council, for a 30% fee on recovery only.
Who qualifies as an MSME supplier
The MSMED Act remedies apply to a supplier that is a registered micro or small enterprise (Udyam registration) at the time of supply. Medium enterprises can register but the Samadhaan remedy is for micro and small suppliers. Both manufacturers and service providers qualify. The buyer can be any entity: a company, a PSU, a government department, a partnership or a trader.
If you are not yet registered, register now; registration is free and online. It protects future supplies immediately and strengthens your position for current ones. For dues that pre-date registration, other remedies apply; see legal debt recovery.
What the MSMED Act gives you
- A statutory deadline. Section 15 fixes payment at the agreed date, which cannot exceed 45 days from acceptance of goods or services. If nothing is agreed, 15 days.
- Penal interest. Section 16 makes the buyer liable for compound interest with monthly rests at three times the bank rate notified by RBI, from the day after the due date. This overrides any lower rate in the contract.
- A fast forum. Section 18 sends disputes to the Micro and Small Enterprises Facilitation Council in your state, which conducts conciliation and then arbitration, with a target of 90 days.
- A costly appeal for the buyer. Section 19 requires the buyer to deposit 75 percent of the award before any court will hear a challenge.
- Tax leverage. Section 43B(h) of the Income-tax Act denies the buyer a deduction for the expense until it is paid within the MSMED limit.
Use the MSME interest calculator to see how large the interest on your ledger has become.
The FundRaksha MSME recovery process
- Free consultation: we confirm Udyam status, supply dates, acceptance and the interest computation.
- Legal notice within 24 hours, citing Sections 15, 16 and 18 and Section 43B(h), with the principal and interest tabulated.
- Negotiation: many buyers settle the principal immediately to stop the interest and tax consequences.
- Filing on the MSME Samadhaan portal with the Facilitation Council in your state, and appearance at conciliation and arbitration.
- Enforcement of the award as a decree if the buyer still does not pay.
Nothing is paid upfront. FundRaksha Legal charges 30% of what is recovered. There is no court fee for a Samadhaan reference.
Common questions MSME suppliers ask us
The buyer is a government department or PSU
The Act binds them too. Government buyers are in fact the most responsive to a Samadhaan reference because the interest becomes an audit observation.
The buyer says there was a quality issue
Section 15 counts the 45 days from acceptance, and acceptance is deemed if no written objection is raised within 15 days of delivery. A late objection does not stop the clock.
The dues are from several years ago
Samadhaan references are not subject to a strict limitation bar, though Councils look at delay. Act now; see old debt recovery.
MSME recovery in your state
Each state has its own Facilitation Council, and some have several. FundRaksha files and appears before all of them. See Gujarat, Tamil Nadu and Uttar Pradesh, or the SME debt collection agency in Ludhiana page for a city example. For the filing itself, read MSME Samadhaan filing, then book a free consultation.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.