Recovery · Template
A large buyer's finance team pays the supplier who is expensive to ignore. A statutory notice under the MSMED Act is what makes you that supplier: it converts a polite follow-up into a documented claim carrying compound interest that the buyer cannot contract out of, and it is the step that comes before the facilitation council.
Quick Statutory Answer
When can I send an MSME non-payment notice? Once payment has passed the date agreed in writing, or 45 days from the day of acceptance or deemed acceptance where no date was agreed, under s. 15 of the MSMED Act, 2006. There is no requirement to wait longer, and the interest liability under s. 16 runs from the appointed day rather than from the date you complain.
The full text of this document as VidhiSar drafts it, with every blank shown in square brackets. Copy it or download it as a Word file and fill it in yourself — or answer a few questions and VidhiSar fills it in and prints a formatted PDF. Clauses that apply only in some cases are left out here; the drafting flow adds them when your answers call for them.
NOTICE DETAILS
Date: [Date of Notice]
To, [Defaulter Customer Name] [Defaulter Office Address]
Subject: Statutory Demand Notice for Immediate Payment of Outstanding Dues of Rs. [Outstanding Dues Amount] — Under Sections 15 & 16 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006
NOTICE
Dear Sir/Madam,
Under the instructions and on behalf of our client, [Your Business Name], a registered Micro/Small/Medium Enterprise holding Udyam Registration Number [Your MSME Udyam Registration Number], registered and operating under the provisions of the MSMED Act, 2006, we hereby serve upon you this Statutory Demand Notice as follows:
STATEMENT OF FACTS
1. Our client supplied and delivered goods/rendered services, specifically described as "[Brief description of goods/services provided]", under Invoice Number(s) [Pending Invoice Number] dated [Invoice Date], which were duly received and accepted by you.
2. As per the terms of engagement and in accordance with Section 15 of the MSMED Act, 2006, you were obligated to make payment of the outstanding sum of Rs. [Outstanding Dues Amount] within forty-five (45) days of the date of acceptance or deemed acceptance of the aforesaid goods/services.
3. Despite the due date having long elapsed, and despite repeated oral and written reminders, you have willfully, negligently, and without any lawful justification failed and refused to make the payment of the said dues.
4. Under Section 16 of the MSMED Act, 2006, you are now statutorily liable to pay compound interest with monthly rests on the outstanding principal amount at three (3) times the bank rate as notified by the Reserve Bank of India from the date the payment became due.
LEGAL DEMAND
TAKE NOTICE THAT you are hereby called upon to pay the entire outstanding principal amount of Rs. [Outstanding Dues Amount] together with all statutory interest accrued to the date of payment, within fifteen (15) days of receipt of this Notice.
TAKE FURTHER NOTICE THAT in the event of your failure or neglect to make such payment within the stipulated period, our client shall, without further notice to you, initiate proceedings before the Micro and Small Enterprises Facilitation Council (MSEFC) having jurisdiction, and/or approach the appropriate court of law for recovery of the said amount together with interest, costs, and such other reliefs as may be deemed fit.
EXECUTION
Yours faithfully, For and on behalf of [Your Business Name]
Authorised Signatory
What the law behind this document actually requires.
| Essential Clause | Legal Purpose & Protection | Governing Law / Benchmark |
|---|---|---|
| Your Udyam registration number | The whole remedy rests on registered micro or small status. State the number in the notice so the buyer cannot open by disputing standing. | MSMED Act, 2006 — s. 15 |
| Invoice-level particulars | Number, date, amount and what was supplied against each. A lump-sum demand is easy to query and slow to reconcile. | MSMED Act, 2006 — s. 16 |
| The date acceptance occurred | This is what starts the clock under s. 15. Identify it explicitly rather than leaving the buyer to infer it from the invoice date. | MSMED Act, 2006 — ss. 18–19 |
| The interest computation | Show the basis — compound interest, monthly rests, three times the RBI bank rate — with the rate you have applied and the date from which it runs, so the figure can be checked rather than argued about. | MSMED Act, 2006 — s. 15 |
| A clear payment deadline | A demand without a date is a reminder. Give a specific date and state what follows it. | MSMED Act, 2006 — s. 16 |
| Reference to the facilitation council | Naming the next step under the Act is what changes the buyer's calculation, because a council reference is an actual forum rather than a threat. | MSMED Act, 2006 — ss. 18–19 |
Once payment has passed the date agreed in writing, or 45 days from the day of acceptance or deemed acceptance where no date was agreed, under s. 15 of the MSMED Act, 2006. There is no requirement to wait longer, and the interest liability under s. 16 runs from the appointed day rather than from the date you complain.
Section 16 of the MSMED Act, 2006 provides for compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India. Because the rate is the notified bank rate at the relevant time, the computation should state the rate applied and the period, so the buyer can verify it. Confirm the current notified rate before issuing the notice.
No. Section 15 caps the period the parties may agree, and s. 16 states that the interest liability applies notwithstanding anything contained in any agreement. A contractual 90-day term does not displace either.
The dispute may be referred to the Micro and Small Enterprises Facilitation Council under s. 18, which conducts conciliation and, failing settlement, arbitration. The statutory notice is the step that establishes the claim and the accrual date before that reference.
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