RM Legal acts for businesses in disputes arising from contracts, supply and service arrangements, and business relationships, and in recovering unpaid dues. We advise on which route fits the dispute and the client's commercial position, whether that is negotiation, mediation, arbitration, a commercial suit or a statutory remedy. Many disputes are settled before formal proceedings begin.
Our work includes:
Under the Micro, Small and Medium Enterprises Development Act, 2006, a buyer must pay a micro or small enterprise supplier within the agreed period, which cannot exceed 45 days. Delayed payments attract compound interest at three times the bank rate notified by the Reserve Bank of India. The supplier can refer the claim to the Micro and Small Enterprise Facilitation Council, which conducts conciliation and, if that fails, arbitration. A buyer that wishes to challenge the Council's award must first deposit 75% of the amount awarded. The supplier must be registered as a micro or small enterprise, and the timing of registration can affect the claim.
An arbitral award must ordinarily be made within 12 months of the completion of pleadings, extendable by six months with the parties' consent and further only by the court. An award can be challenged only on limited grounds, within three months of receipt, extendable by up to 30 days. Filing a challenge does not automatically stay enforcement of the award.
If a cheque is dishonoured, a demand notice must be sent within 30 days of receiving information of the dishonour. If payment is not made within 15 days of receipt of the notice, a complaint can be filed within one month after that. These time limits are strict.
An operational creditor can apply to the National Company Law Tribunal against a corporate debtor for a default of ₹1 crore or more. Insolvency proceedings are not a substitute for a recovery suit, and an application is likely to fail where there is a genuine pre-existing dispute about the debt.
Trade credit disputes are common in Surat's textile and diamond trades, often involving long credit periods, brokers and informal documentation. In these disputes, invoices, delivery records, ledger confirmations and broker communications are frequently the most important evidence.
How long does it take to recover unpaid dues?
It depends on the route and the other side's response. Many claims are resolved after a legal notice or in mediation, while contested suits and arbitrations take longer.
Is mediation compulsory before filing a commercial suit?
Yes, for commercial disputes of ₹3 lakh and above, unless the suit seeks urgent interim relief.
Can an MSME supplier claim interest on delayed payments?
Yes. A micro or small enterprise supplier is entitled to compound interest at three times the bank rate notified by the RBI, and can refer the claim to the Facilitation Council.
Our contract has an arbitration clause. Can we still go to court?
Generally, the dispute must be referred to arbitration. Courts can still grant interim relief and assist the arbitration, for example by appointing an arbitrator.
Can a dishonoured cheque be the basis for both a criminal complaint and a civil claim?
Yes. A complaint under section 138 of the Negotiable Instruments Act, 1881 and a civil recovery claim can proceed alongside each other.
Should we file for insolvency against a company that owes us money?
Only in appropriate cases. The default must be ₹1 crore or more, and there should be no genuine pre-existing dispute about the debt. Insolvency affects all creditors and is not a debt-collection tool.
Reviewed by Richa M. Goyal, Managing Partner. Last reviewed: October 2026.