Operations · Vendor Onboarding · Procurement Risk
How to Add Litigation Screening to Vendor Onboarding (2026)
Onboarding a vendor usually means checking its GST registration, its bank details and maybe a reference or two. What that misses is whether the vendor is a defendant in recovery suits, whether its promoters face criminal complaints, or whether it is sliding into insolvency, any of which can mean a supplier that cannot deliver, or a reputational and continuity risk you did not price in. Adding a litigation check to onboarding catches that before you depend on the vendor. This page explains where the check belongs in the onboarding workflow, what to search, and how to keep it proportionate so low-risk vendors are not slowed down. Last verified October 2026.
- Why here: onboarding is the cheapest moment to act, because you can still decline, ask for more, or onboard with conditions.
- Where it sits: after basic KYC and before approval, as part of the same due-diligence step as the GST and bank checks, scaled to the vendor.
- Who to search: the vendor, promoters and directors, group companies, and key sub-contractors for critical vendors.
- Make it proportionate: full search for critical and high-spend vendors, standard for medium, light-touch for small one-off vendors; repeat on renewal.
01Why onboarding is the moment
Before a vendor is onboarded, you owe it nothing. After, you may depend on it for a critical input, have paid advances, or have your brand tied to its conduct. Onboarding is the point where a litigation problem is cheapest to act on: you can decline, ask for more, or onboard with conditions. The same problem found a year into the relationship is a continuity or a liability problem.
Litigation screening complements the checks procurement already runs, GST, bank, references, by adding the disputes layer that those do not show. For the wider company view, see the MCA, GST and litigation company due diligence checklist.
02Where the check sits
Place the check so it gates onboarding without blocking the pipeline:
- After basic KYC, before approval. Run the litigation check once a vendor is a real candidate, as part of the same due-diligence step as the GST and bank checks.
- Scaled to the vendor's importance. A critical or high-spend vendor gets a full search; a small, one-off vendor gets a light-touch check.
- Repeated on renewal for ongoing vendors, because a clean vendor at onboarding can go bad later.
Once a vendor is live, monitoring carries the risk forward. For the standing process, see how to build a litigation-monitoring process.
03Who and what to search
Search the vendor and the people and entities that carry its risk:
| Who | Why |
|---|---|
| The vendor entity | Recovery suits, insolvency and large disputes that threaten supply |
| Promoters and directors | Criminal and economic-offence matters, personal guarantees |
| Group and connected companies | Contagion and common-promoter risk |
| Key sub-contractors, for critical vendors | Where delivery depends on a chain |
Weight the search to supply-threatening signals: insolvency, recovery, serious criminal matters, and large civil disputes. For a high-spend or sole-source vendor, also look at sector and regulatory exposure. Confirm exact legal names and identifiers first so the search runs against the right identity.
04Make it proportionate
Most vendors are small and low-risk, and screening all of them as hard as a critical supplier wastes effort and slows procurement. Tier the check:
- Critical and high-spend vendors: full search of the entity, promoters and group, with monitoring after onboarding.
- Medium vendors: a standard search of the entity and promoters.
- Small, one-off vendors: a light-touch entity check.
The point is not to screen every vendor to the same depth. It is to put the most scrutiny where a vendor failing would hurt you the most.
05Turning a finding into a decision
A finding feeds the onboarding decision; it does not make it automatically:
- Verify. Confirm the hit is the vendor, not a namesake, using the match confidence and party details.
- Weigh materiality. An old, small, disposed matter is noise; a live insolvency is a supply risk.
- Choose the response. Decline, onboard with conditions such as advances held back or alternate sourcing, or proceed with monitoring.
- Record it, so onboarding decisions are consistent and defensible.
Read results honestly: "nothing on record" is not a clean chit, a pending case is not a verdict, and a criminal matter carries the presumption of innocence.
06Where Claw fits
Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.
ClawScore (at clawscore.clawlaw.in) is Claw's litigation and criminal-risk intelligence service, and it slots into onboarding because it returns a scored result quickly and can be scaled to the vendor. Name the vendor, its promoters, directors and group entities, and ClawScore returns every matter it finds across 9,102 courts, benches and forums in one scored Excel workbook: a Summary with a ClawScore risk band (Clean, Low, Moderate or High) that lets you clear low-risk vendors fast and flag the rest, a Matters sheet, a Related parties sheet covering directors, promoters and guarantors, and a Coverage sheet showing what was searched. Every finding carries a match confidence, so a hit on a common vendor name is flagged rather than assumed. Constant Monitoring then watches onboarded vendors and reports New filings, Changed movement and Closed disposals. Results return in under 5 seconds, judgment search spans 30 crore+ judgments with Supreme Court decisions from 1950 and High Court decisions from 1990, and Claw does not use your searched names or documents to train its AI models. The output is a risk input, not a verdict: "nothing on record" means nothing was found in these registries on the date searched under the names searched, a pending or criminal matter is not proof of guilt, and the workbook is not legal advice and not a credit score.
To screen a vendor and its promoters at onboarding, run a case search across Indian courts by party name across every forum at once.
07Sources and further reading
- eCourts (district and High Court case status): ecourts.gov.in
- National Judicial Data Grid (official pendency data): njdg.ecourts.gov.in
- Insolvency and Bankruptcy Board of India: ibbi.gov.in
- Claw: clawlaw.in
This page is general information for an Indian B2B audience, not legal advice. A litigation check supports an onboarding decision and complements KYC and tax checks; it does not replace counsel on any specific matter.
08Frequently asked questions
Why screen vendors for litigation if we already do KYC?
KYC, GST and bank checks confirm a vendor exists and is registered. They do not show that the vendor is a defendant in recovery suits, that its promoters face criminal complaints, or that it is sliding into insolvency, which can mean a supplier that cannot deliver or a reputational risk. The litigation check adds that disputes layer.
Where should the check sit in onboarding?
After basic KYC and before approval, as part of the same due-diligence step as the GST and bank checks, so a vendor is only searched once it is a real candidate. Scale the depth to the vendor's importance, and repeat the check on renewal for ongoing vendors because a clean vendor can go bad later.
Do I need to screen every vendor to the same depth?
No, and doing so wastes effort and slows procurement. Tier it: a full search of the entity, promoters and group with monitoring for critical and high-spend vendors, a standard search of the entity and promoters for medium vendors, and a light-touch entity check for small, one-off vendors.
Who should be searched for a vendor?
The vendor entity for recovery suits, insolvency and large disputes, its promoters and directors for criminal matters and personal guarantees, group and connected companies for contagion and common-promoter risk, and key sub-contractors for critical vendors where delivery depends on a chain. Confirm exact names first.
Does a litigation finding mean we reject the vendor?
No. Verify the hit is the vendor and not a namesake, weigh how material it is, and choose a response: decline, onboard with conditions such as holding back advances or lining up alternate sourcing, or proceed with monitoring. An old, small, disposed matter is noise; a live insolvency is a real supply risk. Record the decision so onboarding stays consistent.