Private Limited Company Not Paying Your Pending Bills? Step-by-Step Legal Recovery Guide

1. The Short Answer

2. Check the Company Before You Act

Every company in India has a public record with the Ministry of Corporate Affairs. Search the company name or CIN on the MCA portal and note:

• Exact legal name and CIN. Your notice and case must name the right entity. Brand names and group companies often differ from the company that signed your purchase order.
• Registered office address and official email. This is where legal notices should go.
• Company status. “Active” is what you want. “Under CIRP” or “Under liquidation” means a court-ordered moratorium already applies and you cannot sue; you file your claim with the resolution professional instead. “Strike off” needs a different approach (see Section 7).
• Directors. Useful for addressing the notice, and for a cheque bounce complaint.
• Charges. Loans secured on the company's assets. Heavy charges mean banks will be paid before you if the company fails, which matters when choosing between a suit and the insolvency route.

Also look at the signs of a company that can pay: it is still trading, filing GST returns, hiring, or paying other vendors. A company that can pay but won't is exactly where legal pressure works best.

3. The Notice to the Company

In a company, your bill is usually stuck between the person who ordered from you and the finance team that releases payment. A lawyer's notice moves it out of that loop and onto the desk of people with legal responsibility. Address it to the company at its registered office, marked for the attention of the Managing Director and the CFO or Head of Accounts, and send it by Speed Post and to the official email on record.

A strong notice to a company:

• lists each purchase order, invoice, delivery and part-payment, with the exact balance;
• claims interest at the contract rate (or the MSME rate if you are a Udyam-registered micro or small supplier);
• points out costs to the company of not paying, such as GST input tax credit reversal after 180 days;
• gives a clear deadline, usually 7 to 15 days; and
• states the next step: mediation and a Commercial Court suit, or an insolvency notice for large undisputed dues.

You can send an online lawyer notice to a company for unpaid bills through LegalRecovery.in, our online notice service, delivered by Speed Post, email and WhatsApp. For the documents that prove your invoice and how to use them, see our guide on client not paying an invoice after delivery.

One tactic helps whatever happens next: before the notice, ask the company's accounts team to confirm the outstanding balance by email or send a signed ledger confirmation. A written acknowledgement of the debt is strong evidence and restarts the limitation period.

4. Pick Your Route by Bill Size

These routes can run side by side. A supplier with a bounced cheque can file a Section 138 complaint and a civil suit together, and an MSME supplier can choose Samadhaan instead of a suit. Our MSME 45-day payment guide covers the Samadhaan route and the security cheque guide covers cheque cases.

5. Bills Below ₹1 Crore: Mediation and a Fast-Track Suit

A bill between businesses is a “commercial dispute” under the Commercial Courts Act, 2015. If it is ₹3 lakh or more, Section 12A requires you to try pre-institution mediation through the District Legal Services Authority before filing a suit, unless you need urgent interim relief. Companies often send someone from finance or legal to the mediation, and many settle there because a mediated settlement can be enforced like a court decree. If the company does not attend, you get a non-starter report and go straight to court.

In court, the Commercial Court works to fixed timelines: the company gets at most 120 days to file its written statement. Where your claim is based on a written contract, accepted invoices or a written acknowledgement, a summary suit under Order 37 CPC may be possible. The company must then convince the judge it has a real defence before it is even allowed to contest, and the court can make that conditional on depositing money.

Do not dismiss a ₹50 lakh or ₹80 lakh claim as “too small for insolvency.” A well-prepared summary suit against a company that has no real defence is a serious threat in its own right.

6. ₹1 Crore or More: The 10-Day Insolvency Notice

If a company owes you ₹1 crore or more for goods or services, the Insolvency and Bankruptcy Code, 2016 gives you a much sharper tool. As a supplier (the law calls you an “operational creditor”), you send the company a demand notice under Section 8 in the prescribed form, with copies of the unpaid invoices. Several unpaid invoices from you can add up to the ₹1 crore threshold.

What happens next, in plain words

1. The company has 10 days to pay or to show that a genuine dispute about the debt already existed before your notice.
2. If it does neither, you can file an application under Section 9 before the National Company Law Tribunal (NCLT).
3. If the NCLT admits it, insolvency proceedings start. A moratorium freezes cases against the company, and the board of directors loses its powers: an insolvency professional takes over management of the company (Section 17).

That last step is why the notice works. The owners and directors of a solvent company risk losing control of the business over one unpaid bill, so many prefer to pay or settle. Even after admission, the case can be withdrawn under Section 12A if the parties settle, which keeps the door to payment open.

When not to use it

• The debt is disputed. In Mobilox Innovations v. Kirusa Software (2017), the Supreme Court held that the NCLT must reject the application if a real dispute existed before the notice, such as written complaints about quality or short delivery. The IBC is not meant for arguments about the work.
• The company really is insolvent. The IBC is a rescue and resolution process, not a debt collection service. If the company goes into resolution or liquidation, secured lenders are paid first and suppliers often recover only a small part of their dues.

Used against a company that can pay and has no real dispute, the Section 8 notice is often the fastest route. Used against the wrong company, it can cost you your bill. Have an advocate check the paper trail for any earlier complaints before sending it.

7. Can You Go After the Directors Personally?

A private limited company is a separate legal person. In most cases the company owes the money, not its directors or shareholders, and threatening directors personally without a legal basis weakens your position. But there are real exceptions:

• Personal guarantee. If a director signed a guarantee for the company's payments, you can claim against them directly.
• Bounced company cheque. Under Section 141 of the Negotiable Instruments Act, directors who were in charge of and responsible for the company's business can be made accused in a Section 138 case along with the company.
• Fraud. If the company was used to take goods with no intention of paying, a court can look past the company to the people behind it. This needs strong evidence.
• Company struck off. If the company is struck off the register while owing you, Section 248(7) of the Companies Act says the liability of its directors continues and can be enforced as if the company had not been dissolved. A creditor can also apply to the NCLT to restore a struck-off company.

8. Making Sure You Actually Get Paid

Winning is only half the job. If you fear the company will move its money or assets before judgment, your lawyer can ask the court for attachment before judgment under Order 38 Rule 5 CPC, which requires showing that the company is trying to dispose of property to defeat your claim.

Once you have a decree or a mediated settlement, you file for execution. The court can attach the company's bank accounts, receivables owed to it by its own customers, and its movable and immovable property. Interest keeps running until payment under Section 34 CPC, so delay only increases what the company owes.

9. How Long You Have

Recovery suits generally must be filed within three years of the date payment fell due (Limitation Act, 1963). The Supreme Court held in B.K. Educational Services v. Parag Gupta (2018) that the three-year limit also applies to insolvency applications, counted from the date of default. A written acknowledgement of the debt signed by the company, or a part-payment, before the period ends restarts the clock. If you need to send a notice for a specific B2B invoice quickly, you can send a B2B unpaid invoice notice online.

10. Frequently Asked Questions