MSME Delayed Payment: File a Samadhaan Complaint and Claim Your Interest

Who this guide is for

This guide is written for owners and managers of Micro and Small Enterprises who are owed money by a buyer — whether the buyer is a private company, a large corporation, a public sector undertaking, or a government department — and who want to recover payment without spending a lot on lawyers or court fees.

You will benefit from this guide if:

• You have supplied goods or rendered services and the buyer has not paid by the due date.
• You have a valid Udyam Registration certificate (or Udyog Aadhaar, if pre-dating the Udyam regime) and the registration was done before the invoices in dispute were raised.
• Your enterprise qualifies as Micro or Small under the current investment and turnover thresholds defined in the MSMED Act. Note: Medium Enterprises cannot use the MSEFC route, but Micro and Small ones can.
• The buyer is based or operates in India (foreign buyers are outside MSMED Act jurisdiction).

If you are not yet registered on Udyam, stop here: register first at udyamregistration.gov.in (it is free), then come back. You cannot claim MSMED Act protections for invoices raised before your registration date.

This guide complements our broader MSME CGTMSE loan guide and our consumer court filing guide for related dispute scenarios.

What you can do this weekend

Friday evening

Pull together your paper trail. Open your email and accounting software and download every invoice related to the buyer, every purchase order or work order (even WhatsApp messages confirming an order count as secondary evidence), every delivery challan, and every reminder you have sent. Save them all into a single folder on your computer. Also locate your Udyam Registration certificate — you will need the Udyam number to log in to the ODR Portal. If you do not have the certificate handy, download it from udyamregistration.gov.in using your registered mobile number.

Check whether the buyer has sent any written objection to the invoices or delivery. If they have not objected in writing within 15 days of delivery, the law treats acceptance as "deemed" — and the clock for the payment deadline runs from the day of delivery itself.

Saturday

Draft and send a formal demand email (use the template in this guide below). The email should state the invoice numbers, total outstanding amount, the original due date, and invoke the MSMED Act. Send it from your official business email to the buyer's accounts payable department and copy the buyer's senior management. This is not a legal requirement before filing, but it often prompts faster payment and creates a clean paper trail for the MSEFC.

While you wait for a reply, calculate the overdue interest. Under Section 16 of the MSMED Act, the rate is compound interest with monthly rests at three times the RBI bank rate. The RBI bank rate changes periodically — check the current rate at rbi.org.in before computing. Use the applicable rate(s) for each month in the delay period. (Example, for illustration only: if the RBI bank rate during the delay period was 6.5%, the applicable interest rate under the Act would be 19.5% per annum, compounded monthly. Label any figures you present to the MSEFC clearly as an estimate, and always verify the current RBI rate.)

Also check the payment timeline applicable to your transaction. Under Section 15 of the MSMED Act:

• If there is no written agreement on credit period: the buyer must pay before the "appointed day" — which is the day immediately after 15 days from acceptance or deemed acceptance of goods/services.
• If there is a written credit agreement: the buyer must pay on or before the agreed date, but that agreed period cannot exceed 45 days from the day of acceptance or deemed acceptance.

Sunday

Register on the MSME ODR Portal (odr.msme.gov.in). Create an account using your Udyam number and mobile number. Explore the claim form so you know exactly what information you will need to enter. Combine all your supporting documents into PDF files (multiple invoices can go into one PDF). You are now ready to file the complaint on Monday morning — or even finish filing on Sunday if you have everything ready.

Documents and evidence checklist

Step-by-step action plan

Step 1 — Verify your Udyam status

Log in to udyamregistration.gov.in and confirm your Udyam Registration number and certificate are active. Check that the registration date is earlier than all the invoice dates in your claim. If you registered under the older Udyog Aadhaar system and have not migrated, do so now — the ODR Portal requires a Udyam number.

Step 2 — Calculate what you are owed

Total up the outstanding principal across all disputed invoices. Then prepare an interest estimate. The MSMED Act (Section 16) provides for compound interest with monthly rests at three times the RBI bank rate, running from the appointed day or agreed due date. Look up the current RBI bank rate at rbi.org.in. If the delay spans multiple rate-change periods, apply the rate applicable in each month separately. Keep your working transparent and label it as an estimate — the MSEFC will do a final calculation.

Step 3 — Send a formal demand notice to the buyer

Before filing, send a written demand (email is sufficient) to the buyer's accounts team and senior management. State the invoice details, the MSMED Act provision, the interest accruing, and a deadline — typically 7 to 15 days — for payment. Sending this notice is not a legal prerequisite but it frequently resolves matters quickly and, if it does not, it strengthens your case. Use the copy-paste template in this guide below.

Step 4 — File on the MSME ODR Portal

Go to odr.msme.gov.in and create an account with your Udyam number and registered mobile. Fill in the guided digital claim form:

• Your enterprise name, Udyam number, category (Micro/Small), PAN, GSTIN, address, email, and mobile.
• Buyer's full name, address, GSTIN, email, phone, and buyer category (private company / public sector / government).
• Invoice details: dates, amounts, and due dates for each invoice.
• Total outstanding principal and your interest estimate.
• Upload all supporting documents in PDF format (you can combine multiple invoices into one PDF).

Filing is free of charge. No court fee, no stamp duty, no lawyer required at this stage.

