Quick answer: You file online, through the government’s MSME dispute portal, which routes your case to your state’s MSME Facilitation Council. No court, no heavy fees, and you can do the filing yourself — though professional help is advisable for high-value or genuinely disputed cases. The process starts with an automated notice to the buyer, moves to conciliation, and converts automatically into arbitration if the buyer still doesn’t settle.

Before you file: make sure informal pressure has been tried

Filing works best as an escalation, not a first move. Send a professional reminder, then a formal demand notice stating the amount, the computed interest (at three times the RBI bank rate, compounding monthly) and a reference to the buyer’s tax exposure under Section 43B(h) of the Income Tax Act. A large share of dues get cleared at this stage — the notice signals that you know your rights and are prepared to use them.

Step 1: Get your documents in order

Keep ready: your Udyam Registration certificate (dated before the transaction — this is checked), invoices with visible dates, proof of delivery or service completion, any purchase orders or written terms, and your reminder/notice correspondence. A statement computing the interest owed, month by month, strengthens the file considerably.

Step 2: File on the online portal

The government has moved MSME delayed-payment complaints to an online dispute resolution (ODR) system, which replaced the older Samadhaan portal as the entry point for new cases. You register the case online, upload your documents, and the system sends an automated notice to the buyer — typically giving them a window of around 15 days to respond or settle before the matter formally proceeds. Many buyers pay at this stage itself, because an official notice with computed interest is very different from a supplier’s reminder email.

Step 3: Conciliation, then automatic arbitration

If the buyer doesn’t settle, the case goes before your state’s MSME Facilitation Council. The Council first attempts conciliation — a structured settlement discussion. If that fails, the matter converts into arbitration automatically, without you filing anything fresh. The Council is expected to dispose of references within 90 days, and it can award you the full principal plus the statutory compound interest.

Step 4: If the buyer tries to appeal

A buyer wanting to challenge the Council’s award in court must first deposit 75% of the awarded amount. This single rule removes most of the incentive to appeal purely for delay — you receive the bulk of your money even while any challenge is pending.

Do you need a lawyer?

For filing and straightforward cases, no — the portal is designed for business owners to use directly. For high-value or genuinely disputed matters (quality disputes, complicated contracts), professional help at the Council stage is money well spent. But do not let the absence of a lawyer stop you from filing; the process was built precisely so that it wouldn’t have to.

Frequently Asked Questions

Q. Which state’s Council will hear my case?

A. Generally the Council of the state where you, the supplier, are located — one of the quiet advantages of this route over chasing the buyer in their home state’s courts.

Q. Is there a limit on the claim amount?

A. The delayed-payment mechanism is not restricted to small amounts; substantial claims go through the same route. For very large or complex disputes, take advice on whether this or another route (like insolvency proceedings) creates better pressure.

Q. What if the buyer simply ignores everything?

A. The process does not stop. The Council can proceed and pass an award even if the buyer refuses to engage, and that award is enforceable like an arbitral award.

Q. Can I settle with the buyer midway?

A. Yes. Cases can be closed on settlement at any stage — and the pendency of a Council case is often exactly what brings the buyer to the table.

About the author: Advocate Praveen Siinghhal is a Delhi-based lawyer with 25+ years of experience in MSME payment recovery, commercial disputes and business legal protection. He advises MSMEs and business owners on unpaid dues, legal notices, MSME Facilitation Council claims and recovery strategy.

Disclaimer: This article is for general information only and is not legal advice. Laws, RBI bank rate, tax treatment, portal procedures and case law may change from time to time. Please verify the current position or consult a professional before acting on any specific claim.