If a company in India has not paid your invoice, the route you take should depend on four facts: who you are (an MSME or not), what paper you hold (a cheque, a signed acknowledgment, only invoices), whether the buyer disputes the debt, and how big the amount is. Choosing the route that matches those facts saves months. This note walks through the options a business can use, in the order we would usually consider them.
Step 1: Build the paper trail and send a legal notice
Before anything else, collect the contract or purchase order, the invoices, proof of delivery or completion, and every email or ledger confirmation in which the buyer accepts that the money is due. A legal notice then states the amount, the basis of the claim, the interest claimed and a short deadline, typically 15 days.
The notice does three jobs. It gives the buyer a last chance to pay, it fixes the date of demand, and, if the buyer replies with a dispute, it shows early what the defence will be. Many claims end here, so the notice is worth drafting with care. Our legal notice format guide explains what it should contain.
Step 2: Check limitation
A suit for the price of goods sold or services rendered must generally be filed within three years from when payment fell due. A signed acknowledgment of liability, made before that period ends, gives a fresh three years from its date. Part-payment can have the same effect when it is made by the debtor and recorded. Do not let months pass in negotiation without a written acknowledgment, because talks alone do not stop the clock.
Step 3: Pick the route
MSME Facilitation Council (for registered small suppliers). Under the MSMED Act, 2006, a buyer must pay a micro or small supplier within the agreed period, which cannot be more than 45 days. Delayed payment carries interest at three times the RBI bank rate, compounded monthly (Section 16). The supplier can refer the dispute to the Facilitation Council under Section 18, which conciliates first and then arbitrates. A buyer that wants to appeal against the award must deposit 75% of the awarded amount first (Section 19). The route only works if the supplier was registered as a micro or small enterprise when the contract was made, so check the Udyam date first.
Summary suit under Order XXXVII CPC. Where the claim is a fixed sum on a written contract, an acknowledged debt or a negotiable instrument, a summary suit lets the plaintiff seek judgment without a full trial. The defendant has ten days from service of summons for judgment to apply for leave to defend, and the court grants leave only if a real defence is shown. For a commercial dispute, the matter is listed before the Commercial Court.
Ordinary commercial suit. Where the debt is contested, the claim goes through a full commercial suit. A dispute of the specified value (₹3 lakh at present) falls under the Commercial Courts Act, 2015, and, unless urgent interim relief is sought, pre-institution mediation under Section 12A comes first. We cover that step in our note on pre-institution mediation and summary judgment.
Cheque bounce complaint. If the buyer paid with a cheque that was dishonoured, Section 138 of the Negotiable Instruments Act is often the quickest pressure point. The time limits are strict: three-month validity, 30 days to send the demand after the return memo, 15 days for the drawer to pay, and one month more to file. Jurisdiction lies where the payee’s collecting bank branch is situated.
Insolvency (Section 9, IBC). An operational creditor can serve a demand notice and then file before the NCLT, but only for an undisputed debt at or above the minimum threshold of ₹1 crore. The Code is not a general recovery tool, and an application that rests on a debt the buyer genuinely disputes will fail. It is considered when the amount is large, the debt is clean and the buyer’s solvency is in doubt.
Step 4: Interest, costs and timelines
Interest follows the contract if it sets a rate, and a court can award reasonable interest from the due date through to payment; the MSMED Act has its own statutory rate. As a rough guide, a firm notice can bring payment or a settlement within weeks; an MSME reference commonly takes several months; and a summary or commercial suit commonly takes one to three years or more. These are ranges, not promises, and depend on service of summons and the defence taken.
Step 5: Enforce the decree
A decree is only paper until it is executed. Execution petitions can attach bank accounts, receivables and property of the debtor, so details of the buyer’s accounts and assets collected early are valuable.
What we do
Our advocates act for suppliers, contractors and service businesses in recovery claims before the Delhi commercial courts, the NCLT and the Delhi High Court, and advise on which route fits a given set of documents. See our pages on commercial dispute work and the corporate law firm in Delhi, or speak to our advocates on 99115 44811.
This note is general information, current as of October 2026, and is not advice on a particular claim. Thresholds and rates are set by statute and notification and should be checked before acting.