Introduction
Ever lent money to a friend and now regret it? Worked on a credit basis but still waiting for payment? Or received a cheque that bounced? You’re not alone. Every day, countless individuals and small businesses across India face similar challenges. Fortunately, the law provides clear remedies to recover your money legally.
Whether through a cheque bounce case under Section 138 of the Negotiable Instruments Act (NI Act) or by filing a money recovery suit under the Code of Civil Procedure (CPC), there are defined legal pathways to reclaim what’s yours.
What Is a Recovery of Money Suit?
A recovery of money suit is a legal proceeding initiated by a creditor or lender against a debtor or borrower to recover a specific sum of money. It’s one of the most common legal actions in civil courts, ensuring financial justice for individuals, professionals, and businesses.
Legal Framework for Money Recovery in India
1. The Indian Contract Act, 1872
This Act governs all agreements and contractual relationships. If the payment is part of an agreement—written or oral—the creditor can invoke:
- Section 70: For obligations arising from non-gratuitous acts.
- Section 73: For compensation due to breach of contract.
2. The Code of Civil Procedure, 1908 (CPC)
The CPC provides the legal mechanism to file civil suits.
- Order IV: Governs the commencement of a civil suit.
- Order 37 (Summary Suits): Designed for quick resolution in cases involving contracts, promissory notes, or financial instruments.
3. The Negotiable Instruments Act, 1881
This Act regulates financial instruments like cheques and promissory notes.
- Section 138: Criminalizes the act of issuing a cheque that is dishonored due to insufficient funds.
4. The Limitation Act, 1963
The law specifies a three-year limitation period for filing a money recovery suit, counted from the date the debt becomes due. If not filed within this period, the claim becomes time-barred, even if valid.
Understanding Jurisdiction: Where to File the Suit
1. Territorial Jurisdiction
As per Section 20 of CPC, a suit can be filed where:
- The defendant resides, or
- The cause of action arises.
Example:
Ajay lives in Delhi, where the agreement was signed. If Anika files the suit in Mumbai (her city), the court may reject it since territorial jurisdiction lies in Delhi.
2. Pecuniary Jurisdiction
This depends on the monetary value of the claim:
- Civil Judge (Junior Division): Up to ₹1–₹5 lakhs.
- District Court (Senior Division): Higher-value suits.
Money Recovery Lawyer in Jayanagar Bangalore
Legal Path to Reclaiming What’s Yours
Step 1: Knock Politely – Send a Legal Notice
Before approaching the court, send a formal legal notice to the debtor demanding payment within a specified period. The notice should clearly state:
- Amount owed
- Transaction details
- Deadline for payment
- Legal consequences for non-payment
Note: In cheque bounce cases, this notice is mandatory under Section 138 of NI Act and must be sent within 30 days of cheque dishonor.
Step 2: Take Legal Action – File a Suit or Complaint
Option 1: Money Recovery Suit (Civil Case)
- Filed under the Code of Civil Procedure.
- Draft a plaint (formal written complaint) under Order IV CPC.
- Pay the prescribed court fee based on the claim amount.
Option 2: Cheque Bounce Case (Criminal Case)
- File under Section 138 of the NI Act.
- Involves different procedures than civil recovery suits.
Example:
Ravi’s advocate sends a notice demanding ₹2 lakhs within 15 days. When Hari ignores it, Ravi files a Summary Suit under Order 37 CPC, ensuring faster disposal if Hari fails to defend credibly.
Step 3: Patience, Paperwork, and Hearings
Once filed, the court issues summons, receives responses, examines evidence, and hears arguments over several sessions.
Example:
Ravi produces the loan agreement, bank transfer proof, and WhatsApp chats as evidence. The court, upon review, directs Hari to file a written statement in reply.
Step 4: Judgment and Execution
If the court rules in your favor, but the debtor still refuses to pay, you can initiate execution proceedings under Order 21 of CPC.
The court may then:
- Attach the debtor’s property,
- Freeze bank accounts, or
- In extreme cases, issue an arrest warrant.
Example:
After a year of hearings, Ravi wins the case. Hari is ordered to pay ₹2 lakhs with 6% interest. When Hari still refuses, Ravi seeks execution of the decree, requesting the court to attach Hari’s property.
Conclusion
Most money recovery disputes get resolved at the legal notice stage, as defaulters often repay once they realize the creditor has a legal remedy. However, if litigation becomes necessary, patience and documentation are key.
While court recovery may take time, the law ensures fairness and enforceability. Always keep records, maintain proof of transactions, and consult a money recovery lawyer to navigate the process effectively.
Disclaimer: This blog is for general informational purposes only and does not constitute legal advice. Privacy laws may vary based on circumstances and jurisdiction. Readers are advised to consult a qualified legal professional, such as Bisani Legal, for specific advice regarding data protection, privacy rights, or related legal concerns.
Published by: Mr. Saket bisani
Date: 09/10/2025
