Section 7
Classification
Defines micro, small and medium enterprises by investment in plant and machinery or equipment and annual turnover. Both limits must be met.
The MSMED Act, 2006 protects micro and small suppliers with a 45-day payment rule, compound interest at three times the bank rate and a fast forum for recovery. Learn how it works — and how our MSME lawyers in Delhi, led by Adv. Amarendra Kumar Dubey and Adv. Kanhaiya Lal Mishra, enforce it.
The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is the central statute that defines MSMEs in India, promotes their growth and, most importantly for suppliers, protects them from delayed payment. It came into force on 2 October 2006 and is administered by the Ministry of MSME.
Before 2006, a small manufacturer could wait years for a large buyer to pay. The Act changed this by fixing a statutory payment deadline, penal compound interest and a dedicated dispute forum — the MSME Facilitation Council (MSEFC) — with a 90-day timeline for conciliation and arbitration.
If your business is owed money by a buyer, you do not need to wait for a civil suit. The best MSME lawyers in Delhi use Sections 15 to 19 of this Act to recover principal plus interest quickly. Our MSME case practice handles everything from notice to execution of the award.
Five numbers every MSME owner should know before approaching MSME lawyers in Delhi. Swipe, tap the dots or let it play.
From the original 2006 statute to the digital ODR portal and the 2026 amendment.
Replaces the earlier small-scale industries framework and introduces the 45-day payment rule and interest regime.
Classification now uses both investment and turnover, and Udyam registration becomes the single online registration.
Investment and turnover ceilings are increased for micro, small and medium enterprises.
New delayed-payment cases are filed on odr.msme.gov.in; MSME Samadhaan stops accepting new filings.
Parliament passes the Bill (Rajya Sabha 3 Aug, Lok Sabha 7 Aug). It operates only once notified by the Government.
Swipe through the provisions our MSME lawyers in Delhi use most in recovery cases.
Defines micro, small and medium enterprises by investment in plant and machinery or equipment and annual turnover. Both limits must be met.
Online registration on the Udyam portal. Registration should be in place before the supply contract to claim delayed-payment protection.
Buyer pays by the agreed date or within 45 days; if no agreement, within 15 days of acceptance or deemed acceptance.
Three times the RBI bank rate, compounded monthly, from the day after the due date. Overrides contract clauses.
The buyer is liable to pay the principal and the Section 16 interest for goods supplied or services rendered.
Either party can refer the dispute to the MSME Facilitation Council: conciliation first, then arbitration under the Arbitration and Conciliation Act, 1996.
To apply for setting aside the award, the buyer must deposit 75% of the amount awarded. Read about our arbitration services.
Two quick tools: check your category and estimate Section 16 interest. These are indicative only — ask our MSME lawyers in Delhi for an exact computation.
Limits effective 1 April 2025. Enter amounts in ₹ crore.
Compound interest, monthly rests, at 3× the bank rate. Change the bank rate to the current RBI notified rate.
What an MSME supplier can demand from a defaulting buyer.
On mobile, tap a card to flip it.
Common misconceptions we hear from clients searching for the best MSME lawyers in Delhi.
“Only manufacturers are protected.”
Both goods suppliers and service providers who are registered micro or small enterprises can claim under Sections 15 to 19.
“My contract says 90 days, so I must wait.”
The law caps the agreed credit period at 45 days; a longer contractual period does not defeat your statutory right.
“Interest is optional if the buyer pays the principal.”
Section 16 interest is payable irrespective of any agreement to the contrary, and can be claimed with the principal.
“Registration after the dispute is enough.”
Courts look at whether the supplier was registered on the date of the contract. Register early.
“I should still use MSME Samadhaan.”
New cases must be filed on the MSME ODR portal since 15 October 2025.
The route our MSME lawyers in Delhi follow — see also our guide on late payment interest and MSME rights explained.
Udyam certificate, purchase order, invoices, delivery proof, ledger and correspondence.
Demand principal plus Section 16 interest and fix a 15-day compliance window.
Statement of claim on odr.msme.gov.in, followed by conciliation by the MSEFC.
Arbitral award, defence against Section 19 challenges and execution against assets.
| Category | Investment up to | Turnover up to |
|---|---|---|
| Micro | ₹2.5 crore | ₹10 crore |
| Small | ₹25 crore | ₹100 crore |
| Medium | ₹125 crore | ₹500 crore |
The Bill passed in August 2026 proposes Section 18A and a release mechanism of up to 50% of the Section 19 deposit while keeping the 75% rule. It applies only after the Government notifies it. Our team tracks the notification so your strategy stays current.
