Enforcement in India · Choosing the route

How to recover business dues in India: seven routes compared

Shraddha Rathod · Published 4 November 2026 · Guide · 8 min read

Head of B2B Collections, Kenstone Capital

B.Com, LL.B; PG Diploma in Cyber Law and Forensics, NLSIU Bengaluru · Profile

In one sentence

To recover an unpaid business invoice in India you can use a collection agency, a demand notice, MSME Samadhaan, a Section 138 complaint, a commercial suit, arbitration or a Section 9 insolvency petition. Which one fits depends on the amount, the documents you hold, whether a cheque bounced, whether you are a registered micro or small supplier, and whether the debt is disputed.

Key takeaways

Start with the least expensive route the evidence supports. A demand notice comes before almost every legal route, and many accounts settle at that point.
MSME Samadhaan is open only to micro and small suppliers registered on Udyam at the time of supply. A buyer challenging the Council's award must first deposit 75% of it.
Section 138 applies only where a cheque has bounced, and its deadlines are strict: notice within 30 days of the bank's return memo, 15 days for the drawer to pay, and the complaint within one month after that.
IBC Section 9 is not a collection tool. It needs a default of ₹1 crore or more, fails on a genuine pre-existing dispute, and starts an insolvency process for every creditor.
A commercial suit of ₹3 lakh or more must go through pre-institution mediation under Section 12A first, unless it seeks urgent interim relief.

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The routes side by side

Each route below has its own guide. The table shows when each one fits, the condition it needs, the clock it runs on, who decides it and how the cost is made up. It does not show fee amounts, because they depend on the claim.

Route	When it fits	Threshold or condition	Statutory clock	Who runs it	Cost structure
Collection agency	The debtor is still operating, the claim is documented and the relationship may be worth keeping.	No minimum amount.	None of its own; the claim must be within limitation, generally three years.	The agency, on your mandate.	A success fee on amounts received, at Kenstone Capital.
Demand notice	Before any suit or petition. A notice that sets out the claim and what follows often settles it.	Any amount.	The date the notice sets. Section 138 and Section 8 IBC notices carry statutory periods.	An advocate.	The advocate's fee.
MSME Samadhaan	You are a micro or small supplier, and the buyer has not paid within the agreed period or 45 days.	Udyam registration at the time of supply.	The Council is to decide within 90 days of the reference.	The state's Micro and Small Enterprises Facilitation Council: conciliation, then arbitration.	An application on the government portal.
Section 138 complaint	A cheque given for the debt was returned unpaid.	The cheque was presented within its three-month validity.	Notice within 30 days of the return memo; 15 days to pay; complaint within one month after that.	A magistrate, on a criminal complaint filed by your advocate.	The advocate's fee and court fee.
Commercial suit	A documented claim against a debtor with reachable assets, and no arbitration clause.	₹3 lakh or more for the commercial courts; pre-institution mediation first, unless urgent interim relief is sought.	Mediation within three months, extendable by two. The suit must be filed within limitation.	The commercial court, through your advocate. A summary suit under Order 37 suits written claims.	The advocate's fee and court fees, which vary by state and claim value.
Arbitration	The contract has an arbitration clause.	A written arbitration agreement.	The award is due within 12 months of the pleadings closing, extendable by six months by consent.	The arbitrator, or an arbitral institution.	The arbitrator's fee and the advocate's fee.
IBC Section 9	A large, undisputed operational debt owed by a company that would rather pay than lose control.	Default of ₹1 crore or more; no genuine dispute that existed before the demand notice.	After the Section 8 notice, the debtor has 10 days to pay or show a dispute.	The National Company Law Tribunal, through your advocate.	The advocate's fee and the tribunal fee.

Which route fits your claim?

Answer these in order. The first that applies usually decides the route.

Is the claim older than three years? Check limitation first, with the limitation period calculator. Unless the debtor acknowledged the debt in writing or paid part of it within the period, most legal routes may be closed.
Did a cheque bounce? The Section 138 clock starts on the bank's return memo. Diary the 30-day notice deadline before anything else.
Are you a registered micro or small supplier? MSME Samadhaan brings statutory interest and the 75% deposit rule, which make most buyers settle.
Does the contract have an arbitration clause? Then arbitration is the forum. A court suit can be referred back to it.
Is the debt ₹1 crore or more, and genuinely undisputed? Section 9 is available, but only use it if you accept that it starts insolvency, not collection.
Is the debtor still operating, and the claim documented? Structured collection and a demand notice usually come first, and are the least expensive.

