Introduction
“Justice delayed is justice denied.”
Recovering money from someone who refuses to pay can be challenging — whether it involves an outstanding invoice, an unpaid loan, a dishonoured cheque, or a cybercrime such as fraud. Fortunately, In India recovering money is no longer an impossible task, Indian laws provide multiple effective legal remedies for money recovery. Following are the main remedies available and practical steps to implement them.
1. Legal Notice for Recovery
A legal notice is one of the most effective ways to recover money in India without going to court. It is usually the first step in most recovery cases. A legal notice warns the defaulter about possible legal consequences and gives them a final opportunity to settle the matter before formal proceedings begin.
How to Implement:
- In cases of unpaid loans or outstanding dues, the limitation period for filing a recovery suit is generally 3 years from the date on which the money becomes due.
- Send the notice well within this period so that sufficient time remains for filing a case if required.
- The notice should clearly state the amount owed, the basis of the debt, and the deadline for repayment.
2. Civil Suit for Recovery
In case of default in payment even after serving the legal notice the aggrieved party can file a suit against the defaulter under Order 37 of the Civil Procedure Code (CPC) i.e. summary procedure which provides a civil remedy for recovering amounts.
How to Implement:
- File the suit within 3 years from the date on which the payment became due.
- File in the District Court or Commercial Court, depending on the claim amount (Commercial Courts Act applies for claims above ₹3,00,000(the amount may be revised time to time )).
- Summary suits are quicker as they do not require a lengthy trial.
- Keep essential documents ready:
- Proof of payment (receipts, bank statements, UPI records)
- Copy of legal notice
- Any agreement or written communication proving the debt
3. Cheque Bounce Cases
In case of dishonoured cheque (bounched) money can be recovered by filing a suit under Section 138 of the Negotiable Instruments Act, 1881 after serving a legal notice within the time frame.
How to Implement:
- Send a legal/demand notice within 30 days of receiving the bank’s cheque return memo.
- If payment is not made within 15 days, file a criminal complaint within 30 days thereafter.
- Preserve electronic proof like UPI trails, SMS alerts, bank app records, or screenshots.
4. Commercial Suits for Contractual or Business Recovery
The Commercial Courts Act, 2015 allows speedy resolution of commercial disputes, including unpaid invoices, breach of contract, and business recovery matters, provided the claim is above ₹3,00,000, but entities have to first move for pre litigation mediation and after obtaining report of mediation they can further file suit under the said act.
(Below ₹3,00,000 the above mentioned remedies for filing a civil suit is provided under law)
How to Implement:
- Mandatory PreLitigation Mediation: As per the 2018 amendment to the Act, parties must attempt pre-litigation mediation before filing a commercial suit (except where urgent interim relief is sought). Mediation is conducted through authorised mediation centres notified by the Legal Services Authorities. If parties reach a settlement, it has the same effect as an arbitral award under Section 30(4) of the Arbitration and Conciliation Act, 1996.
- If mediation fails within 3 months (extendable by 2 months), the plaintiff can proceed to file the suit.
- Procedure in Court- File a plaint in the appropriate Commercial Court.
- Proceedings are timebound (strict timelines for filing written statements, case management hearings, discovery, etc.).
- Courts aim for speedy disposal compared to ordinary civil suits.
- Requirements- Maintain proper contracts, invoices, delivery challans, emails, and correspondence as evidence.
- Reliefs available: Recovery of money, damages, specific performance, injunctions, and interest on delayed payments.
5. Arbitration
If your contract contains an arbitration clause or if both parties mutually decide , disputes can be resolved through arbitration instead of directly going to court. This process is confidential, quicker, and the award is legally enforceable.
How to Implement:
- Appoint an arbitrator mutually or as per the contract.
- If no agreement is reached you have the option of approaching the High Court under Section 11 of the Arbitration and Conciliation Act, 1996 to appoint an arbitrator.
- After proceedings arbitration award can be enforced in court via execution proceedings under the CPC.
6. Debt Recovery Tribunal (DRT) (For Banks and Financial Institutions):
Banks and financial institutions can approach the DRT under the RDDBFI Act and the SARFAESI Act for recovery of debts exceeding ₹20,00,000. DRT can order seizure and auction of the borrower’s assets without a regular civil suit.
7. Police Complaint for Fraud or Cheating
For criminal matters like fraud or cheating:
- Section 316 BNS – Criminal breach of trust
- Section 318 BNS – Cheating
- Section 324 BNS – Non-payment in certain cases
How to Implement:
- File an FIR along with all supporting evidence such as payment proofs, agreements, and communication records.
- File a complaint with cyber crime department in case of the fraud / cheating was done via electronic media.
Conclusion
In India, recovering money is much easier with recent legal developments — including the new criminal laws of 2023 that recognise electronic evidence — proving your claim has become easier. Quicker disposal of suits is now possible through commercial courts and arbitration.
To recover your dues effectively:
- Act within the limitation period
- Preserve all relevant evidence
- Consult a competent advocate
With the right approach, you can recover your dues without losing hope.
FAQs
Q1. What is the first step to recover money legally in India?
The first step is usually to send a legal notice to the defaulter, warning them of legal action if they fail to pay within a given time frame.
Q2. Can I file both a civil and criminal case for money recovery?
No, you can file either accoeding to the nature of the case, For example, you can file a civil suit for recovery of dues and a criminal case of fraud/ cheating under BNSS.
Q3. How long do I have to file a money recovery case?
The general limitation period is 3 years from the date the payment became due.
Q4. Is arbitration better than going to court?
If there is an arbitration clause in your agreement, arbitration is usually faster, private, and less expensive than traditional litigation.
Q5. Can electronic evidence be used in money recovery cases?
Yes. Under the new criminal laws (under section 57,58,64 Bhartiya Sakshaya Adhiniyam), electronic records such as UPI trails, emails, SMS, and screenshots are admissible in court.
Q6. How can banks recover their money without going to court?
Banks and financial institutions can approach the Debt Recovery Tribunal (DRT), which allows seizure and auction of assets without filing a regular civil suit.
Q7. What if my case involves more than ₹3,00,000?
Claims above ₹3,00,000 can be filed in Commercial Courts, which have faster, timebound procedures.