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

Mr. Sameer Sharma, a former employee of a tech startup named Innovatech Solutions Pvt. Ltd. based in Rajnagar, finds himself in a challenging financial predicament. During his employment, the company faced a severe cash crunch. Acting in good faith and trusting the management, Mr. Sharma loaned a significant sum to help the company stay afloat. He transferred ₹6.9 lakhs directly to the company’s bank account and another ₹5 lakhs to the personal account of the CEO, Mr. Vikram Singh, who subsequently transferred this amount to the company’s account.

Mr. Singh had verbally promised to repay the entire amount of ₹11.9 lakhs within five months. However, more than a year has passed since Mr. Sharma left the company, and an amount of ₹5.75 lakhs is still pending. Whenever Mr. Sharma contacts the CEO for the outstanding payment, he is directed to the Vice President, Mr. Alok Gupta, with the excuse that Mr. Singh is busy. Mr. Gupta, while acknowledging the debt over email, consistently delays the payment, citing the company’s poor financial health.

Feeling that he is being given the runaround, Mr. Sharma, who now resides in Mayapuri, is distressed. The geographical distance between his current residence and the company’s location in Rajnagar adds another layer of complexity. He has maintained meticulous records of all bank transactions and email communications where the debt is acknowledged by the VP. He is now seeking guidance on the legal steps he can take to recover his money.

Advice in such cases

Navigating such a situation requires a strategic and legally sound approach. Here are some general steps to consider:

• Document Everything: Preserve all proofs of the transaction, including bank statements, emails, text messages, and any other form of communication where the loan and the promise of repayment are discussed or acknowledged.
• Send a Formal Demand: The first official step is often to send a formal demand for payment. This should ideally be done through a legal notice drafted by a lawyer, which clearly states the outstanding amount and a deadline for payment.
• Consider Jurisdiction: Since the parties are in different cities (Mayapuri and Rajnagar), determining the correct court with jurisdiction to hear the case is crucial. This depends on factors like where the transaction took place or where the company is registered.
• 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.

Applicable Sections of Law

This case primarily falls under civil law for the recovery of money, but certain aspects of criminal law might also be relevant.

• Code of Civil Procedure, 1908 (CPC): This is the primary statute governing the procedure for civil lawsuits in India. A suit for recovery of money would be filed under the provisions of the CPC. A “summary suit” under Order XXXVII of the CPC could be a faster option if the claim is based on a written contract, which can include emails acknowledging the debt.
• The Limitation Act, 1963: It is crucial to act within the time limit prescribed by law. A suit for the recovery of a loan must be filed within three years from the date the loan becomes due. An acknowledgment of the debt in writing (like the VP’s email) can extend this limitation period.
• Bharatiya Nyaya Sanhita, 2023 (BNS): While the matter is largely civil, criminal action can be explored.
  • Section 318 (Cheating): To invoke this section, it must be proven that the CEO and the company had a dishonest intention to not repay the money from the very beginning of the transaction.
  • Section 316 (Criminal Breach of Trust): This could apply if it can be established that the money was entrusted for a specific purpose and was then dishonestly misappropriated, though it is less common in simple loan cases.

If you are the complainant

As the person who has loaned the money, you should take the following proactive steps:

• Organize Your Evidence: Compile all bank statements showing the transfer of funds, and printouts of all email and message exchanges with the CEO and VP.
• Issue a Legal Notice: This is a formal communication from your lawyer to the company and the CEO, demanding the payment of the outstanding amount. It serves as a final warning before initiating legal proceedings and is often a prerequisite for filing a suit.
• File a Civil Suit: If the legal notice does not result in payment, the next step is to file a civil suit for the recovery of money in the appropriate court. Your lawyer will guide you on whether to file a regular suit or a summary suit.
• 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.

If you are the victim

If you find yourself in a position like Mr. Sharma’s, it is essential to act decisively to protect your interests.

• Act Promptly: Do not let the matter linger. The law provides a limited time frame (limitation period) to file a recovery suit. Any delay can weaken your legal position.
• Secure Digital Evidence: Take screenshots and back up all digital communications. Emails and messages are crucial pieces of evidence that can be presented in court.
• Evaluate Criminal Action: Discuss with your lawyer the possibility of filing a criminal complaint. However, be aware that the police may initially view it as a civil dispute. A strong case for cheating or criminal breach of trust needs to be made.
• 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.

How the police behave in such cases

In matters involving financial disputes that appear to be loans gone bad, the police are often cautious about registering a First Information Report (FIR). They tend to perceive such cases as being of a “civil nature.” They might advise the complainant to approach the civil court for recovery of money rather than initiating a criminal investigation. For the police to act under sections of the Bharatiya Nyaya Sanhita, 2023, there must be clear and compelling evidence of fraudulent or dishonest intent from the outset, not just a failure to repay a loan.

FAQs people normally have

What evidence is required?

To build a strong case for the recovery of your money, you will need solid evidence. The most critical pieces of evidence include:

• Bank account statements showing the transfer of money to the company and/or the CEO.
• Email correspondence where the loan is discussed or the debt is acknowledged by the company representatives (like the VP).
• Text messages, WhatsApp chats, or any other recorded communication regarding the loan and repayment.
• Any witness who was privy to the loan agreement, even if it was verbal.

How long will the investigation take?

The timeline for legal proceedings can vary significantly. If you file a civil suit for recovery, it can be a lengthy process, often taking several years to reach a final decision due to the backlog in courts. However, if your case is eligible for a “summary suit” under Order XXXVII of the CPC, the process can be much faster, as the defendant is not allowed to defend the suit unless they can prove to the court that they have a substantial defense. A summary suit can potentially be resolved within a year. If a criminal case is initiated, the investigation timeline under the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) depends on the complexity of the case and the efficiency of the investigating agency.

Advocate Sudhir Rao, Supreme Court of India