23 May 2015
Hi, One of my client is unable to recover his dues for materials sold to the company from past 8 Months. The Company from his money is due is a Limited company Called Energo India Ltd.
My Client is a MSME firm.
I would like to understand what are the steps that can be taken against the company.
What would be the primary steps. My Client has already sent several emails as reminders to the company and had several tele-con.
The materials were supplied to another party. Can we approach the party where the material is installed for the payments.
What is the legal course of action.
Can we send letters at the Managements personal addresses.
20 July 2025
Hey Saket, I see your client’s in a tough spot trying to recover dues from Energo India Ltd. Here’s a clear step-by-step approach and legal options you can consider for recovery from a limited company, especially for an MSME supplier:
1. Primary Steps Before Legal Action Formal Demand Letter: Send a legal notice/demand letter on a lawyer’s letterhead addressed to the company’s registered office. This is a formal reminder with a clear timeline for payment. Follow-Up Calls & Emails: Keep records of all communications (emails, calls, reminders). This will help in legal proceedings. Check Contract & Payment Terms: Review the sales contract or purchase order for any specific clauses about payments, penalties, or dispute resolution. 2. Can you approach the party where the material was installed? Typically, you cannot demand payment from a third party unless they have directly contracted with your client or agreed to pay. However, if the buyer has passed the material to another party without payment, your client might explore a “claim for lien” or “unpaid seller’s right” if applicable, but that’s complex and depends on contract terms. 3. Legal Course of Action Micro, Small and Medium Enterprises Facilitation Act, 2006 (MSME Act): Since your client is an MSME, you can initiate a claim under this act for recovery of dues within 45 days from the date of payment becoming overdue. File a Suit for Recovery in Civil Court: If the amount is above the threshold, file a civil suit for recovery of dues. Insolvency & Bankruptcy Code (IBC), 2016: If the amount is ₹1 lakh or more and payment is overdue by 90 days, MSMEs can initiate insolvency proceedings against the company. 4. Sending Letters to Management’s Personal Addresses Yes, you can send letters to personal addresses, but be cautious and professional. This might help in getting attention but won’t legally bind the management personally unless they have given personal guarantees. 5. Other Non-Legal Measures Mediation/Arbitration: If the contract has an arbitration clause, pursue arbitration for faster resolution. Approach Industry Bodies or Chambers of Commerce: Sometimes, industry bodies can mediate and help in recovery.