MSME Award Challenge Pending Beyond Six Months: Future Minimum 50% Payment Rule
By Ravi Sisodia · Reviewed by CA Divyanshu Sengar · Updated 5 October 2026
The 2026 amendment adds a significant supplier-protection proviso: if a set-aside application remains pending for more than six months, the court shall order payment to the supplier of at least 50% of the amount awarded from the deposited amount, once the provision commences.
Finin2min 2-Minute Summary
- Six-month release status note: the supplier-protection proviso exists in the enacted Amendment Act; current cases should not assume the new trigger applies until commencement of the substituted section 19 is verified.
- The amended section 19 keeps the 75% pre-deposit requirement.
- Once that future six-month threshold is crossed, the substituted section requires a court-directed supplier release from the money already deposited.
- The six-month case-age should be tracked from the set-aside proceeding with court records.
- Buyer and supplier accounting/cash planning should model the possible mandatory release.
Track the six-month milestone
Create a litigation calendar from the set-aside filing and preserve each court order. The future supplier-release trigger depends on how long the challenge remains pending, so the file should evidence the relevant start point rather than rely on a rough case-age estimate.
Legal teams should alert treasury and the supplier before the milestone.
Supplier cash-flow file
Separate amount awarded, 75% deposited, amount already released and the minimum 50% trigger once applicable. Reconcile every court-ordered payment.
Do not treat receipt as final undisputed income without considering the pending proceeding/accounting advice.
Buyer planning
A buyer cannot assume the deposit remains fully blocked until final judgment. The future proviso makes prolonged litigation itself a cash-flow event.
Challenge strategy should incorporate this time-based release.
Six-month milestone example
For a ₹2 crore award, the future six-month proviso would make prolonged litigation a material treasury event because a significant portion of the deposited money would have to move to the supplier once the statutory trigger and court order apply. The buyer should therefore model the cash release before deciding that a long challenge simply preserves liquidity.
Legal teams should place the six-month milestone on the same dashboard as hearings and submissions. Supplier finance teams should likewise avoid booking a receivable merely from passage of time; recognition should follow the operative law and actual court direction.
- Calculate the 50% award amount in advance.
- Alert treasury before the six-month date.
- Recognise receipts only when legally/order-wise appropriate.
Six-month checklist
- Set-aside filing/admission date.
- Six-month milestone.
- Award amount.
- Deposit confirmation.
- Earlier release orders.
- 50% minimum-release calculation.
- Commencement verified.
Questions readers commonly ask
What happens after six months under the amended wording?
The substituted provision creates a mandatory supplier-release mechanism once the challenge has remained pending beyond the six-month point, subject to the provision being operative.
Is that 50% of the 75% deposit or of the award?
The text refers to at least 50% of the amount awarded, paid from the deposited amount.
Should businesses plan for it now?
Yes for readiness, but operative status must be checked.
Does receipt end the litigation?
Not by itself.
Official / primary sources
- Ministry of MSME - Amendment Act listing - Official ministry listing of MSMED Amendment Act 2026
- PIB - Parliament passage of MSMED Amendment Bill 2026 - Official background and enactment history
- PIB - MSMED Amendment 2026 backgrounder - Official summary of changes
- eGazette recent uploads - Act No. 16 of 2026 Gazette publication
Disclaimer
Important: General educational and professional-reference material. Verify the current operative law, commencement notification, portal version and exact facts before acting. Educational and professional reference only; confirm the current law, rates and the facts of your case before relying on this page.