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Recovery of money
Recovery of money is a legal remedy available to anyone who has a legal right to recover an outstanding debt or receivable from a defaulter.
Parties involved in cases of recovery of money:
- Plaintiff or Petitioner
Plaintiff or respondent is the lender who is legally entitled to receive the outstanding debt or money from the borrower. This can either be an individual or a company.
- Defendant or Respondent
Defendant or respondent is the borrower who is allegedly liable to pay the outstanding debt or money to the lender. Thus can also be an individual or a company.
legal options available for the recovery of money in India
The most common remedy for recovery of money is through Summary suits under Order XXXVII of the Code of Civil Procedure, 1908. Summary suits are similar to ordinary suits in procedure however, they are disposed off much more speedily.
Once a summary suit is filed, a summons is issued to the respondent i.e., the alleged defaulting borrower The respondent then has 10 days to appear before the court.
If the respondent fails to appear, another summons is issued to the Respondent. If the Respondent still doesn’t appear before the court then the facts and allegations of the suit are accepted as true and the case is disposed of accordingly.
Negotiable Instruments Act, 1881
Under this Act, you as a lender can recover your debt or money for negotiable instruments like cheques, bills of exchange, etc.
Under S. 138 of the Act, a legal notice should be sent to the alleged defaulting borrower within 30 days from the date of cheque bounce.
The Legal notice usually provides a time period of 15 days for the borrower to pay you the outstanding amount. In case of the borrower’s failure to comply with the notice, you have another 30 days from the date of expiry of the notice period to file a complaint. You may ask for an extension with adequate justifications for the delay.
Insolvency and Bankruptcy Code, 2016
Under this Act, an insolvency case may be filed against the defaulting borrower for the recovery of money.
The plea is usually admitted or rejected within 14 days from the date of filing.
A criminal case under the IPC
You also have an option to file a criminal case under different provisions of the Indian Penal Code, 1860 like S. 406 for criminal breach of trust.
Debt Recovery Tribunal (DRT)
Banks and financial institutions can approach the DRT under the Debt Recovery Act, 1993, Recovery of Debts due to Banks and Financial Institutions Act, 193 or the SARFAESI Act, 2002 for recovery of money.
DRT should dispose of a case within 180 days from the date of filing. However, if the application is made under the SARFAESI Act, then the case should be disposed off within 60 days to 4 months from the date of filing.
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- Recovery of money from distributors or vendors
- Recovery of money for goods and/ or services provided
- Recovery of money from a defaulting borrower