To recover money from a debtor in India you first make a written demand, then serve a legal notice, and if the money is still not paid you sue in the civil court that has jurisdiction over the amount claimed, seeking a decree for the sum due with interest and costs; once you hold a decree you enforce it by attaching the debtor's property or bank accounts. Where a cheque was dishonoured you have a separate remedy under section 138 of the Negotiable Instruments Act, 1881, and where the agreement has an arbitration clause you may go to arbitration instead of court.
Which route is best depends on your documents, the amount, and whether the debtor has anything to attach. This guide sets out the options, the papers, the steps and the pitfalls.
Routes to recovery
- Written demand and legal notice. The cheapest step, and often enough — a clear notice with the amount, the evidence and a deadline.
- Summary suit. Under Order XXXVII of the Code of Civil Procedure, 1908, a suit on a written contract, promissory note or bill of exchange can be filed as a summary suit, in which the defendant must seek leave to defend.
- Ordinary civil suit. For debts that do not fall within the summary procedure.
- Cheque dishonour complaint. Where a cheque is dishonoured for want of funds, the statutory notice and complaint under section 138 of the Negotiable Instruments Act, 1881 can run alongside the civil claim.
- Arbitration. Where the contract contains an arbitration clause, the dispute goes to arbitration, and an award is enforced like a decree.
- Small causes court. For smaller money claims a simplified procedure applies in the courts that have that jurisdiction, such as the Court of Small Causes at Calcutta for claims within its limits.
- Security before judgment. Where the debtor is trying to dispose of assets, the court can be asked for attachment before judgment under Order XXXVIII of the Code of Civil Procedure, 1908, to protect the claim while the suit runs.
Documents required
- The written contract, loan agreement, promissory note or purchase order.
- Invoices, delivery challans, receipts and the running account or ledger.
- Bank statements showing the advance or the non-payment.
- The dishonoured cheque and the bank's return memo, where relevant.
- Correspondence — emails, letters and messages — in which the debtor admits the debt or asks for time.
- A written acknowledgement of the debt or a part-payment receipt, since these can start limitation afresh.
- The legal notice and proof of service.
- Identity details of the debtor, to identify the right defendant and to help enforcement later.
Steps in order
- Quantify the debt. Fix the principal, the interest agreed, and the date it fell due.
- Send a demand, then a legal notice. State the amount, the evidence and a deadline, and keep proof of dispatch.
- Check limitation. A money suit is governed by the Limitation Act, 1963, and generally must be filed within three years of the date the debt became due; the applicable article turns on the nature of the debt and should be confirmed.
- Choose the forum. Decide between a summary suit, an ordinary suit, the small causes court or arbitration, based on the documents and the amount.
- File the suit. The plaint states the transaction, the amount and the relief; court fee is prescribed by the Court Fees Act and should be checked against the schedule.
- Decree. If the court finds for you, it passes a decree for the sum due with interest and costs.
- Execution. If the debtor does not pay, you apply for execution under Order XXI of the Code of Civil Procedure, 1908, to attach and sell property or attach bank accounts.
Time limits and delay
Two clocks matter. First, limitation: if you let it run, the suit can be dismissed as time-barred. A written acknowledgement of the debt, or a part payment, can start limitation afresh under the Limitation Act, 1963, so keep every such writing. Second, in a cheque case the statutory notice and the complaint must follow the sequence and timing the Act lays down, and a step taken late can defeat the complaint. On both counts, take advice before the deadline passes.
Common mistakes
- Relying on an oral loan with no writing and no proof of payment.
- Allowing limitation to expire while negotiating.
- Accepting a part payment without any document that records it.
- Missing the sequence in a cheque dishonour case.
- Suing the wrong entity, or a person who was never the debtor.
- Obtaining a decree and then doing nothing to enforce it.
Where the debtor disputes the debt or has property to protect, the drafting of the plaint and the choice of forum decide how quickly the case moves. Our recovery suits service covers the notice, the money recovery suit and the execution stage. Our published consultation and appearance fees are set out on our pricing page, and you can raise questions about your papers through our contact page.
Questions people ask
Can I recover money without going to court?
Yes, and it is always worth trying. A firm written notice, with the evidence attached and a deadline, persuades many debtors to pay without litigation.
What if the debtor has no property?
A decree can still be passed and enforced later, and the debtor's bank accounts and future assets can be attached when they exist.
Is a cheque bounce case the same as a recovery suit?
No. The cheque case is a criminal complaint with its own notice and timing, while a recovery suit is a civil claim for the money. Both may run together.
How long does a recovery suit take?
The time depends on the court, whether the debt is contested and whether the summary procedure applies; no honest answer can fix a date in advance.