In short. Once the council's award reaches both sides, a clock starts. The buyer gets three months to challenge it (a court can add up to 30 days for sufficient cause), and it can't be heard at all unless it first deposits 75 percent of the awarded amount under Section 19 of the MSMED Act. No challenge? Then the supplier executes the award like a court decree. This guide is for suppliers holding an award and buyers facing one. Execution can take months. Write down today the date the signed award reached you.
Is this your situation?
- The council ruled for you weeks ago. The buyer hasn't paid a rupee, and its accounts team has stopped answering.
- You're on the buyer's side, the award has landed on your desk, and the CFO wants to know how much cash a challenge will lock up.
- The buyer has filed a challenge, and you'd like some of the money released now instead of in two years.
- You've lost track of whether the three months are over, so you don't know if you can file execution yet.
- The buyer is in another state. Its bank accounts and its plant are nowhere near your district.
- The buyer is a government department or a PSU, and someone there keeps saying payment needs budget approval.
- Somebody at your trade association mentioned the 2026 amendment, and you want to know if it touches your award.
What happens after an MSME council award? The short answer
Winning before the council gets you halfway. That's all. Once the award is signed and delivered, there's a three-month wait during which the buyer can go to court and ask for the award to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996. If the buyer does nothing in that time, the award becomes enforceable as though it were a civil court decree, and you file an execution petition. If the buyer does challenge, it has to deposit 75 percent of the awarded amount in court first. That one rule, in Section 19 of the MSMED Act, 2006, is why a council award is worth so much more to a supplier than an ordinary arbitral award.
In our experience, buyers react to an award in one of three ways. Some pay, usually after haggling over the interest. Some challenge it and put the deposit in, which at least brings most of the money within your reach. And some sit tight and wait for you to come after them. We'll go through each of these below, and what you should be doing while you wait. We won't cover the grounds a buyer can use to attack the award. Those are in our companion post, Can a buyer challenge an MSME council award?
What a council award actually is, legally
If conciliation fails, Section 18(3) of the MSMED Act says the council either arbitrates the dispute itself or sends it to an institution. It also says the Arbitration and Conciliation Act applies as if the parties had signed an arbitration agreement. So the council's final decision is an arbitral award, full stop. Under Section 31 of the Arbitration Act it has to be in writing, signed, reasoned and delivered to each party.
Two practical things follow from that. The date that counts is the date each side actually receives the signed award. Not the date typed on it. Councils often send awards by speed post, and the India Post tracking page then becomes your evidence of when the challenge period started. Second, if the dispute settled during conciliation, the settlement signed before the council has the same status and effect as an arbitral award under Section 74. It's enforced the same way. And frankly, those tend to get paid faster, because the buyer already agreed the figure.
Read the operative part the day it arrives. It should give the principal, interest up to the award date, the rate and basis of interest after the award, and costs if any. Spot a typing or arithmetic slip? Section 33 lets either side ask for a correction within 30 days of receipt. Leave it alone and it may turn into the buyer's favourite argument later.
After the award: how the months usually run
| Stage | What happens | Usual time | Money you should expect to spend |
|---|---|---|---|
| Signed award delivered | The council posts or hands over signed copies; write down the date you got yours | A few days to a few weeks after signing | Nothing, unless you need certified copies |
| Correction request (Section 33) | Either side asks the council to fix errors | Within 30 days of receipt | Nothing, or close to it |
| Challenge window (Section 34(3)) | The buyer can apply to set the award aside; the court may allow 30 more days for sufficient cause, never more | 3 months from receipt, plus up to 30 days | For the buyer: court fee plus the 75 percent deposit |
| Supplier's release application (Section 19 proviso) | You ask the court to pay part of the deposit out to you | Usually at the first or second hearing of the challenge | Drafting by your lawyer; sometimes security or an undertaking |
| Execution petition (Section 36 and Order XXI CPC) | You ask the court to attach the buyer's accounts or property | Once the window closes with no challenge, or after a challenge fails | Execution court fee is small in most states; check the current schedule |
| Execution hearings | Notice to the buyer, asset disclosure, attachment, payout | Often 3 to 12 months; the Supreme Court has said executions should ordinarily be decided within six months | Process fees and attachment costs |
Can you enforce the award straight away?