Step 5 — Engage in Tier-1 pre-MSEFC resolution

Once filed, the ODR Portal electronically notifies the buyer. The portal may facilitate structured digital negotiation — offers and counter-offers — or assign a mediator for virtual sessions. This Tier-1 stage is voluntary: either party may opt out. If the buyer pays or a settlement is reached here, the matter is closed. If not — or if the buyer ignores the process — the dispute automatically escalates to Tier-2.

Step 6 — MSEFC proceedings (Tier-2)

Your claim is referred to the state's Micro and Small Enterprise Facilitation Council. The MSEFC first attempts conciliation between the parties. If conciliation fails, the Council itself arbitrates the dispute. The MSEFC must conclude proceedings within 90 days of the reference date. The buyer cannot stay proceedings by filing a counter-case in a civil court during this period (subject to Supreme Court rulings on jurisdiction). Attend or appear virtually before the MSEFC on scheduled dates — failure to appear may weaken your case.

Step 7 — Receive and enforce the award

If the MSEFC rules in your favour, it issues an award directing the buyer to pay the principal plus compound interest under Section 16. The award bears the official seal and has the same legal force as a decree of a civil court. If the buyer still does not pay, file an execution petition in the competent civil court in the buyer's jurisdiction. The court can then attach and sell the buyer's assets to satisfy the decree.

Step 8 — Parallel track: Income Tax Act Section 43B(h) leverage

If your buyer is a company that files income tax returns, note that Section 43B(h) of the Income Tax Act disallows deduction of payments to MSME suppliers that exceed the prescribed timeline. This means delayed payment to you costs the buyer extra tax. You can legitimately inform the buyer of this in your demand notice — it often accelerates payment without any formal complaint.

Escalation ladder

Copy-paste complaint template

Replace the text in square brackets with your own details before sending.

When RTI can help

RTI under the Right to Information Act, 2005 is a powerful tool — but only when your buyer is a public authority. Public authorities include central and state government departments, public sector undertakings (PSUs), municipal bodies, government universities, and any entity substantially financed by the government.

If your buyer is a government department, PSU, or other public authority that has not paid your invoices, you can file an RTI application to:

• Obtain a copy of the purchase order or work order sanctioned for your supply — useful if the buyer disputes the terms.
• Get copies of the bills passed or payment sanctioned in internal records — this can reveal if payment was approved internally but not released to you.
• Trace any budget allocation, utilisation, or lapse that explains why payment was not made — useful for your MSEFC proceedings.
• Find out the name and designation of the officer responsible for processing your payment, so you can address escalation to the right person.
• Get copies of any inspection notes or acceptance certificates internally generated — these can defeat a buyer's claim that goods were not accepted.

File your RTI application online at rtionline.gov.in for central government departments. For state government departments and PSUs, use the respective state RTI portal. The application fee is ₹10 (waived for BPL card holders). You will receive a response within 30 days. If not satisfied, file a first appeal under Section 19. Our guide on CPGRAMS and RTI covers related escalation for government grievances.

When RTI will not help

RTI does not apply to private companies. If your buyer is a private limited company, a partnership firm, an LLP, a proprietorship, or a foreign company, RTI cannot compel them to disclose payment records or internal documents. The MSME ODR Portal / MSEFC route and civil courts are your remedies in those cases.

Even for public authority buyers, RTI gives you information — it does not directly compel payment or award interest. Use RTI to build your evidence for the MSEFC, not as a substitute for the MSEFC process. Our guide on filing in the consumer forum may also be relevant if the dispute involves a service transaction with a consumer angle.

Common mistakes to avoid

• Registering on Udyam after raising invoices. The Supreme Court has held that MSMED Act protections are not retrospective. If your Udyam registration date is later than the invoice date, those invoices are outside the Act's protection. Register early — even before you raise your first invoice to a new buyer.
• Filing on the old Samadhaan portal. From 15 October 2025, new complaints must go on the MSME ODR Portal (odr.msme.gov.in). The Samadhaan portal (samadhaan.msme.gov.in) no longer accepts new filings — it is for tracking existing cases only.
• No purchase order and no affidavit. The portal requires a purchase order or work order. If yours was verbal, you must submit a signed affidavit. Do not skip this — the MSEFC will need to establish the existence and terms of the contract.
• Claiming a specific interest rate without verifying the current RBI bank rate. The interest rate under Section 16 is linked to the RBI bank rate, which changes. Always check the rate at rbi.org.in before computing, and clearly label your estimate as such in your MSEFC submission.
• Waiting too long. Interest on delayed payment keeps accruing in your favour, so there is a financial reason to file early. More importantly, memories fade, documents get lost, and buyers may become insolvent. Do not wait months before acting.
• Ignoring the Tier-1 negotiation stage. Some suppliers view the pre-MSEFC negotiation as a formality to skip. However, a settlement at this stage is faster than an MSEFC award and costs nothing. Engage genuinely — you can always opt out and proceed to MSEFC if the offer is unreasonable.
• Sending invoices without delivery proof. Invoices alone do not prove delivery. Always obtain a signed delivery challan, a service completion certificate, or at minimum an email acknowledgement from the buyer confirming receipt. Without delivery proof, the buyer can claim "deemed acceptance" was never triggered.
• Assuming a Medium Enterprise can use MSEFC. Only Micro and Small Enterprises can file before MSEFC. If your turnover or investment now puts you in the Medium category, the MSEFC route is unavailable — consult a lawyer about civil recovery options.