From Dispute To Default: A Multi-Regime Analysis Of MSME Payment Enforcement In India
Sharad Shandillya, PhD Scholar, Sushant University
Dr. Himadri S. Dey, Assistant Professor, Sushant University, Gurugram
Dr Sachin Datt, Associate Professor, Sushant University, Gurugram
ABSTRACT
Micro, Small, and Medium Enterprises (MSMEs) in India frequently experience delayed payments, which strain their cash flow and increase their reliance on legal remedies. This paper briefly examines the interaction among civil, criminal, and fiscal laws in the enforcement of payments, focusing on the MSMED Act, the Arbitration and Conciliation Act, the Negotiable Instruments Act, the Income-tax Act, and the Central Goods and Services Tax Act.
Legal practitioners note that civil and arbitral systems handle non-payment via adjudication, while criminal and fiscal systems may label it as a default even without disputes. This difference creates procedural overlaps, adds complexity, and worsens systemic inefficiencies. As a result, processes often become confused and take longer. (Pimpalkhare, 2025)
This article says the main problem with getting small and medium-sized businesses to pay their debts is that the rules are spread across civil, criminal, and tax laws. To fix this, the article suggests building a single, flexible system to handle disputes fairly and efficiently. This new system would tell real disputes apart from cases where someone is just trying to avoid paying. It would also make procedures more consistent and reduce the need for businesses to use multiple courts. The aim is a debt collection process that is both effective and fair for small and medium-sized businesses, offering a more tailored approach to addressing these issues.
Keywords: MSMEs, Delayed payments, Payment enforcement, MSMED Act, Cheque dishonour, Section 43B(h), Legal fragmentation, India