No. Section 36(1) of the Arbitration Act only allows enforcement after the time for a Section 34 application has run out, or after such an application has been refused. That time is three months from the day the buyer received the signed award. The court can stretch it by up to 30 days, but only if the buyer shows sufficient cause. In Union of India v. Popular Construction Co. (2001), the Supreme Court said Section 5 of the Limitation Act can't be used to go further. Day 121 is too late. Whatever the excuse.
Don't waste those three months. Use them to find out where the buyer's money and property are, to put the execution papers together and, if you'd rather be paid without a fight, to talk. A buyer who knows it'll have to put 75 percent in court just to be heard is often more open to settling in this window than at any later point.
Since the 2015 amendment, filing a Section 34 petition doesn't automatically freeze enforcement. The buyer has to make a separate stay application under Section 36(2), and under Section 36(3) the court can grant a stay on conditions. For a money award that usually means securing the amount. In MSME matters the Section 19 deposit already does most of that job. For how stay applications go in ordinary arbitrations, see our post on getting a stay against enforcement of an arbitral award.
The 75 percent deposit under Section 19: what the law actually says
Section 19, MSMED Act, 2006
A court can't entertain an application to set aside a decree, award or other order of the council (or of the institution the council referred the case to) unless the applicant, if it isn't the supplier, has deposited 75 percent of the amount under that decree, award or order, in whatever manner the court directs. While the application is pending, the court has to order that a share of the deposit it thinks reasonable be paid to the supplier, on any conditions it considers necessary.
Goodyear (India) Ltd v. Norton Intech Rubbers (Supreme Court, 2012)
The deposit is mandatory. The buyer can't get its challenge heard by offering some other kind of security, or by saying the award is obviously wrong.
Gujarat State Disaster Management Authority v. Aska Equipments (Supreme Court, 2021)
Mandatory again. But the Court accepted that where paying 75 percent in one go would cause undue hardship, the court can let it be paid in instalments. That's all. It isn't a power to waive the deposit or cut it down.
Tirupati Steels v. Shubh Industrial Component (Supreme Court, 2022)
A High Court had let a Section 34 challenge go ahead with no deposit. The Supreme Court overturned that and told the buyer to deposit 75 percent before its challenge could be looked at on merits.
How the 75 percent is calculated and paid
Section 19 ties the 75 percent to the amount payable under the award. Courts generally read that as the full sum the award tells the buyer to pay as on its date: principal, interest calculated up to the award, and costs if any were given. Post-award interest that keeps piling up is trickier, and you'll find orders going both ways. If the award gives a figure as on a date and then directs further interest until payment, look closely at how the court words its deposit order. Raise the point at the first hearing. Not later.
The money goes into court, usually by cheque or electronic transfer to the court's account. Courts often direct that it sit in a fixed deposit with a nationalised bank so it earns interest while the case drags on. Courts have generally wanted actual money, not an undertaking. Can a bank guarantee stand in for cash? It depends on the bench, and many say no, because the proviso assumes money will be paid out to the supplier.
For the buyer, timing matters. The challenge still has to be filed inside three months plus 30 days, and the deposit should be made, or at least an application for directions on it filed, when the petition goes in. We regularly see buyers file a bare petition on the last day and then sit on the deposit. If you're the supplier, object at the very first hearing. Until the deposit arrives, the court can't entertain the challenge at all.
Can you get money out of the deposit while the challenge is pending?
Yes. And it's the part of Section 19 that suppliers use least. The proviso says the court "shall" order a percentage of the deposit to be paid to the supplier while the challenge runs. How much is up to the court, on the facts. It can attach conditions, such as an undertaking to refund with interest if the award is later set aside, or some kind of security.
Apply early. Ideally the week the deposit comes in. Tell the court plainly why the money matters to you: working capital stuck, the bank breathing down your neck about your CC limit, invoices unpaid for years. Offer a sensible condition before the court has to come up with one. A micro unit that offers a personal undertaking from its proprietor or partners, with a list of the unit's assets behind it, usually does better than one that just asks for everything.
When Advocate B.K. Singh acts for a supplier whose award has been challenged, he files the release application along with the reply to the stay application. He doesn't wait for final arguments. A Section 34 petition in a busy court can easily take a year, sometimes more, and the release application is often the only moment in that year when the supplier actually gets paid.
