MSME Samadhaan and the Facilitation Council: How to Recover Unpaid Dues

Who can file, and where

Any micro or small enterprise with a valid Udyam registration and a payment overdue beyond the Section 15 limit may refer the dispute to the Micro and Small Enterprise Facilitation Council of the State where the supplier is located.

Filing is through the MSME Samadhaan portal, online and free. You upload the Udyam certificate, the invoices, proof of delivery or acceptance, and any correspondence. The buyer is notified and given an opportunity to respond.

Conciliation, then arbitration

The Council first attempts conciliation under the Arbitration and Conciliation Act 1996. If that fails, it either takes up the dispute itself as arbitrator or refers it to an institution providing alternate dispute resolution — and in doing so it is treated as though the parties had an arbitration agreement, even where none exists.

That deeming provision is the mechanism's real strength: a buyer cannot resist arbitration on the ground that no arbitration clause was agreed.

Timelines

Section 18(5) requires a reference to be decided within ninety days of its making. In practice, Councils vary considerably in how closely that is observed, and backlogs in the larger industrial States are well documented.

The timeline is nonetheless useful in negotiation, because a buyer facing a ninety-day statutory clock and a mandatory deposit on appeal has a weaker position than one facing an ordinary civil suit.

The 75 per cent deposit

Section 19 provides that no application to set aside an award shall be entertained unless the buyer deposits seventy-five per cent of the amount awarded. The Court may order interim release of part of it to the supplier pending disposal.

This is the provision that makes the route worth pursuing. An ordinary money decree can be appealed with no payment; an MSEFC award cannot be challenged without most of the money being put up first.

Frequently asked questions

### Is there a fee to file on MSME Samadhaan?

No. Filing a reference through the portal is free. Costs may arise later if the matter proceeds to arbitration before an institution, but the initial reference and the conciliation stage carry no fee.

### Can a medium enterprise file with the MSEFC?

No. Section 18 is available to micro and small enterprises. Medium enterprises must pursue ordinary civil or arbitral remedies under their contract.

### What if there is no arbitration clause in the contract?

It does not matter. Section 18(3) deems the reference to be made under an arbitration agreement for the purposes of the Arbitration and Conciliation Act, so the buyer cannot object on the ground that arbitration was never agreed.

### How long does an MSEFC case take?

The statute requires decision within ninety days of reference. Actual timelines vary significantly by State and by the backlog of the particular Council, and the ninety-day period is frequently exceeded in practice.