If a buyer has held up a Chennai micro or small supplier’s bill for more than 45 days, the law gives the supplier a direct route to the Micro and Small Enterprises Facilitation Council (MSEFC) for Chennai, one of four in Tamil Nadu. You file online on the central MSME Samadhaan portal, pay Rs 1,000 by demand draft at the District Industries Centre, and the council aims to settle the case within 90 days, according to the state Industries Commissionerate.
The interest the buyer owes is steep, which is often what brings them to the table. Here is how the process works and what to prepare.
The 45-day rule and the interest penalty
Sections 15 to 24 of the MSMED Act, 2006 deal with delayed payments. A buyer must pay a micro or small supplier within the agreed date, and that agreed date cannot be later than 45 days from accepting the goods or services. If the buyer misses it, compound interest with monthly rests becomes payable at three times the bank rate notified by the RBI, as the Office of the Development Commissioner (MSME) explains.
Since 1 April 2024 there is a tax angle too. Clause (h) of section 43B of the Income-tax Act, added by the Finance Act 2023, lets a buyer deduct a payable to a micro or small enterprise only in the year it is actually paid if it is paid late under section 15. That has pushed many larger Chennai firms to tighten their vendor payment cycles before 31 March.
Who can file and where
Any micro or small enterprise, manufacturing or services, with a valid Udyam Registration can file, per the state MSME department. Medium enterprises are not covered by this route. Tamil Nadu set up its four councils, for the Chennai, Coimbatore, Madurai and Tiruchirappalli regions, under a 2007 government order. A 2008 press release noted the Chennai council met at the Industries Commissioner’s office in Chepauk, with petitions then routed through the Regional Joint Director of Industries and Commerce at Guindy. The council can hear disputes with a buyer located anywhere in India.
Step by step
- Sign up on MSME Samadhaan with your Udyam number and file the complaint, listing each unpaid invoice, its date and the date of acceptance.
- Choose the Chennai council if your unit falls in its region.
- Pay Rs 1,000 by demand draft at the District Industries Centre.
- Submit two hard copy sets of everything you uploaded: purchase orders, invoices, delivery challans or acceptance proof, ledger extracts and any correspondence demanding payment.
- Allow 15 days for a direct settlement. The buyer and supplier first get a chance to settle between themselves.
- Council stage. Unsettled complaints become cases. The council conciliates and, if that fails, arbitrates, with a 90-day target.
Preparing a strong case
Most disputes are won or lost on paperwork. Before filing, make sure you can show three things for every invoice: that the buyer ordered the goods or service, that they accepted delivery, and the date of acceptance, because the 45-day clock runs from that date. A signed delivery challan, goods receipt note or an email acknowledging completion of a service all help.
- Your Udyam Registration must have been valid when you supplied the goods or services, so keep a copy of the certificate showing its date.
- Work out the interest claim separately for each invoice, from the due date to the date of filing.
- Keep copies of reminders you sent; they show the buyer knew the amount was due.
If the buyer challenges the award
A buyer who wants a court to set aside the council’s award must first deposit 75% of the award amount, under the MSMED Act. This rule discourages appeals filed just to buy time.
How big the problem is
A Lok Sabha reply of 25 July 2024 put the national figure at 89,810 pending applications on Samadhaan, involving Rs 21,583.7 crore, filed between October 2017 and 22 July 2024. The same reply counted 159 MSEFCs across the country, with Tamil Nadu among the states that have more than one. A state-wise split was not given.
| Period | Pending cases | Amount (Rs crore) |
|---|---|---|
| 2021-22 | 13,228 | 3,681.18 |
| 2022-23 | 14,902 | 3,746.11 |
| 2023-24 | 31,194 | 5,335.20 |
Quick answers
Can a trader use MSEFC?
The route is for micro and small enterprises with valid Udyam Registration in manufacturing or services. Check your Udyam classification before filing.
What is the fee?
Rs 1,000 by demand draft at the District Industries Centre, as listed by the state.
How long does it take?
Fifteen days for direct settlement, then a 90-day target for the council.
Does the buyer have to pay interest?
Yes. Compound interest at three times the RBI bank rate, with monthly rests, from the due date.
For disputed contracts, take advice from a lawyer before filing.
Information checked against official sources on 18 October 2026. Fees, dates and rules can change; confirm on the linked official pages before acting.
Sources
- MSE Facilitation Councils (Commissionerate of Industries and Commerce, Tamil Nadu)
- MSEFC page (MSME Department, Government of Tamil Nadu)
- Legal framework for MSMEs (Office of DC MSME)
- MSME Samadhaan portal (Ministry of MSME)
- Lok Sabha Unstarred Question 564, 25 July 2024 (Ministry of MSME)
- Section 43B, Income-tax Act (Income Tax Department)
- MSEFC Chennai sitting, press release No. 910, October 2008 (Government of Tamil Nadu)
