Suit for recovery of money/recovery of money suit/recovery suit under CPC
In the case of a loan, credit or any other account which is to be received in part or whole, if such debt is not recovered, it becomes a bad debt and thus the need arises to recover such debt.
Methods for recovery: A lot of methods are available for the recovery of debts; some are legal while some are illegal. Methods such as calling the borrower for amicably solving the issue or by hiring the commissioned agents for the recovery of debt. While, the legal methods involve:
a. Civil Remedy: aggrieved party sends legal notice to the borrower/debtor for the initiation of the civil Suit for Recovery of Money.
b. Criminal Remedy: the aggrieved party can file an FIR in the local Police Station which has the jurisdiction over the matter. After the FIR is filed, a criminal case shall be filed and thus, the proceedings will be set in motion.
c. Out of Court Settlement: if the parties are not interested in solving the issue through the Court or are looking for a quick and efficient way to sort out the issue, then they can resolve the issue by the methods of arbitration, mediation or negotiation.
Laws related to the Recovery of Debt-
There are many provisions provided for the issue related to the recovery of debt. It could be quite tedious and puzzling sometimes to ensure as to which law shall be applied in one’s case of debt recovery-
The Indian Contract Act, 1872- One of the major reasons for the accrual of debt is dishonour of contract. There some of the major issues related to contracts due to which debt could be generated. They are-
Section 17- Fraud
Section 18- Misrepresentation
Section 124- Contract of Indemnity
Section 126- Contract of Guarantee
Section 73- Compensation of loss or damage by breach of Contract
·
Negotiable Instruments Act, 1881- In the cases of dishonour of cheques under Section 138, for dishonour of Bill of Exchange or Promissory Note, this Act is applied. Under the provisions provided by the Act, for the proceedings to be initiated, first a legal notice is issued to the parties.
Code of Civil Procedure- for speedy disposal of cases, a summary suit is filed under the Order 37
Indian Penal Code- if a debt has been accumulated on a party due to any of the reasons mentioned below, then such aggrieved party can approach the Court-
Sections 405 & 406-Criminal Breach of Trust
Section 403- Dishonest Misappropriation of property
Section 415 & 417- Cheating
Insolvency and Bankruptcy Code, 1905- if the opposite party becomes bankrupt or insolvent, only then can this provision be availed.
Recovery of Debts Due to Banks and Financial Issues (RDDBFI Act), 1993- In case the aggrieved party is any financial institution like a bank or any private finance corporation, this Act can be applied to for adjudication through establishment of Tribunals so as to recover the debts
Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest (SARFAESI) Act, 2002- the objective of this Act is to regulate the securitisation and reconstruction of financial assets by establishing the Asset Reconstruction Companies.
What are the legal requirements to file a suit?
For initiating the proceedings under the Acts mentioned above different legal requirements are provided as per every provision-
A summary suit can be filed if the amount of recovery is not more than Rs 10,00,000 under the Order XXXVII of CPC, 1908 or Arbitration proceedings can also be initiated under the A&C Act.
If the debt amount is more than Rs. 1,00,000, one can initiate the proceedings for the Recovery Of Money Suit as per the following Acts-
a. IBC- if the opposite party has gone bankrupt
b. SARFAESI- can be invoked for the repossession of the mortgaged property without the intervention of the Court, however the such asset should have been declared as NON_PERFORMING ASSET (NPA)
If the debt incurred is more than Rs10,00,000, following Acts can be invoked-
a. IBC
b. Can initiate proceeding under the Securitisation Act
c. An application under the DRT can also be filed.
How can an Advocate assist?
As has been explained in the above article, a no. of laws have been provided regarding the issue of debt recovery, an experienced advocate help filing for a summary suit, or file a Recovery Suit Under cpc or to file an application under the DRTs or before the NCLT. Also different forums or jurisdictions have different procedures, which is quite confusing for a layman. Thus, appointing an experienced lawyer would help you in a long way, as he could guide you through the various options available to you in accordance to your issue and also help you through various procedures involving paperwork and so on. LEAD INDIA provides you with a team of experienced advocates who have huge experience in dealing with issues similar to the ones mentioned above.
Visit Us: - https://www.leadindia.law
Call Us: - +91-8800788535
Youtube: - https://www.youtube.com/c/LeadIndiaLawAssociates
Facebook: - https://www.facebook.com/leadindialaw
LinkedIn: - https://www.linkedin.com/company/76353439
Twitter: - https://twitter.com/leadindialaw
Pinterest: - https://in.pinterest.com/lawleadindia
Instagram: -https://www.instagram.com/leadindialawofficial
Comments