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Section 17: Recovery of amount due

Micro, Small and Medium Enterprises Development Act, 2006 • Official Statutory Text & Practice Guide

MSME Law
3x Compound Interest
MSEFC Facilitation Council
Act 27 of 2006
Section 16 All 32 Sections of MSMED Act Section 18
Statutory Defined Terms in this Section: (Click any term for official legal definition)
Buyer Sec 2 Supplier Sec 2

Legal Commentary & Landmark Judgments: Section 17

Section 17 of the MSMED Act establishes the statutory right of the supplier to recover the principal amount along with compound interest calculated under Section 16 from the defaulting buyer.

  • Statutory Rights & Obligations: Section 17 crystallizes the buyer's payment obligation into an enforceable statutory debt.
  • Core Legal Standard: It specifies that for any goods supplied or services rendered, the buyer remains liable to pay the full price together with interest accrued under Section 16.

This provision links the substantive duty in Section 15 and the interest calculation in Section 16 to the recovery mechanism under Section 18, ensuring that both principal and compound interest form an indivisible statutory claim that can be submitted to the Micro and Small Enterprises Facilitation Council.

Key Landmark Precedents:
  • Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd. (2023) 6 SCC 401: The Supreme Court observed that Section 17 provides a statutory cause of action enabling suppliers to recover both the principal claim and accrued statutory interest as a unified statutory debt through the specialized forum established under the Act.
Legal Commentary:

By defining the buyer's liability as a composite debt encompassing both goods/services and mandatory compound interest, Section 17 ensures that partial payments made by buyers are adjusted first towards accrued statutory interest and costs before the principal is reduced, preventing strategic partial settlements designed to avoid compounding.

Section 16 All 32 Sections of MSMED Act Section 18