Section 138 of the Negotiable Instruments Act, 1881 makes the dishonour of a cheque for insufficiency of funds an offence, provided the payee follows a strict sequence. A written demand must reach the drawer within thirty days of the bank’s return memo. The drawer then has fifteen days from receiving it to pay. If payment does not follow, the complaint must be filed within one month of that fifteen-day window closing.

Courts may order interim compensation of up to twenty per cent of the cheque amount under Section 143A, and the offence is compoundable — which is why most matters settle once proceedings are properly instituted.

What to bring us

The original cheque, the bank’s return memo, the underlying invoice or agreement, and any correspondence acknowledging the debt.

Under Sections 15 and 16 of the Micro, Small and Medium Enterprises Development Act, 2006, a buyer must pay a micro or small supplier within the agreed period, which cannot exceed forty-five days from acceptance of the goods or services. Beyond that, the buyer owes compound interest with monthly rests at three times the bank rate notified by the Reserve Bank.

The supplier may refer the dispute to the Micro and Small Enterprises Facilitation Council, usually through the MSME Samadhaan portal. The council attempts conciliation and, failing it, arbitrates; it is required to decide within ninety days of the reference. A buyer seeking to challenge an award must first deposit seventy-five per cent of the amount awarded (Section 19).

Where it applies

The supplier should hold Udyam registration as a micro or small enterprise — ideally before the contract was made. Our claim assessment estimates the statutory interest on your dues.

Estimate your interest →

Section 12A of the Commercial Courts Act, 2015 requires a plaintiff who does not seek urgent interim relief to first exhaust pre-institution mediation. The Supreme Court has held the requirement to be mandatory, and suits filed without it are liable to be rejected.

Handled well, this is an advantage rather than a delay. A prepared creditor — with documents in order, interest computed and terms ready — often settles at mediation, and a settlement reached there carries the force of an arbitral award.

How we prepare you

We assemble the claim file, compute the amount due with interest, set out a realistic settlement range and attend the mediation with you.

An operational creditor owed at least ₹1 crore by a company in default may issue a demand notice under Section 8 and, if the debt is neither paid nor genuinely disputed within ten days, apply to the National Company Law Tribunal under Section 9.

The route is powerful because admission places the debtor’s management in the hands of an insolvency professional. It is also unforgiving: a plausible pre-existing dispute defeats the application, and once insolvency begins, the creditor is one of many. We advise on it carefully, and only where the facts support it.

Under the Limitation Act, 1963, a suit for money due on goods sold or services rendered must ordinarily be filed within three years. But time does not always run from the invoice date. A written acknowledgment of the debt, signed by the debtor before the period expires, starts a fresh period (Section 18). So does a part-payment made within the period (Section 19).

Emails, ledger confirmations, balance-confirmation letters and even messages can qualify, depending on their content. Before writing off an old debt, send us everything the debtor has written to you — we will tell you honestly whether the claim survives.