What legal action can I take to recover a debt in India?

You can take both civil and criminal action to recover your money with the help of expert debt recovery advocates. You can also opt for outside Court settlements. Civil remedies: It includes sending notice to the debtor and filing a complaint to initiate civil proceedings under Negotiable Instruments Act, Civil Procedure Code or Insolvency and Bankruptcy Code. Criminal remedies: The first step to obtain a criminal remedy is to lodge a F.I.R. in a police station of appropriate jurisdiction.Once sufficient evidence has been gathered on record, a criminal suit can be initiated under Indian Penal Code for quick disposal of matter. Outside Court Settlements: For high monetary value contracts, the best way is to settle differences and cut off loses through alternative dispute mechanisms such as Arbitration or Mediation. This is a method which is most effective against corporates as the matter can be resolved very expeditiously without furthering the loses they’d normally have to bear without having to resort to the tedious court process.

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Under which laws can I take an action to recover my money?

Recovery of money in India can be a very difficult task at times, and deciding as to which law will be applicable even more. Thus, it is advisable that you hire an expert debt recovery lawyer in India to recover your money. The laws applicable are: Negotiable Instruments Act: It is applicable in cases of dishonour of cheques under Section 138 of the Act or dishonour of any other bill of exchange or promissory note. Legal notice is issues and thereafter proceedings are initiated in case of non-payment. Code of Civil Procedure: A summary suit for recovery of money can be instituted under Order 37 to ensure speedy disposal of cases. Indian Penal Code: A case can be lodged under S/420 for Cheating or misappropriation of funds. FIR must be lodged in a police station of appropriate jurisdiction. SARFAESI: This Act is only applicable to cases of debt recovery by banks or financial institutions to borrowers.

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Do I need to send a legal notice before filing a case for recovery of my money?

Yes, you need to send a legal notice in India before filing a case for recovery of your money either as a civil suit or under DRT or under Indian Penal Code. Legal notice serves as intimidation and notice as to the intention to initiate criminal proceedings against any person. It provides a reasonable opportunity to the person to pay off your debt to escape legal proceedings.  

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Where should I file a case for debt recovery in India?

The forum where you should file your case depends on the kind of action you wish to take. NCLT: You can file a case under NCLT where the debtor is a corporation undergoing liquidation and your debts are not cleared by them. DRT: Any debt can be recovered by filing a case in the Debt Recovery Tribunal of appropriate jurisdiction Civil Court: A summary suit under Order 37 of Code of Civil Procedure can be filed for recovery of money due to the borrower with the help of best debt recovery lawyers in India. Summary suit is generally disposed off in a very short span of time discharging the debts and claims. Criminal Court: A suit can be filed under S/406 or S/420 of Indian Penal Code, for cheating or misappropriation of money in a Court of competent jurisdiction to ensure that the debts are discharged.

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What is a summary suit?

Summary suit is a legal procedure used for enforcing a right that takes effect faster and more efficiently than ordinary methods. Its object is to summarise the procedure of suits in case the defendant is not having any defence. A summary suit can be instituted in High Courts, City Civil Courts, Courts of Small Causes and any other court notified by the High Court. High Courts can restrict, enlarge or vary the categories of suits to be brought under this order. A summary suit is instituted by presenting a plaint in an appropriate civil court. Summary procedure is applicable to recover a debt or liquidated demand in money arising on a written contract, an enactment or on a guarantee. Under summary procedures, the defendant has to get the leave to defend from the court. A burden is placed upon the defendant to disclose the facts sufficient to entitle him to defend in the application for leave to defend.  

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Can I file a summary suit for recovery of my money?

Yes, you can file a summary suit to recover your money as the most effective and appropriate civil remedy available to your case with the help of top debt recovery attorneys in India. Summary procedure is applicable to recover a debt or liquidated demand in money arising on a written contract. The advantage in filing a summary suit is that the time taken is very less as compared to other procedures. Further, there exists no burden on the part of plaintiff to prove the existence of legally enforceable debt. A burden is placed upon the defendant to disclose the facts sufficient to entitle him to defend in the application for leave to defend.  

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What is Order 37 under Code of Civil Procedure (CPC)?

Order 37 under CPC relates to the procedure in a summary suit and the litigation. It acts as a boon for the plaintiff in a money recovery suit. The real benefit of an Order 37 Suit is that unless the Defendant is able to demonstrate that he has a substantial defence in his case, the Plaintiff is entitled to a judgment immediately. This in layman’s language means that the stages of filing a Written Statement within 30 days and not later than 90 days, a rejoinder thereafter, admission/denial of documents, framing of issues by Court, leading evidence, cross-examination by parties, final arguments and then finally the judgment/decree, in an ordinary Civil Suit gets eliminated. Thus, the idea behind a summary suit is speedy justice.

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What documents are required to prove my debt to a person?

Any document evidencing the grant of money from you to any other person is enough to prove the debt. Any document, contract, message, telephonic conversation, mail or post can serve as a proper evidence in Court of law to prove your debt. Any witness or any other circumstance arising from the consequence of such debt can also help you prove the debt. Bank account transactions, promissory notes, a contract or other payments so made serve as legal evidences of the lending of such money. A good debt recovery advocate in India can help you better in establishing your case in a Court of law.

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Can I file a criminal case against a person who has not repaid my debt in India?

Yes, you can file a criminal case against the person who has not repaid your loan under Section 420 of the Indian Penal Code i.e. the offence of cheating. The first step in filing of the criminal case is lodging of FIR in the police station of your jurisdiction. Once the investigation is concluded a case can be instituted in a Court of appropriate jurisdiction preceded by a legal notice to the accused. A criminal case acts as an efficient remedy owing to the retributive nature of the punishments and penalty.