Global Vision Law Firm has 13+ years of practice and 1400+ cases handled and successfully executed. Our MSME desk pairs strategy and execution.
Leads MSME recovery strategy, arbitration and Supreme Court / High Court litigation for suppliers owed delayed payment by corporates and PSUs.
Handles MSEFC conciliation, ODR filings, award enforcement and recovery proceedings before tribunals and courts in Delhi.
The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is the central law that defines micro, small and medium enterprises, promotes their development and protects them against delayed payment by buyers. It came into force on 2 October 2006. Sections 15 to 19 are the payment-protection provisions that MSME suppliers rely on most.
Global Vision Law Firm is a Delhi law firm that handles MSME delayed-payment recovery before the MSME Facilitation Council (through the MSME ODR portal), the Delhi High Court and the Supreme Court. The MSME team is led by Adv. Amarendra Kumar Dubey (Founder and Managing Partner) and Adv. Kanhaiya Lal Mishra (Senior Associate), backed by 13+ years of practice and 1400+ cases handled and successfully executed.
Section 15 makes the buyer pay within the agreed period or 45 days. Section 16 adds compound interest with monthly rests at three times the RBI bank rate. Section 17 makes the buyer liable for the principal and that interest. Section 18 lets the supplier refer the dispute to the MSME Facilitation Council. Section 19 requires a buyer to deposit 75% of the award before challenging it in court.
A buyer must pay an MSE supplier on or before the agreed date, and the agreement cannot stretch this beyond 45 days from the day of acceptance or deemed acceptance of the goods or services. If there is no written agreement, payment is due within 15 days of acceptance.
Under Section 16 the buyer owes compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India, from the day after the due date. The interest is payable irrespective of any contrary term in the contract. Use the calculator on this page for an estimate.
A supplier that is a registered micro or small enterprise (Udyam registration) on the date of the contract can claim the Section 15 to 19 protection. Medium enterprises are covered by the development provisions but, in practice, the payment-protection regime is invoked by micro and small suppliers. Registration should exist before the supply contract is entered into.
Micro: investment up to ₹2.5 crore and turnover up to ₹10 crore. Small: investment up to ₹25 crore and turnover up to ₹100 crore. Medium: investment up to ₹125 crore and turnover up to ₹500 crore. Both investment and turnover limits must be met.
New cases are filed on the MSME Online Dispute Resolution (ODR) portal at odr.msme.gov.in, which has been mandatory for new filings since 15 October 2025. MSME Samadhaan no longer accepts new filings. The portal routes the matter to the MSME Facilitation Council for conciliation and then arbitration.
The MSMED (Amendment) Bill 2026 was passed by Parliament in August 2026 (Rajya Sabha on 3 August and Lok Sabha on 7 August). It takes effect only when notified by the Government. It proposes Section 18A and a mechanism for releasing up to 50% of the deposit while keeping the 75% pre-deposit rule. Check the notification status before relying on it.
You can file on the ODR portal yourself, but drafting the statement of claim, computing Section 16 interest, handling the 90-day conciliation and arbitration, defending Section 19 deposit challenges and executing the award are legal tasks where a specialist lawyer improves outcomes. Global Vision Law Firm's MSME lawyers in Delhi handle the full cycle.
The award is enforceable as a decree. We file execution proceedings, seek attachment of bank accounts and assets and, where facts support it, pursue parallel remedies such as a statutory demand under the IBC or a complaint of cheating or breach of trust under the Bharatiya Nyaya Sanhita (BNS Sections 318 and 316).
It is not a statutory pre-condition, but a well-drafted legal notice citing Sections 15 and 16 usually brings buyers to the table, fixes the due date and interest trail, and strengthens your claim record. We recommend sending one before filing.
Share your invoice details and get a callback. Global Vision Law Firm, M-3 Gupta Tower, Commercial Complex, Azadpur, Delhi 110033.
+91 95998 01188 · globalvisionlawoffice@gmail.com
Last updated: 10 October 2026. This page is general information and not legal advice.
It is a law created to support, promote, and protect Micro, Small, and Medium Enterprises in India.
To encourage business growth, ensure timely payments, and provide legal and financial support to MSMEs.
Businesses classified as Micro, Small, or Medium Enterprises based on investment and turnover.
Yes, registration helps businesses get legal benefits, financial support, and protection.
Yes, buyers must pay within the agreed period or within forty five days, otherwise interest applies.
Yes, they can file cases with the MSME Facilitation Council.
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