An MSME supplies goods worth few lakhs to a buyer. The invoices get overdue. Buyer takes countless calls and issues a cheque finally. Supplier deposits it, thinking all is fine now. Bank returns the cheque few days later unpaid. Now does the trader file a cheque bounce complaint, MSME Samadhaan complaint or both? Cannot MSMEs avail only one remedy? The remedies available under cheque bounce laws and MSME Samadhaan can arise out of the same default in payment of commercial debt, but serve two distinct legal purposes. Section 138 of NI Act, 1881 punishes the dishonour of a cheque issued for discharge, in whole or in part, of a debt or liability. MSMED Act, 2006 on the other hand enshrines a statutory delayed-payment mechanism for qualifying micro and small suppliers. A supplier should not feel forced to give up pursuing one deadline because he has already initiated the other. Section 138 comes with its own stringent notice & complaint deadline. MSEFC reference has its own statutory procedure to follow. This distinction matters particularly when the amount involved is large, there are multiple invoices, interest is accrued or the buyer challenges the supply itself. Advocate BK Singh from MSME Lawyers can review the cheque, invoices, purchase orders, delivery notes, ledger and MSME certificate together and guide the business owner on how these remedies can be coordinated. Delayed payments can be more than figures on an accountant’s spreadsheet for small businesses. A defaulting buyer can impact salaries, GST payments, vendor payments, working capital and new orders. The stakes are raised if the buyer’s cheque is dishonoured. Not only do you now have two distinct legal issues (the commercial recovery of dues and the legal position resulting from the bounced cheque) but… If you are a business based out of Delhi NCR, Noida, Ghaziabad, Gurugram, Faridabad, Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Kolkata or any other business hub, the forum to which these disputes are brought could also vary depending on the route you decide to take. While the Civil Procedure Code dictates which courts have jurisdiction to hear civil matters in India, Section 142 of the NI Act specifically prescribes the court competent to entertain a Section 138 case. BK Singh Advocate typically begins dealing with such a file by understanding what each remedy provides as opposed to viewing every outstanding invoice as part of the same process. The most basic explanation of the difference would go like this: MSME Samadhaan deals with delayed payment for business transactions, whereas Section 138 deals with the dishonour of a “qualifying cheque.” Let’s say a micro-enterprise sold engineering components worth Rs.12 lakh. The buyer accepted delivery but did not make payment against the invoices raised. Much later issued a cheque in the amount of Rs.10 lakh which got dishonoured. The underlying delayed-payment claim of the supplier may be covered under the MSMED Act if all statutory criteria are fulfilled. Independently, the dishonoured cheque may give rise to a cause of action for proceedings under Section 138 if all “ingredients” and timelines under that section are fulfilled. The fact that one proceeding is based on a civil cause of action and the other is a criminal offence should not convert one into the other merely because they arise from the same business dealing. The Supreme Court has acknowledged, in the general context of concurrent civil and criminal disputes, that civil and criminal courts can each have jurisdiction to entertain civil and criminal proceedings arising out of the same facts. But applying that overarching principle to the specific case of MSEFC and Section 138 proceedings being undertaken together would require a study of the facts involved. Each case cannot be resolved by laying down a hard and fast rule for all MSME-related disputes. That is also why Advocate BK Singh would first analyse the invoice debt, cheque liability and payment history before advising you on how concurrent proceedings might impact each other. Buyers defaulting on payments usually become an issue for manufacturers, traders falling within the definition, contractors, technology companies, service providers and other micro or small businesses which have provided goods or services on credit. Specifically, if: BK Singh may need to segregate the cheque amount from the larger claim for invoice amount so that your pleadings and payment calculations match up. Begin with the underlying commercial transaction. There should be identification of dates of purchase order & invoice, actual delivery/completion dates, terms agreed to including credit period and amount outstanding. For purposes of an MSMED Act claim, eligibility of the enterprise as a statutory “supplier” must also be reviewed. Then move to the cheque. Cheque number, date, amount, drawer, bank return memo and purpose for which cheque was issued should be lined up against the outstanding ledger. A cheque for Rs.5 lakh cannot be thrown casually into pleadings as evidence of an admitted Rs.15 lakh liability unless the supporting record evidences the relationship. Section 138 should be tracked separately for its statutory clock. Filing of an MSME claim does not automatically extend the NI Act notice period/complaint limitation. That is because Sections 138 and 142 each have their own statutory stipulations including period to file. On the delayed-payment side, if an eligible supplier considers filing MSME Samadhaan and representation and the ensuing MSEFC process, Conciliation could result in opportunity to settle the commercial dispute. If not resolved at that stage, Section 18 gives route to arbitration. Where money is paid or settlement reached in either proceeding, such development must be revealed and accounted for where legally necessary. A creditor cannot pursue parallel processes in order to collect upon the same principal debt twice. At this point, Advocate BK Singh may help reconcile figures, interest claim, cheque amount and any settlement terms so that one proceeding is not undermined by another. Maintain a single folder with all documents in chronological order: MSME Lawyers blog on MSME delayed payment recovery also lists record of Udyam registration, purchase order or work order, tax invoice, proof of delivery, ledger, emails as some of the crucial documents. Legal review becomes useful straightaway after receiving a cheque return memo and when the clock has started running on the 30 days notice period prescribed under Section 138. Advice may also be necessary where the buyer disputes the supply, alleges defective goods, denies accepting the services, states that cheque was only a security