If a client has not paid, you have three realistic routes: a written demand notice, a reference to the MSEFC if you were Udyam-registered before the contract, or a civil suit — often a summary suit under Order XXXVII of the Code of Civil Procedure, 1908. Which one is open to you depends on facts you fixed months ago, when the contract was made.
Send a written demand notice. It records the amount, the due date and a deadline to pay, and it is the document that starts interest running: under Section 3 of the Interest Act, 1978, a court may allow interest on a debt from the date of a written demand.
You do not need a lawyer to send one. No Indian law requires a pre-suit notice to be drafted or signed by an advocate, and none requires a notice at all before an ordinary breach-of-contract claim. It matters because it proves you asked, and because "I was never told" is the first defence a defaulting client reaches for.
If your contract states a rate, you can claim that rate as a contractual entitlement. If it is silent, you cannot simply pick a number: Section 3 of the Interest Act, 1978 caps pre-suit interest at the "current rate of interest", defined in Section 2(b) as the highest rate payable on scheduled-bank deposits, and leaves the award to the court.
This is the single cheapest thing to fix. A late-payment clause agreed before work starts converts interest from something a court may allow into something you are owed.
The Micro and Small Enterprises Facilitation Council hears delayed-payment references under Section 18 of the MSMED Act, 2006. It is attractive because no court fee is payable, Section 16 provides compound interest at three times the RBI bank rate, and under Section 19 a buyer challenging the resulting award must first deposit 75% of it.
The catch is timing. In Silpi Industries v. Kerala SRTC (2021), the Supreme Court held that a supplier must have been registered under the MSMED Act as on the date of entering into the contract to claim its benefits. Registering after a client stops paying does not make that contract eligible. Aspects of Section 18 remain contested before the courts, but this is the rule councils and courts have been applying, so treat it as the operating assumption.
The practical consequence is simple: Udyam registration is free and takes about ten minutes, and the right time to do it is before your next contract, not after a dispute.
No, not for an ordinary contract claim. The Indian Contract Act, 1872 requires no pre-suit notice between private parties. Notice is mandatory only in specific situations — Section 80 CPC for suits against the government, Section 138 of the Negotiable Instruments Act for a bounced cheque, Section 106 of the Transfer of Property Act for tenancy, Section 8 IBC for insolvency.
One step is mandatory for larger claims. Where the dispute is a commercial dispute of specified value (₹3 lakh and above), Section 12A of the Commercial Courts Act, 2015 requires pre-institution mediation before filing, unless you are seeking urgent interim relief. In Patil Automation v. Rakheja Engineers the Supreme Court held this is mandatory, and a plaint filed without it is liable to be rejected.
You need to show what was agreed, what you delivered, and that the client accepted it — each with a date. A signed agreement, dated submissions, and the client's own approvals carry far more weight than a WhatsApp thread reconstructed months later.
Electronic records are admissible, but they come with a formality: Section 63 of the Bharatiya Sakshya Adhiniyam, 2023 — the provision that replaced Section 65B of the Evidence Act — requires a certificate identifying the record, describing how it was produced, and giving particulars of the computer systems involved. Gather this while the relationship is still working, not after it breaks down.
Three years, under the Limitation Act, 1963. Which article applies depends on how you frame the claim: Article 18 governs a suit for the price of work done and runs from the date the work was done where no time for payment was fixed, while Article 55 governs compensation for breach of contract and runs from the date of the breach. Either way the period is three years, and it runs from an event in the past — not from when you gave up chasing.
Section 18 of the Act can extend that period: an acknowledgement of liability, in writing and signed by the client before the three years expire, starts a fresh period from the date of the acknowledgement. An email saying "I will clear it next month" is worth keeping for exactly this reason, though whether a given electronic message satisfies the signature requirement is fact-specific.
Yes. No Indian law requires a legal notice to be drafted or signed by an advocate. You can write and send one in your own name as a party to your own contract. An advocate's letterhead often prompts a faster response, but it is not a condition of validity.
The MSEFC route carries no court fee, which is its main attraction for small claims. A civil suit attracts court fees calculated on the amount claimed, which vary by state, plus advocate fees. A demand notice sent yourself costs nothing and resolves a large share of cases without escalation.
It can. Under the Indian Contract Act, 1872 an agreement is valid where there is offer, acceptance, lawful consideration, free consent and a lawful object — no particular form is required. The difficulty is evidentiary: proving what was agreed, when, and that neither side edited the record afterwards.