In short: start with a legal demand notice. If you are a registered MSME, you can claim the dues with high interest before the MSME Facilitation Council through the Samadhaan portal. Where the unpaid debt is ₹1 crore or more and there is no genuine dispute, an insolvency petition under Section 9 of the Insolvency and Bankruptcy Code (IBC) puts heavy pressure on the debtor. Otherwise, file a commercial suit, using summary procedure where the claim rests on invoices or written contracts.
Step 1: legal notice
A legal notice sets out the invoices, the amount due, interest, and a deadline to pay. It often produces payment or a settlement, and it starts the paper trail every later step relies on. Commercial suits also need pre-institution mediation first, unless urgent interim relief is sought.
Step 2: MSME delayed payment (MSME Samadhaan)
If you are registered on Udyam as a micro or small enterprise, the buyer must pay within the agreed period, at most 45 days. Under the MSMED Act, delayed payments carry compound interest at three times the RBI bank rate. You can file a claim online on the MSME Samadhaan portal before the Micro and Small Enterprises Facilitation Council, which conciliates and then arbitrates. A buyer challenging the award must first deposit 75% of it.
Step 3: insolvency under the IBC (₹1 crore and above)
- Demand notice under Section 8 (Form 3 or 4) to the company.
- Ten days for the company to pay or point out a pre-existing dispute.
- Section 9 application to the NCLT if it does neither, where the default is ₹1 crore or more.
The Supreme Court (Mobilox Innovations v. Kirusa, 2017) held that a genuine dispute existing before the demand notice defeats a Section 9 application. So the IBC suits clear, undisputed dues. Admission puts the company's management in the hands of a resolution professional, which is why many debtors settle before admission. Financial creditors (lenders) file under Section 7.
Step 4: commercial suit
Claims of ₹3 lakh and above between businesses go to the Commercial Court, with strict timelines. Where the claim is on written invoices or a contract, a summary suit (Order XXXVII) means the defendant must get the court's leave before it can defend.
Questions people ask
How can I recover payment from a company that is not paying?
Send a legal notice, then use MSME Samadhaan if you are a micro or small enterprise, an IBC Section 9 petition if the undisputed debt is ₹1 crore or more, or a commercial or summary suit.
What is the minimum amount to file insolvency against a company?
The default must be ₹1 crore or more to start insolvency proceedings against a company under the IBC.
What interest can an MSME claim on delayed payment?
Compound interest with monthly rests at three times the bank rate notified by the RBI, from the day after payment was due.
Is there a time limit to recover dues?
Generally three years from the date the payment fell due, or from a written acknowledgement or part payment, which restarts the period.
The company issued a cheque that bounced. What then?
You can also file a cheque bounce complaint under Section 138 of the Negotiable Instruments Act, in addition to civil recovery.
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Become a ClientCall +91 81001 21141This guide gives general information about the law in India as on 11 November 2026. It is not legal advice for your situation, and reading it does not create a lawyer-client relationship. Rules and limits change; please take advice on your own facts.