Section 15 of MSMED : Section 15: Liability Of Buyer To Make Payment

Explanation using Example

Imagine a small enterprise, ABC Widgets Ltd., which supplies machine parts to a larger company, XYZ Motors. They have a written contract stating that XYZ Motors will pay for the parts within 30 days of delivery. One month passes, and ABC Widgets has not received payment. Under Section 15 of The Micro, Small and Medium Enterprises Development Act, 2006, XYZ Motors is legally obligated to pay ABC Widgets within the agreed 30 days or face penalties, as the agreed payment period does not exceed the maximum of 45 days from the acceptance of goods.