Facing Delayed Payments as an MSME? Here’s What You Can Do Legally

MSMEs & the Payment Problem in India

Delayed payments are one of the most common and frustrating challenges faced by MSMEs across India. Whether you're a manufacturer, trader, or service provider — cash flow disruptions due to non-payment by clients can hurt operations and stall growth.

But what many MSMEs don’t realise is this: you have strong legal rights under the MSMED Act, 2006 — and you don’t need to silently suffer.

At HEDG, we help MSMEs recover what's rightfully theirs, without getting lost in legal jargon or bureaucracy.

Your Legal Options for Recovering MSME Payments

When a buyer delays your payment beyond the agreed period (or 45 days if no agreement exists), here are the three main legal remedies available to you:

✅ 1. MSME Samadhaan Portal

What it is: An online government platform where registered MSMEs can file applications to recover delayed payments.

Who can file: Only MSMEs registered with Udyam.

What happens:

• Your application is sent to the buyer and referred to the local Micro & Small Enterprise Facilitation Council (MSEFC).
  
  

• The MSEFC can initiate conciliation or arbitration proceedings.
  
  

• If the buyer is found at fault, they must pay the dues with interest (up to 3x the RBI bank rate).
  
  

Why it works:

• Government-recognised
  
  

• Quicker than full-blown court cases
  
  

• Filing is free
  
  

At HEDG, we help you gather the right documents, file properly, and follow up through the Samadhaan portal and MSEFC stages.

✅ 2. Arbitration or Conciliation under MSMED Act

If the dispute isn't resolved through Samadhaan's conciliation, the MSEFC can shift it to arbitration. This is legally binding and conducted under the Arbitration and Conciliation Act, 1996.

Benefits:

• Faster than civil litigation
  
  

• More privacy and flexibility
  
  

• Judgment carries the same weight as a court order
  
  

Drawbacks:

• Can take several months depending on complexity
  
  

• Requires proper documentation and presentation
  
  

HEDG works with MSME-focused legal professionals who guide you through the arbitration process without unnecessary costs.

✅ 3. Commercial Litigation (Civil Suit)

If your case does not fall under the MSME definition or if arbitration fails, you may need to file a civil suit for recovery.

Considerations:

• Formal process in district or high court
  
  

• More expensive and time-consuming
  
  

• Often a last resort when other remedies fail
  
  

However, sometimes litigation is necessary — especially if:

• The buyer is deliberately stalling
  
  

• The MSEFC mechanism has been exhausted
  
  

• You’re approaching the 3-year limitation period
  
  

At HEDG, we assess your situation and help you explore the best route — litigation is always the last option, not the first.

⚖️ MSME Samadhaan vs Civil Litigation: What’s the Difference?

📈 When Should You Escalate the Matter?

You should consider legal action if:

• Your payment has been pending for more than 45 days
  
  

• The buyer is not responding or refusing to pay
  
  

• You’ve already tried to settle informally
  
  

• You’re nearing the 3-year limitation period
  
  

🔧 How HEDG Supports MSMEs at Every Stage

Whether you’re dealing with a small dispute or a long-pending payment, HEDG can help you recover your dues, without overcomplicating the process.

Here’s what we do:

• Evaluate your eligibility under MSMED Act
  
  

• Help register with Udyam, if not already done
  
  

• Draft and file your Samadhaan application
  
  

• Represent you during MSEFC conciliation or arbitration
  
  

• Help calculate interest legally owed
  
  

• Escalate to civil recovery only when necessary
  
  

• Keep documentation ready to avoid limitation issues
  
  

We don’t offer shortcuts — we offer diligent, practical legal help from a trusted Indian CA and legal team.

✅ Final Word: You Don’t Need to Chase. You Need to Act.

Delayed payments can ruin good businesses. But you don’t have to run from lawyer to lawyer or keep calling the buyer in vain.
With the right legal tools — and a solid team like HEDG — you can get what’s due to you, legally and respectfully.

📞 Need to Recover a Delayed Payment?

Let HEDG guide you through the process.
Start with a no-obligation consultation today.
👉 Contact Us