Enforcing the award, one step at a time
If the challenge window closes with no challenge, or the challenge is thrown out, the award is executed under Section 36 of the Arbitration Act read with Order XXI of the Code of Civil Procedure.
Make sure the award is enforceable
Check when the buyer received the award and confirm more than three months have gone by. Search the cause lists and the e-Courts records of the court where a challenge would be filed, and ask the council whether it got notice of any challenge. If a challenge was filed and dismissed, get a certified copy of the dismissal order.
Find the buyer's assets
Write down every bank account the buyer has ever paid you from, its registered office and plant addresses, any property it owns, vehicles in its name, and money its own customers owe it. MCA filings will show charges registered on its assets. Its GST registration shows where it does business.
Pick the court
File where the assets are. In Sundaram Finance v. Abdul Samad (2018) the Supreme Court held that an arbitral award can be executed directly in any court with jurisdiction over the place where the assets sit. No transfer from another court is needed.
Draft and file the petition
Use the tabular form prescribed under Order XXI Rule 11. Give the award details, the amount due with interest to date, anything already received, and how you want execution done, for instance attachment of specific bank accounts. Attach the signed award or a certified copy.
Ask for an asset affidavit
Ask the court to direct the buyer to file an affidavit listing its assets. Rahul S. Shah v. Jinendra Kumar Gandhi (2021) encourages executing courts to do exactly that.
Attach and collect
After notice and objections, the court can attach bank accounts, send garnishee orders to the buyer's own debtors, or attach and sell property. Attached money is deposited in court. You apply, and it's released to you.
Each mode of execution is explained in more detail on the commercial court team's page on execution of a decree. Points common to every kind of award are in our general post on how to enforce an arbitral award in India.
Which court will execute it?
Two rules work together here. First, Section 10 of the Commercial Courts Act, 2015 sends execution of arbitral awards in commercial disputes of Rs 3 lakh and above to the Commercial Court or, where the High Court has ordinary original civil jurisdiction, to its Commercial Division. In Delhi, that means the District Judge (Commercial Court) at Tis Hazari, Saket, Karkardooma and the other complexes for awards up to Rs 2 crore, and the Delhi High Court above that. A proposal to raise that limit has been under consideration, so check the current figure. In Ghaziabad, Gautam Buddh Nagar, Gurugram and Faridabad, it's whichever court is designated as the district's Commercial Court.
The second rule is about where the assets are. After Sundaram Finance, you file where the buyer's bank account, factory or receivables are, even if a council in another state passed the award. Say you're a Delhi supplier with an award against a Pune company whose assets are all in Maharashtra. You can go straight to the commercial court in Pune. You can run more than one execution if the assets are spread around. Just tell each court about the others, so you don't recover twice.
Against a company, execution goes after the company's own assets. Directors aren't personally on the hook for a company's award unless they signed a personal guarantee, or the court lifts the corporate veil for fraud. That's rare. If the buyer is a partnership firm or a proprietorship, it's a different story: the partners' or the proprietor's personal assets can be reached.
What the executing court can actually do for you
- Freeze bank accounts. Against a business that's still trading, nothing works faster. The court sends a prohibitory order to the bank, the bank freezes the amount, and it later sends the money to court.
- Garnishee orders. If the buyer's own customers owe it money, the court can tell them to pay into court instead, under Order XXI Rules 46A to 46I. We find this works well against buyers who sell to big distributors or to government departments.
- Attach and sell property. Land, buildings, machinery and vehicles can be attached and auctioned. It's slower, and a bank holding a charge over the property will very often object.
- Make the buyer disclose what it owns. The court can direct a responsible officer to list the buyer's assets on affidavit, and can act against them if the affidavit turns out to be false.
- Appoint a receiver. In the right case, a receiver can be put over income like rent or receivables.
- Civil detention. Arrest and civil prison are possible against individuals, after notice and an inquiry. Against a company it's rarely practical, although officers who disobey court orders can face contempt.
Papers you'll need for the execution petition
The award and where it stands
- The signed award, or a certified copy from the council
- Something showing when the buyer received it, like the speed post tracking printout or a signed acknowledgment
- A certified copy of any order dismissing a challenge, and of any appeal order after that
What's owed now
- Your interest working from the award date to the filing date, at the rate the award gives
- Details of anything the buyer has paid since the award
- The RBI bank rate notifications you used in the calculation
Where the buyer's money is
- Bank account details from old payments or cheques
- Plant, warehouse and office addresses taken from GST and MCA records
- If you know them, the names of the buyer's own customers, for garnishee orders
Your side's authority
- A board resolution, or partnership authority, for whoever is signing
- Vakalatnama in favour of your advocate
- Your Udyam certificate and the council's reference number, for the record
Does interest keep running after the award?