cheque from him, raises a counter claim against you or has made part payments to you. You should not wait for consultations just because negotiations seem to be going well. Negotiations and Statutory limitation period may not run parallel. Advocate BK Singh will look into whether Section 138, MSMED Act route,negotiation, settlement or an amalgamation of legal remedies is applicable on your documents and transaction. MSME Lawyers offers legal assistance when it comes to MSME cheque bounce, delayed payments to your business, disputes and related legal proceedings. Their website lists delayed-payment cases, Samadhaan claims, MSEFC complaints and cheque cases separately. Advocate BK Singh will be able to go over all the facts of your business transaction, right from the MSME certification, purchase order, invoices, proof of delivery, cheque issued, dishonour memo and correspondence, to the outstanding account ledger. If both remedies are legally available, taking parallel courses of action is not about filing more lawsuits. It is about ensuring that your legal positions are aligned, statutory timelines are not jeopardized and that payments or settlements are accurately accounted for. Advocate BK Singh can also evaluate the realistic merits of settling through conciliation, MSEFC complaint proceedings and the Section 138 proceeding beforehand if your business is facing a large unpaid invoice or cheque dishonour. Ans. Initiating a delayed-payment proceeding does not automatically extinguish a valid Section 138 remedy. Sections 138 and 15 have different statutory bases. Whether the two proceedings are maintainable and/or precluded must be assessed based on the facts of the transaction at issue and subsequent events. The broader SC position is that parallel civil and criminal remedies can be pursued in different forums. Ans. An MSME supplier should not assume that it does. Sections 138 and 142 contemplate their own notice and complaint periods. The MSMED limitation provision is separate and the statutory cheque-bounce timeline should be tracked independently. Ans. Yes, a cheque, return memo and supporting correspondence could be part of the commercial documentary evidence. Their value as evidence will depend on the facts, such as what liability the cheque was issued for and whether the cheque amount corresponds to outstanding invoices. Ans. Not necessarily. For delayed-payment relief under Chapter V, the definition of “supplier” in Section 2(n) limits coverage to micro or small enterprises and certain related parties. Every enterprise should evaluate MSEFC eligibility based on the statutory definition of supplier relevant to the transaction at issue. Ans. When and how a supplier receives payment are key facts. If the buyer makes payment anytime within the 15 days after service of the statutory notice, such timing would have specific legal consequences because Section 138 already allows the drawer 15 days from notice to make payment. Ans. Interest under MSMED Section 16 is a separate statutory framework that applies if its conditions are met. The interest amount should be computed based on the transaction facts, rather than as a simple addition to the cheque amount. Advocate BK Singh will evaluate the invoice dates, acceptance date and payment history prior to calculating the interest component. Ans. Under Section 18, where a settlement is not reached during conciliation, the Council may take up the dispute for arbitration itself, or refer the dispute to an institution or centre providing alternate dispute resolution services under Chapter VI of the Arbitration and Conciliation Act. The arbitration law would apply to such referrals as per the MSMED Act. Ans. That would depend on the facts and the nature of the underlying liability at the time the cheque was made payable. The label “security cheque” is not by itself dispositive. See also Q9, below. Ans. The MSME should calculate the total unpaid invoices versus the amount of the cheque. Advocate BK Singh will ensure that the MSEFC claim form and Section 138 Complaint are consistent with each other and explain any shortfall rather than raising contradictory amounts. Ans. Yes, parties can settle during pending proceedings. However, the settlement agreement should specifically address amounts paid (principal and interest), treatment of pending cases and obligations to withdraw or dispose of pending cases, etc. Default consequences should be spelled out. The impact of a settlement on each proceeding must be analyzed based on the settlement terms and governing law. Treat Cheque bounce and MSME Samadhaan remedies as two separate legal processes. Do not file them as alternative recovery notices. One can claim delayed payment and statutory interest from an eligible micro or small supplier under the MSMED Act, via the MSEFC process. One can separately claim a dishonoured cheque under Section 138 if all the statutory elements are met. The challenge isn’t realizing that there are two remedies available. The challenge is managing the amounts claimed, evidence compiled, timelines followed and settlement position across both claims. Advocate BK Singh can help you review the entire commercial record when there are significant business dues at stake. Don’t let a missed deadline or inconsistent pleading diminish the value of what would otherwise be a strong claim.How Do Cheque Bounce and MSME Samadhaan Remedies Work Together?
Why Does This Issue Matter for MSMEs Across India in 2026?
Quick Facts
Understanding the Core Legal Issue
Who needs help filing claims under both remedies?
How Do Cheque Bounce and MSME Samadhaan Proceedings Work Together Step by Step?
Documents and Evidence Required:
When Should You Consult a Lawyer?
How Can MSME Lawyers Assist With Both Courses of Action?
MSME Samadhaan (Frequently Asked Questions)
Q1. Can an MSME initiate both Section 138 case and MSME Samadhaan claim arising from one and the same transaction?
Q2. Does initiating on MSME Samadhaan toll the limitation period for Section 138?
Q3. Can a bounced cheque be produced as evidence before the MSEFC?
Q4. Is MSME Samadhaan available to all enterprises which have registered as MSMEs?
Q5. What if the buyer settles after Section 138 notice is served?
Q6. Can the MSME claim interest under Section 16 of the MSMED Act if the cheque was only for part (principal) of the amount due?
Q7. What if Conciliation attempt before MSEFC doesn’t work?
Q8. Can a buyer take the defence that the cheque given was only for security?
Q9. What if MSME sends a cheque which only covers part of the amounts invoiced and unpaid?
Q10. Can I settle even if both proceedings are ongoing?
Conclusion
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