It’s important to note that the specific mechanism for money recovery depends on the nature of the debt, the amount involved, and the applicable laws. Seeking legal advice and representation is advisable to choose the most appropriate and effective method for money recovery in a particular case.
In India, there are various mechanisms available for the recovery of money, depending on the nature of the debt and the amount involved. Some common mechanisms for money recovery in India include:
1. Legal Notice:
If negotiation fails, the creditor can send a legal notice to the debtor, formally demanding payment of the outstanding amount within a specified period. The legal notice serves as a warning of potential legal action if the debt remains unpaid.
2. Debt Recovery Tribunal (DRT):
The Debt Recovery Tribunal is a specialized forum established under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. It handles cases related to the recovery of debts by banks and financial institutions from borrowers.
3. Civil Court:
For non-banking financial institutions (NBFCs) and other creditors, money recovery can be pursued through civil courts. The creditor can file a civil suit to recover the outstanding amount.
4. Summary Suit: ‘
In certain cases, when the debt is based on a written contract or promissory note, the creditor can file a summary suit. A summary suit expedites the legal process and provides a quicker remedy for the recovery of money.
5. Commercial Suit:
The Commercial Courts Act, 2015 was introduced to reduce the pendency of the Commercial Disputes which earlier were dealt with under the category of regular suits. There are different types of Commercial Disputes such as breach of the contractual relationship or any other contract-related issue, IPR infringements between two businesses or issues regarding the land dispute in which the said land is used for commercial purposes, etc.
6. Lok Adalat:
Lok Adalat is an alternative dispute resolution mechanism where cases are settled amicably with the help of a mediator or conciliator. Money recovery cases can be referred to Lok Adalat for resolution.
7. MSME:
The MSME Samadhaan portal enables the MSMEs to directly register their cases about delayed payments against the buyer of goods/services before the Micro and Small Enterprise Facilitation Council (MSEFC).
8. Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act:
Under SARFAESI Act, banks and financial institutions can take possession of secured assets and sell them to recover the outstanding amount from defaulters.
9. Insolvency and Bankruptcy Code (IBC):
For larger defaults or cases of corporate debt, the creditor can initiate insolvency proceedings against the debtor under the Insolvency and Bankruptcy Code to recover the money owed.
10. Attachment and Auction of Property:
In certain cases, creditors can seek a court order to attach the debtor’s property and have it auctioned to recover the money.
11. Cheque Bounce/Dishonour:
Dishonouring of the cheque is the concept when a cheque is drawn by a person for an account which is maintained by a bank with the banker for paying a certain sum of money rejected by the bank due to an insufficient balance in the account or exceeds the amount there in the account.
12. Arbitration & Conciliation:
ADR provides a viable option for those who prefer to stay out of court and has many potential advantages for most litigants, including Reduced cost, Efficient resolution, Less emotional stress, Flexibility with rules and procedures, Control over the results etc
CHEQUE DISHONOUR CASES
1. The first condition is that cheque must be towards the liability.
2. Within a period of 6 months of validity of cheque, it should be presented by the beneficiary.
3. Due to insufficient funds the bank must have returned the cheque.
4. Within 30 days of the receipt of information from the bank regarding the insufficiency of funds, demand is raised by the payee by giving a written cheque bounce notice for the payment.
5. Within 15 days of the receipt of the written notice of cheque bounce, drawer fails to make payment of the said amount.
6. The cheque bounce notice is sent by the registered post as to create the proof of the notice sent.
7. In case of payment is not received within 15 days then payee can file a complaint before a magistrate within 30 days.
8. A complaint has to be filed in such a state where the bank is situated.
9. Types of recourses:
- Civil Suit: Usually, a civil suit when filed in the case of dishonour of cheque is for the recovery of the money, without dragging the defaulter towards punishment.
- Criminal Complaint: If the drawer is found guilty as a wilful defaulter, he will be charged with a jail term of two years or a fine which is twice the cheque amount, or both. The defaulter is also given a chance to appeal to the sessions court within a month of the date of the judgment of the lower court.
