One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
TL;DR: If an internship stipend remains unpaid for a year despite the offer letter and follow-ups, you can recover it by filing a complaint with the Labour Commissioner in your state without a lawyer. A legal notice from an advocate often leads to a quick settlement. The amount is a contractual right under the Indian Contract Act, 1872.
Key Facts of the Case
- A client completed a three-month paid internship with a stipend of ₹15,000, clearly stated in the official offer letter.
- Payment was never made despite repeated follow-ups via calls, messages, and emails over nearly 12 months.
- The employer stopped responding after months of excuses, claiming the CA would process it or citing other legal issues.
- The client had documentary proof: the offer letter, WhatsApp chats, call logs, and internship completion certificate.
- The client approached the Chamber of Advocate Sudhir Rao after a non-specialist lawyer quoted a fee exceeding the recovery amount, making legal recourse seem unviable.
- Advocate Sudhir Rao and his office assessed the contractual claim under the Indian Contract Act, 1872, and guided the client through low-cost administrative remedies.
- The client succeeded in recovering the full stipend through a complaint to the Labour Commissioner, without incurring significant legal costs.
The Direct Legal Answer
Can I file a complaint myself without a lawyer?
Yes. You can approach the Labour Commissioner of your state by filing a complaint online or in person. Most states have a dedicated labour department portal. The complaint must include your offer letter, proof of work, and communication records. No lawyer is required at this stage, but a legal notice drafted by an advocate often speeds things up.
Is there an online portal for filing a complaint?
Yes. The Ministry of Labour and Employment runs the "e-SHRAM" portal for unorganised workers, and several state labour departments have their own online grievance systems. Alternatively, a written or physical complaint to the local Labour Commissioner's office works just as well.
Can I recover the stipend without paying a lawyer?
Absolutely. The Labour Commissioner route is designed for small claims like these. You can also send a demand letter yourself by speed post, citing the Indian Contract Act, 1872. If the employer still refuses, a legal notice from an advocate (often costing ₹2,000–₹5,000) can push them to settle. In many cases, employers pay up at the notice stage itself.
What does the lawyer route look like?
If a legal notice fails, your advocate can file a civil suit for recovery of money in a small causes court or a magistrate's court, depending on the amount. For claims up to ₹20,000, the procedure is simpler and faster. However, this involves court fees and advocate fees, which can exceed the claim amount unless the court also awards costs.
Advice in Such Cases
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 to 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.
Start by sending a formal demand notice yourself. Keep all communications—emails, WhatsApp chats, and call logs—as evidence. Approach the Labour Commissioner in your state without delay; the longer you wait, the harder it becomes to recover the money. For small amounts, administrative remedies are often faster and cheaper than litigation.
Matters like unpaid stipends involve specific contractual and labour-law nuances. A general practitioner may overlook procedural options like the Labour Commissioner route. An advocate with domain experience can tailor the approach—whether by negotiation, legal notice, or administrative complaint—to minimise your costs and maximise recovery speed.
Applicable Sections of Law
This is a civil matter governed by the Indian Contract Act, 1872. Section 2(d) defines consideration, which is the stipend as payment for your work. Section 72 requires the employer to restore any benefit (your time and work) if the contract fails.
Under the Specific Relief Act, 1963, Section 37 allows for recovery of money due under a contract. The Code of Civil Procedure, 1908 governs the filing of a civil suit for recovery. For state-specific labour rules, the State Shops and Establishments Act (e.g., Karnataka Shops and Establishments Act, 1961) may also apply to internships.
No criminal sections like BNS are applicable here, as this is purely a contractual dispute.
Punishment and Penalties
This is not a criminal case, so there are no criminal penalties like imprisonment or fines under BNS. However, if a civil court or Labour Commissioner finds the employer liable, they can order payment of the unpaid stipend along with interest and costs. Deliberate non-payment after a demand notice can lead to contempt of court proceedings if a court order is disobeyed.