Usually it does. Council awards normally direct interest under Section 16 of the MSMED Act, at three times the RBI bank rate compounded with monthly rests, until payment. Where the award says that, the amount due on the day you file execution can be far larger than the figure on its first page. Work it out carefully and put the working in a schedule. The buyer's first objection in execution is very often to the arithmetic.
What if the award says nothing about post-award interest? Then Section 31(7)(b) of the Arbitration Act gives interest at 2 percent above the current rate of interest prevailing on the award date, unless the award directs otherwise. Either way, interest is a reason for you not to sit on execution, and a reason for the buyer not to sit on payment. Our guide on calculating MSME delayed payment interest shows how monthly compounding works with real numbers.
If the buyer pays part of the award, tell it in writing how you're adjusting the payment. Unless you've agreed something else, payments generally go first towards interest and costs, then principal. Show it the same way in your execution schedule.
What if the buyer is a government department or PSU?
The deposit rule binds them just as it binds a private company. Aska Equipments itself was against a state authority. Government buyers often file Section 34 petitions as a matter of habit, because no officer wants to sign off on paying when a court order can be waited for instead. So expect the challenge, and have your release application drafted.
Execution against a department works a little differently. A Section 80 CPC notice is needed before you sue the government, but it doesn't apply to executing an award. Once the challenge fails, government bodies generally pay rather than see their accounts attached, though the money may take a budget cycle to arrive. For central public sector enterprises, the TReDS duty introduced in October 2026 affects future invoices, not old awards. The earlier stages are covered in our post on MSME claims against a government department or PSU.
What if the buyer is going under?
An unpaid award is a debt. If it's Rs 1 crore or more, you can in principle file an insolvency application as an operational creditor under Section 9 of the Insolvency and Bankruptcy Code. Be careful about when. In K. Kishan v. Vijay Nirman Company (2018), the Supreme Court held that while a Section 34 challenge is pending, the award debt is disputed, and insolvency shouldn't be used to get round the challenge. Once the challenge fails, or if none was ever filed, things look different.
If another creditor has already dragged the buyer into insolvency, the Section 14 moratorium stops your execution dead. You then file your claim with the resolution professional, within the time given in the public announcement, with the award and your interest working attached. We've seen suppliers keep an execution going in a district court for months while the buyer sat in insolvency. Wasted time. The trade-offs are set out in when an MSME can go to insolvency instead of the council.
What will the MSMED (Amendment) Act, 2026 change?
Parliament passed the MSMED (Amendment) Act, 2026 in August 2026, and it was published as Act 16 of 2026. Three of its changes go right to the heart of this subject. A new Section 18A will let a supplier recover a council award or a mediated settlement as an arrear of land revenue, through the District Collector or Deputy Commissioner where the buyer's assets are, and will treat the amount as a debt recognised under the Insolvency and Bankruptcy Code. A substituted Section 19 keeps the 75 percent deposit but adds that if the buyer's challenge stays pending for more than six months, the court must pay the supplier at least 50 percent of the awarded amount. And the challenge will have to be filed in the court where the supplier's official address, as per its registration, is located.
The catch? Commencement. A government notification of 12 October 2026 brought several sections of the amending Act into force from 15 October 2026, and one more from 15 December 2026. The sections rewriting Sections 18 and 19 and adding Section 18A got no date. As of late October 2026, enforcement still runs on the old Section 19 and on execution under Section 36 of the Arbitration Act. Check the latest notification before relying on the new route. And once it's notified, check whether it reaches awards that were already passed.
An invented example: a Sahibabad fabrication unit, a challenged award and money released early
This is a made-up example, not a real client. A sheet metal fabrication unit in Sahibabad, Ghaziabad, registered as a micro enterprise since 2018, wins an award before the council against an auto components company in Manesar. The award directs payment of Rs 31 lakh principal and Rs 22 lakh interest up to the award date, with Section 16 interest running on until payment.
