If you are stuck in such a situation, here is what to do.

Mr. Ramesh Kumar, a small-scale contractor based in the city of Jayanagar, undertook an interior renovation project for a client, Ms. Priya Sharma. The scope of the work and the payment of ₹85,000 were agreed upon through a verbal contract. Mr. Kumar and his team completed the work diligently and on time. However, upon completion, Ms. Sharma refused to release the payment, vaguely claiming that the work was not up to her standards, without providing any specific details of the alleged deficiencies.

The situation escalated when Mr. Kumar tried to follow up for his legitimate dues. Ms. Sharma threatened to file a false case of harassment and assault against him if he ever contacted her again. This put Mr. Kumar in a terrible position; he had already paid his laborers from his own savings and was now facing a significant financial loss coupled with immense mental distress due to the threat of a malicious prosecution. In a state of confusion, he filed a police complaint against the material supplier, Mr. Gupta, who had introduced him to the client. However, Mr. Gupta has since withdrawn his support, leaving Mr. Kumar to fend for himself.

Advice in such cases

When faced with a client who refuses payment and resorts to threats, it is crucial to act strategically and within the bounds of the law.

• Immediately stop all direct, personal communication with the client to avoid any situation that could be twisted and used against you.
• Systematically gather all possible evidence related to the project. This includes photographs of the completed work, messages, call logs, and details of any witnesses like laborers or suppliers.
• The first formal step should be to send a Legal Demand Notice to the client through a qualified lawyer.
• If the client continues to threaten you, you should consider filing a pre-emptive complaint with the police to put your side of the story on record first.

Applicable Sections of Law

This situation involves aspects of both civil and criminal law:

• Indian Contract Act, 1872: A verbal agreement is a valid contract. The refusal to pay for services rendered constitutes a breach of contract, for which you can seek remedy in a civil court.
• Bharatiya Nyaya Sanhita, 2023 (BNS): The threats made by the client can fall under criminal intimidation. Section 351 of the BNS deals with punishment for criminal intimidation. If the threat is to injure reputation or property, or to cause a false accusation to be made, the penalties are more severe.
• Code of Civil Procedure, 1908 & Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS): A civil suit for the recovery of money will be governed by the CPC. The criminal complaint and subsequent investigation will be governed by the procedures laid out in the BNSS.

If you are the complainant

If you are the contractor whose payment is being withheld, here are the steps you should take:

• Document Everything: Compile a file containing all evidence. Take clear, dated photos and videos of the completed work. Save all WhatsApp chats, SMS messages, and emails exchanged with the client. Make a note of the dates and times of all verbal conversations.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
• Send a Legal Notice: Your lawyer will draft and send a formal legal notice to the client, demanding the payment of the outstanding amount within a specific timeframe (e.g., 15 or 30 days) and mentioning the intent to pursue legal action if the payment is not made.
• File a Civil Suit: If the client does not comply with the legal notice, your lawyer can file a civil suit for recovery of money in the appropriate court. For a clear-cut case with strong evidence, a summary suit might be an option for a faster resolution.

If you are the victim

If you are being threatened with a false police case, your safety and legal protection are paramount.

• Preserve Evidence of Threats: If the threats were made via text or WhatsApp, take screenshots. If they were made over the phone, and if your state law permits, record the calls. If there were witnesses to the threats, get their contact information.
• File a Police Complaint: Do not wait for the other party to act. Go to the police station and file a written complaint detailing the entire incident – from the work agreement and non-payment to the specific threats made against you. This creates an official record of your version of events and can serve as a strong defense against any future false allegations.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
• Avoid Engagement: Do not meet the client alone or try to reason with them personally after such threats have been made. Let all further communication be handled by your lawyer.

How the police behave in such cases

Initially, police often view non-payment issues as civil disputes and may be hesitant to register an FIR, suggesting you go to court. However, the moment criminal intimidation or extortion is involved, it becomes a cognizable offense. You must clearly articulate the threats made against you. A lawyer’s presence or a well-drafted complaint can ensure the police take the matter seriously. They will likely summon the other party for their statement. The police might also attempt to mediate an informal resolution, but you are not obligated to accept it, especially if it involves compromising on your rightful dues.

FAQs people normally have

What evidence is required?

For the civil recovery suit, the most crucial evidence includes:

• Any written communication (even informal chats) acknowledging the work or the amount.
• Witnesses, such as your laborers or the material supplier, who can testify about the work being done.
• Photographs and videos of the site before, during, and after the work.
• Invoices for materials purchased for the specific project.
• Bank statements showing payments you made to laborers for this job.

For the criminal complaint of intimidation, evidence would be:

• Recordings of threatening phone calls.
• Screenshots of threatening messages.
• Statements from any person who witnessed the threats.

How long will the investigation take?

The timeline can vary significantly. A civil suit for recovery of money is a lengthy process and can take anywhere from one to several years to reach a final judgment, depending on the court’s schedule and the complexity of the case. The criminal investigation by the police, as per the procedural guidelines of the BNSS, should ideally be completed within a few months, after which they would file a final report or charge sheet in court. Sending a strong legal notice often resolves the matter much faster, as many people prefer to pay up rather than face a prolonged legal battle.

Advocate Sudhir Rao, Supreme Court of India