Can routes run together?

Some can. A Section 138 complaint and a civil suit for the same debt are separate remedies and can run side by side. Collection work can continue while a notice period runs, and most legal routes settle during the process, not at the end of it. Others exclude each other: a valid arbitration clause takes the dispute out of the civil courts, and once a Section 9 petition is admitted, a moratorium stops individual recovery against the company.

What no route does

No route guarantees payment. A decree or award is not money: it still has to be executed against assets the debtor has. A genuine dispute slows every route and stops Section 9 altogether. And a debtor that has shut down with no assets is rarely worth a legal fee. Validating the debtor before choosing a route saves more money than any procedural choice.

Where Kenstone Capital fits

Kenstone Capital runs the collection route itself, on a success fee, and builds the file every legal route needs: invoices, delivery proof, acknowledgements, promises and disputes, on record. When a legal route fits, we assess it case by case and act only on your written approval. The legal work is done by independent advocates you engage, ordinarily TrueNorth Legal Partners, which is associated with the Kenstone group, or your own counsel. Kenstone Capital is not a law firm. See Recover dues and Enforce.

Sources and regulation

Instrument	What it does	Source
Negotiable Instruments Act, 1881 — Sections 138 and 142	Dishonoured cheques; notice, payment window and filing period	indiacode.nic.in
MSMED Act, 2006 — Sections 15–19	Payment within 45 days; compound interest; Facilitation Council; 75% deposit on challenge	msme.gov.in
Commercial Courts Act, 2015 — Sections 2(1)(i), 12A	Specified value of ₹3 lakh; pre-institution mediation	indiacode.nic.in
Code of Civil Procedure, 1908 — Order 37	Summary suits on written claims	indiacode.nic.in
Arbitration and Conciliation Act, 1996 — Sections 21, 29A and 36	Start of arbitration; time limit for the award; enforcement	indiacode.nic.in
Insolvency and Bankruptcy Code, 2016 — Sections 8 and 9	Operational creditor's demand notice and petition	ibbi.gov.in
MCA notification S.O. 1205(E), 24 March 2020	Minimum default of ₹1 crore	mca.gov.in
Limitation Act, 1963 — Sections 18 and 19, and the Schedule	Three years for most money claims; acknowledgement and part-payment	indiacode.nic.in
Patil Automation v. Rakheja Engineers (Supreme Court, 2022)	Section 12A mediation is mandatory	sci.gov.in
Mobilox Innovations v. Kirusa Software (Supreme Court, 2017)	A pre-existing dispute bars a Section 9 petition	sci.gov.in

Thresholds, limitation periods and procedures change. This guide describes the position as generally understood at the time of writing; it is not legal advice. For a specific claim, take advice from an advocate.

If this is your situation: you have an unpaid invoice and are not sure which route to take.

How enforcement works

Questions people ask

What is the fastest way to recover money from a company in India?

There is no single fastest route. On a documented, undisputed claim against a debtor that is still operating, structured follow-up and a demand notice settle most accounts without going to court. Where the debtor will not pay, MSME Samadhaan, for registered micro and small suppliers, and arbitration are usually quicker than a contested civil suit.

Can I file a Section 138 case and a civil suit together?

Yes. A Section 138 complaint is a criminal remedy for the bounced cheque, and a suit is a civil remedy for the debt. They are separate proceedings and can run at the same time.

What is the minimum amount for an IBC Section 9 petition?

A default of ₹1 crore or more, under the government notification of 24 March 2020. The petition also fails if the debtor shows a genuine dispute that existed before the demand notice.

Is mediation mandatory before a commercial suit?

Yes, for a suit under the Commercial Courts Act that does not seek urgent interim relief. Section 12A requires pre-institution mediation first, and the Supreme Court has held the requirement mandatory.

How long do I have to recover an unpaid invoice?

Generally three years under the Limitation Act. A written acknowledgement of the debt signed by the debtor, or a part-payment, made before the period runs out starts a fresh period.

Discuss your receivables

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