On day 87 after getting the award, the buyer files a Section 34 petition in the commercial court at Ghaziabad. It deposits nothing. At the first hearing, the supplier's counsel tells the court it can't entertain the petition until 75 percent of Rs 53 lakh is in. The court orders about Rs 39.75 lakh deposited within four weeks. The buyer asks for instalments, can't show hardship, and pays the full amount.
The supplier applies for release at once. It offers an undertaking from both partners to refund with interest if the award goes, and a list of the unit's machinery to back that up. Within two months the court releases half the deposit, which clears the unit's overdue bank limit. A year later the challenge is still pending. But the supplier isn't waiting for all of its money any more. Every case is different, and the court's discretion on release is real. In this one, applying early was what changed things.
Where suppliers go wrong after winning
- Not keeping proof of the receipt date. If you can't show when the buyer got the award, you can't show the window has closed, and every step after that turns into an argument.
- Waiting for the challenge to finish before asking for release. The Section 19 proviso exists precisely so you can use it while the challenge is pending.
- Filing execution in the wrong place. If you file only where the council sat while the buyer's assets are in another state, you add months of transfer and fresh notice.
- A petition that says "attach the buyer's assets" and nothing more. That gets you very little. Name the bank and branch, the property, the customer who owes the buyer money.
- Sloppy arithmetic. Inflate the interest and you invite objections and delay. A clean schedule makes the hearing shorter.
- Settling on a handshake. If the buyer offers instalments, put it in a written settlement that keeps the award alive if a single instalment is missed. Our post on how buyers settle MSME claims shows the offers buyers usually make.
What to do this week
If you hold an award, write down the date the buyer got it and the date three months on. Start finding assets today: bank accounts, plant addresses, property, customers. If the buyer wants to talk, listen. Just don't let the talking drift past the challenge window without a signed settlement.
If you're the buyer, make up your mind early. A challenge needs 75 percent of the money in court, and the court can hand part of it to the supplier long before your petition is decided. In the execution files that come to Advocate B.K. Singh, the delay we see most often, and the one easiest to avoid, is a supplier who spent six months after the award waiting for the buyer to pay on its own, without tracing a single bank account.
If you'd like the award, the buyer's details and your dates checked before the next step, or want to hear when the 2026 amendment's recovery provisions come into force, get in touch with Advocate B.K. Singh's team through the contact page.
Frequently asked questions
Is an MSME council award final?
Yes, subject to a challenge under Section 34 of the Arbitration Act within three months of receiving it, plus up to 30 days for sufficient cause. There's no appeal on the merits. If nobody challenges it in time, it can be enforced like a decree.
Does the 75 percent deposit apply if the buyer files a writ petition instead of a Section 34 petition?
In India Glycols v. MSEFC (2023), the Supreme Court held that a writ generally isn't the right remedy against a council award, and that the buyer has to use Section 34 with the Section 19 deposit. Whether a writ can ever lie against council orders has been referred to a larger bench, so check where that stands.
Can a buyer pay the 75 percent deposit in instalments?
Only if the court is satisfied that paying it all at once would cause undue hardship. The Supreme Court accepted instalments in that situation in Aska Equipments. The court can't waive the 75 percent or reduce it.
Does the supplier also have to deposit money to challenge an award?
No. Section 19 only applies to an applicant who isn't the supplier. A supplier unhappy with part of an award can file a Section 34 challenge without depositing anything, within the same time limit.
How long does execution of an MSME award take?
That depends on what the buyer owns and how hard it objects. If you know its bank accounts and get them attached early, money can come in within a few months. If property has to be sold, a year or more isn't unusual. The Supreme Court has said executions should ordinarily be decided within six months.
Can I execute an MSME award against the directors of the buyer company?
Usually not. An award against a company is executed against the company's assets. Directors are personally liable only if they gave a personal guarantee, or in the rare fraud case where the court lifts the corporate veil. Partners and proprietors are a different matter.
What if the buyer has shut down its business after the award?
Look for whatever is left, such as property, receivables and machinery, and move fast before it disappears. If the company is in insolvency, file your claim there. A partnership or proprietorship can be pursued against the owners' personal assets.
Can the council itself enforce its award?
Not under the law in force as of October 2026. Enforcement goes through the court under Section 36 of the Arbitration Act. The 2026 amendment adds recovery as arrears of land revenue through the District Collector, but that provision hadn't been brought into force when this was written.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.