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What is the status of homebuyers under Insolvency and Bankruptcy Code, 2016?

The status of homebuyers under Insolvency and Bankruptcy Code is in the nature of financial creditors. The IBC has been amended so as to change the status of homebuyers and their treatment in bankruptcy cases. The status of financial creditors has been accorded to the homebuyers, with the law being silent about the fact if they are secured or unsecured financial creditors. This amendment has strengthened the position of homebuyers in cases of debt recovery. Prior to the amendment, homebuyers had no remedy available to them to recover money except to approach a Court of law, where their debt was at the bottom of the priority list. Now, they will be treated at par with the banks and financial institutions as financial creditors. Further, whether the homebuyer is a secured or unsecured creditor is left to be decided on a case-to-case basis. The onus to prove the category in which the creditor is qualified lies on the homebuyer in accordance with the agreement signed with the real estate company. It is only the secured creditors who will get precedence in payment from the sale of assets when the company gets liquidated.    

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Who are financial creditors under Indian law?

Section 5(7) of Insolvency and Bankruptcy Code defines financial creditors as any person to whom financial debt is owed. A creditor is any person to whom a debt is owed. A debt is a liability or obligation in respect of a claim, due from any person. An essential part of the term claim is a right to payment, or a right to remedy for breach of contract, which gives rise to a right to payment. To be considered a creditor of the corporate debtor, therefore, a right to payment is essential. A secured creditor is generally a bank or other asset-based lender that holds a fixed or floating charge over a business asset or assets. When a business becomes insolvent, sale of the specific asset over which security is held provides repayment for this category of creditor. Unsecured creditors can include suppliers, customers, HMRC and contractors. They rank after secured and preferential creditors in an insolvency situation.

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How to recover a debt from an individual?

Debt recovery from individuals can be a herculean task at times, keeping in mind the nature of day-to-day transactions, lending on friendly basis, oral contracts, lack of documentation, force, fraud etc. However, if you want to recover a debt from an individual it is advisable to hire the best debt recovery lawyers in India to guide you. The measures that are generally taken are: Legal Notice: Sending a legal notice is the first step you can take to recover your money, thereby informing him legally that he is bound to pay  certain sum of money with interests in the stipulated time failing which the legal consequences may flow. A standard window for complying to a legal notice is 30 days. F.I.R: F.I.R. or First Information Report is a criminal complaint against the breaching party. You can lodge an F.I.R. if you wish to initiate criminal proceedings against the person from whom you need to recover the money. Money Suit: A money suit is an ordinary civil suit before a Court of competent jurisdiction. Here, the aggrieved prays for obtaining the monetary compensation against the  loss caused to him. Money suits are generally treated as a summary suit under Order 37 of the Civil Procedure Code so that the matter is disposed off within 3-4 months. Insolvency Petition: Insolvency proceedings are initiated by the official Liquidator when all other remedies fail. An aggrieved has to file a petition under Insolvency and Bankruptcy Code. After the matter is adjudicated upon, an official liquidator is appointed by the said court who manages the assets of the insolvent person and liquidates them so that all debts and monies due from the insolvent can be paid off. Criminal Suit: A criminal suit can be filed under S/406 and Section 420 of Indian Penal Code. A criminal suit can be filed if the amount to be recovered is proportionately high and despite several warnings, the person refuses to pay the amount. A criminal suit is usually the follow-up to an F.I.R. investigation.

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How to recover a debt from a Company?

Recovering a debt from a Company is facilitated easily if there exists a legal document. However, the other measures that you can take with the help of good debt recovery lawyers in India are: Legal Notice: Sending a legal notice is generally the first step in initiation of any proceedings. A legal notice is the first step you can take to recover your money, thereby informing him legally that he is bound to pay  certain sum of money with interests in the stipulated time failing which the legal consequences may flow. Consumer Protection complaint: You can lodge a complaint for consumer protection in a forum of appropriate jurisdiction for any such case. This is a very unique approach to debt enforcement mechanism as this is applicable only in cases where the aggrieved is a consumer. Proceedings under Insolvency and Bankruptcy Code: A financial creditor can initiate proceedings under IBC, to recover money when a Company goes into liquidation and assets are sold to discharge liabilities. Complaint to the Registrar of Companies: The next step an aggrieved can take after the legal notice is to file a complaint with the Registrar of Companies (RoC). The RoC upon receiving the complaint, based on the factual scenario and supporting evidence, sends a show cause notice to the company.

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How can banks recover debt from a borrower?

Recovery of money by banks from the borrower can be done under SARFAESI Act. It involves a two-step process. Firstly, securitisation and reconstruction of financial assets; secondly, enforcement of security interest. Whenever, a bank gives financial assistance to a person, the assistance is termed as a loan to the borrow against any security. In case of default of payment by the borrower, a legal notice is served because of existence of security interest for repayment of debt. If the default persists, the security is sold off to Securitisation and Reconstruction Companies (SCOs and RCOs). The bank in turn receives money and its Non-Performing assets or NPAs are converted into liquid money. The borrower now becomes the borrower of SCOs and RCOs. Further, in a different scenario, banks can even opt for enforcement of security interest in a debt recovery tribunal (DRT). A civil action for recovery of money is taken, wherein after the failure to comply with the legal notice, the Court is entitled to sell the security to recover money and to take other measures for the enforcement of this security interest.  

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What is the limitation period to file a civil suit for recovery of money?

The limitation period to file a civil suit for recovery of money is 3 years from the date of the last payment made or the acknowledgment of debt by the debtor. A civil suit acts as an effective remedy to recover money. The civil suit is generally in the nature of a summary suit wherein the burden of proof is not to prove the debt thus cutting down the bulk of legal proceedings. It is necessary for a suit for recovery of money to be disposed off expeditiously.

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