The MSMED Act provides a special mechanism for delayed payments to eligible micro and small suppliers. A written agreement cannot set a payment period beyond the prescribed maximum, but the supplier’s eligibility and the timing of the transaction are important.
Understand the law and procedure
Calculation of the amount due is linked to the date of acceptance or deemed acceptance and the agreed payment date. The law provides for special interest on delayed payments and a Facilitation Council mechanism. Do not claim that the benefit automatically applies to all medium enterprises, traders or earlier contracts of suppliers registered later. It is necessary to review the enterprise classification, registration and the nature of the services or goods. SAMADHAAN is a means of filing online; submitting an application on the portal is not a final award. Conciliation, arbitration and the buyer’s objections may involve separate procedures.
Further considerations: what could affect the outcome?
Keep delivery and acceptance evidence along with the invoice. It may be relevant whether the buyer raised a written objection in time or later raised a dispute merely to delay payment. Show the calculation of the principal, interest and payments received separately. If the contract contains an arbitration clause, its relationship with the statutory mechanism must be assessed on a case-specific basis.
What should you do?
- Verify the micro/small status and statutory eligibility at the relevant time.
- Prepare a documentary chart of the due date, acceptance and outstanding amount.
- Check the reference through the appropriate MSEFC/SAMADHAAN route with the prescribed documents.
Which documents should you keep?
Keep registration records, purchase orders, invoices, delivery/acceptance proofs and the payment ledger.
Hypothetical example
A small manufacturer delivered goods, the buyer accepted them, and payment was withheld after the agreed date. Its documentary claim would differ from a disputed service matter where both acceptance and the supplier’s eligibility are unclear.
Does every Udyam certificate holder get this remedy for every old bill?
No. The relevant dates, classification, activity and applicable judicial principles must be examined.
Sources and related rules
Editorial review: 26 October 2026. This is general legal information. The outcome may vary depending on the facts of the matter, applicable state law and subsequent amendments.