Business and Company Disputes: Questions and Answers

Question 1

A company is not paying my invoice. What are my options?

Accepted Answer

Send a legal notice, then choose the route that fits your documents: a Section 138 complaint if a cheque bounced, a summary suit for a fixed sum under a written contract, an ordinary commercial suit, arbitration if the contract has a clause, the MSME Facilitation Council for micro and small suppliers, or insolvency proceedings for large undisputed debts.

Question 2

Is mediation compulsory before filing a commercial suit?

Accepted Answer

For commercial disputes where no urgent interim relief is genuinely needed, yes. Section 12A of the Commercial Courts Act requires pre-institution mediation, and a suit filed without it can be rejected.

Question 3

Can a director be prosecuted when a company's cheque bounces?

Accepted Answer

Under Section 141 of the Negotiable Instruments Act, only those in charge of and responsible for the company's business when the offence was committed are liable. Being a director is not enough by itself, and the position of a director who resigned depends on the dates and the facts.

Question 4

What can a minority shareholder do if they are being sidelined?

Accepted Answer

They can petition the NCLT for oppression and mismanagement under Sections 241 and 242 of the Companies Act. Section 244 sets who can file, generally 10 percent of shareholders or 100 members, though the Tribunal can waive the requirement.

Question 5

Does sending a legal notice stop the limitation period?

Accepted Answer

No. A legal notice does not extend limitation. Only a signed written acknowledgment of the debt, or a part payment, made before the period expires restarts it, so a notice should never be treated as a way to buy time.

Question 6

My company received an IBC demand notice. What should we do?

Accepted Answer

A Section 8 notice gives ten days to pay or to notify a dispute that existed before the notice, with documents. Tribunals have allowed a pre-existing dispute to be raised later in some cases, but a company should reply within the ten days and take advice immediately.