Online Dispute Resolution (ODR) in India has transitioned from a supplementary experiment to a serious institutional response to chronic judicial delays, rising litigation costs, and the need for accessible justice mechanisms. Its evolution is closely linked to India’s broader digital transformation and is particularly significant for Micro, Small and Medium Enterprises (MSMEs), which remain disproportionately affected by delayed payments and procedural inefficiencies. When examined together, the growth of ODR in India and the possibility of replacing or restructuring the MSME Samadhaan application process through ODR reveal both systemic promise and necessary safeguards.
The progress of ODR in India has been shaped by coordinated institutional, judicial, and policy-level support. A major catalyst was the intervention of NITI Aayog, which articulated a clear vision for ODR as a tool to enhance access to justice, particularly for small-value and high-volume disputes.[1] The report recognised that traditional court-centric models were ill-suited to the commercial realities of MSMEs and consumers. Judicial endorsement has further strengthened this trajectory. The Supreme Court of India and various High Courts have consistently encouraged technology-driven dispute resolution, especially after the COVID-19 pandemic normalised virtual hearings, electronic filings, and online mediation. These developments laid a strong foundation for institutionalising ODR across sectors.
In terms of use, ODR is already embedded in multiple dispute ecosystems in India. Banking and financial institutions rely on ODR platforms for resolving loan defaults, digital lending disputes, and fintech-related claims. E-commerce and consumer-facing platforms increasingly use online grievance redressal and mediation mechanisms to ensure swift outcomes. For MSMEs, ODR has emerged as a practical alternative for resolving contractual disputes, supply chain conflicts, and delayed payment claims, where conventional litigation is often slow, expensive, and commercially disruptive. Family and matrimonial disputes have also witnessed growing acceptance of online mediation due to its confidentiality and consensual nature.
Against this backdrop, the MSME Samadhaan framework assumes critical importance. The MSME Samadhaan Portal was introduced as a digital facilitation mechanism under Sections 15–18 of the MSMED Act to address delayed payments to MSMEs. While the portal has improved transparency and data aggregation, its practical functioning has revealed structural limitations. Proceedings before the Facilitation Councils frequently replicate the delays and adversarial nature of traditional litigation. Jurisdictional objections, counterclaims, repeated adjournments, and post-award challenges under the Arbitration and Conciliation Act often undermine the statutory mandate of speedy resolution. Consequently, MSMEs continue to suffer liquidity stress despite invoking Samadhaan remedies.
In this context, replacing or integrating the Samadhaan application process with ODR mechanisms offers significant potential benefits. The most immediate advantage lies in speed. ODR platforms are designed around structured online negotiation, mediation, and fast-track arbitration with defined timelines. For MSMEs, timely recovery of dues is often more critical than prolonged adjudication. By reducing procedural formalism and limiting opportunities for delay, ODR aligns more closely with the commercial realities faced by small enterprises.
Cost efficiency is another decisive factor. Although Samadhaan is nominally inexpensive, prolonged proceedings often compel MSMEs to engage legal counsel, attend multiple hearings, and incur indirect costs. ODR substantially lowers these burdens by eliminating geographical constraints, reducing reliance on physical appearances, and automating procedural stages. This makes dispute resolution viable even for smaller claims that MSMEs might otherwise abandon due to cost-benefit considerations.
ODR is also better suited to the nature of MSME delayed payment disputes, which are predominantly document-driven and involve limited factual complexity. Online mediation or document-only arbitration can effectively address such disputes without compromising fairness. Standardised procedures and digital workflows reduce the scope for tactical delays by buyers, particularly large corporates, who often exploit procedural loopholes in conventional forums.
From an access-to-justice perspective, ODR enhances inclusivity. MSMEs located in smaller towns or industrial clusters frequently face logistical difficulties in attending Facilitation Council proceedings situated in urban centres. ODR removes these barriers, enabling participation through basic digital infrastructure. This is especially beneficial for micro enterprises, women-led businesses, and first-generation entrepreneurs with limited administrative capacity.
However, the benefits of replacing Samadhaan with ODR are contingent upon robust legal and institutional safeguards. Enforceability remains a central concern. For ODR to genuinely serve MSMEs, outcomes must culminate in legally enforceable settlements or arbitral awards with minimal scope for obstruction. Without clear statutory recognition, ODR risks becoming an additional pre-litigation layer rather than a solution. Accordingly, ODR mechanisms must be explicitly integrated into the MSMED Act framework, with online mediation settlements and arbitral awards accorded the same enforceability as traditional outcomes.
Another critical issue is power asymmetry. MSMEs often negotiate against large buyers, public sector undertakings, or multinational corporations. ODR processes must therefore incorporate safeguards to prevent coercive settlements and ensure procedural fairness, neutrality, and transparency. The credibility of panelists, platform governance, and oversight mechanisms becomes central to maintaining trust in the system.
From a policy perspective, a hybrid approach appears most appropriate. Instead of entirely replacing Samadhaan, ODR can be embedded as the default first tier under Section 18 of the MSMED Act. Only disputes that fail online mediation or fast-track arbitration should proceed to conventional Facilitation Council adjudication. Such a model preserves statutory protections while significantly reducing backlog, timelines, and compliance costs.
In conclusion,the progress of ODR in India demonstrates its capacity to transform dispute resolution across sectors. When applied to MSME delayed payment disputes, ODR has the potential to address long-standing inefficiencies inherent in the Samadhaan framework. If supported by statutory clarity, enforceability safeguards, and institutional oversight, ODR can shift MSME dispute resolution from a procedural burden to a commercially meaningful recovery mechanism, thereby strengthening both access to justice and the economic resilience of India’s MSME sector.
Author: Khushnuma Khan | Emai: khushnuma@kkassociates.co.in
Disclaimer:This article is intended for general informational and policy discussion purposes only. It does not constitute legal advice, financial advice, or a formal interpretation of law. The views expressed are based on publicly available information, prevailing statutory provisions, and reported developments as of the date of publication. Readers are advised to seek independent professional advice before taking any action based on the contents of this article. The author assumes no liability for decisions taken in reliance upon this information.