Be it your employer sitting on your rightful dues, your client refusing to pay you the rightful amount or a builder refraining from returning the amount he has charged you in excess, you might come across any of the unfortunate aforementioned situations. How does one deal with such a case?
Lending money to a friend or a family might horribly go wrong if they refuse to return such amount. We, the common people, unlike the banks which have a well established recovery mechanism in DRT’s, do not have any particular recovery machinery to boast of. However, there are multiple provisions and recourses available to battle out such cases and get back your money.
SENDING OUT A WELL DRAFTED LEGAL NOTICE
Before you initiate any legal action, you are supposed to serve a notice to the opposition, representing all the grievances to them and indicating your intent to initiate further legal actions.
It is a final chance given to the opposition for a resolution of the problems. There is always a chance that the legal notice might bring the defendant on heels and the case might get settled even before going into trial, through discussions and negotiations. It is very important to draft an elaborate and strongly worded legal notice, which covers everything from facts to your demand from the opponent.
In case, the opponents refuse to refund the money/ settle the matter after the receipt of the legal notice, following are the legal recourses that can be taken:
- File a summary suit under Order 37 of the Civil Procedure Code, in order to recover your money. Compared to normal suits, summary suits are disposed of faster. Once the suit is instituted and the summons are issued, the defendant has 10 days to make an appearance, failing which the court assumes the plaintiff 's allegations to be true and, accordingly, awards the plaintiff. If the defendant makes an appearance and asks for leave to defend, the court accepts his defence only if it is convinced that it is substantial to the case in question.
Where the matter concerns penalties or any other uncertain amount or any amount that is not a debt, one cannot file a summary suit.
- If there is a debt occurring out of a cheque bounce, then one can file a complaint under Section 138 of the Negotiable Instruments Act, 1881. As per this provision, a legal notice is to be sent to the defaulter within 30 days of receiving the cheque return memo. If the cheque issuer fails to make the rightful payment within 30 days of receiving the notice, the payee has the right to file a criminal complaint under this Section. However, the complaint should be registered in a magistrate's court within a month of the expiry of the notice period, otherwise your suit will be time-barred. If found guilty, the defaulter can be punished with a prison term of two years and/or a fine, which can be as high as twice the cheque amount.
One also has the option to file a criminal complaint against the defaulter, with the local police under section 420 (cheating), section 403 (criminal misappropriation) and section 406 (criminal breach of trust), and initiate criminal proceedings against the defaulter by registering the FIR.
If the other party is willing to settle the matter, then one of the fastest and most economical ways of recovering money is to opt for an out-of-court settlement, such as arbitration or conciliation. If the matter is referred to an arbitrator, the latter hears both the parties and passes an award binding on both.
If the matter is referred to a conciliator, then he assists the parties in reaching a mutually agreed settlement of the dispute.