Jurisdiction — Where to File the Case
For a Labour Commissioner complaint, file it in the state where the internship was performed or where the employer's registered office is located. For a civil suit, file it in a civil court (small causes or magistrate's court) within the same territorial jurisdiction. The pecuniary jurisdiction for small claims (up to ₹20,000) is usually with the Civil Judge (Junior Division). Jurisdiction matters because filing in the wrong court can lead to dismissal or delays.
Limitation Period
Under Article 19 of the Limitation Act, 1963, the limitation period for recovering money due under a contract is three years from the date the payment became due. Since the stipend was due at the end of the three-month internship, the clock started from that date. Missing this period can be fatal to your claim. However, courts may condone delay if you show sufficient cause.
Interim Reliefs Available
In a civil suit, you can seek interim relief like attachment before judgment under Order 38 of the Code of Civil Procedure, 1908, if you suspect the employer is likely to dispose of assets or leave the jurisdiction. This is rarely granted for small claims like stipends. Temporary injunctions under Order 39 of CPC or the Specific Relief Act may apply if the employer threatens to destroy evidence or harass you. Interim reliefs matter because they can pressure the employer to settle early.
If You Are the Victim
- Gather all documents: offer letter, WhatsApp chats, emails, call logs, and proof of work completion.
- Send a formal demand letter by speed post or email, giving a 7–10 day deadline for payment.
- File a complaint with the Labour Commissioner in your state via their online portal or in person.
- If both fail, consult an advocate for a legal notice—often a low-cost step that resolves the matter.
- Keep a calm record of all interactions; avoid threats or abusive language, which can weaken your case.
Documents You Must Keep Ready
- Aadhaar card or other identity proof
- Original internship offer letter showing stipend amount
- WhatsApp and email communication screenshots (dated)
- Call logs with timestamps
- Proof of work completion (certificate or email confirmation)
- Bank statement or account details (for payment)
- Copy of any demand letter sent by you
What Evidence Is Required?
- Primary evidence: the offer letter itself, which is a written contract under Section 91 of the Indian Evidence Act, 1872 (now Section 61 of the Bharatiya Sakshya Adhiniyam, 2023).
- Secondary evidence: WhatsApp chats and emails as communications promising payment
- Call logs showing regular follow-ups
- Witness testimony: a colleague who knows you completed the work
- Employer's failure to respond after your demand letter (can be used to show bad faith)
- Any written statement by the employer acknowledging the debt (even a "next week" message counts)
How Courts Typically Approach Such Cases
Civil courts in India treat unpaid stipends as simple money claims. They focus on the written contract (offer letter) and proof of performance. Courts typically accept WhatsApp chats and emails as admissible evidence under the Information Technology Act, 2000. The judge usually awards the amount plus 6–12% interest from the due date, along with costs if the employer acted in bad faith. These cases rarely go to full trial; many settle at the first hearing if the evidence is clear.
Timeline of Legal Process
- Demand notice (you): 1 week – send via speed post
- Legal notice (advocate): 2–4 weeks – employer may settle immediately
- Labour Commissioner complaint: 2–4 months – includes hearing and order
- Civil suit filing: 1 day – summons to employer in 30 days
- Written statement by employer: 30–90 days
- Evidence and arguments: 3–6 months
- Judgment: 1–2 months after final hearing
- Execution of decree: 2–6 months if employer resists payment
Total time via Labour Commissioner: 3–6 months. Via civil court: 8 months to 1.5 years.
Understanding the Costs
The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.
A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.
Can the Matter Be Settled Out of Court?
Yes. Most unpaid stipend cases settle through negotiation or mediation before a court hearing. You can send a proposal to the employer for payment in installments. Under Section 89 of the Code of Civil Procedure, 1908, courts can refer the matter to Lok Adalat for settlement without trial. Lok Adalat awards are binding and cannot be appealed. Settlement is advisable because it saves time, money, and emotional strain. However, ensure the settlement is written and signed by both parties to avoid future disputes.
Common Mistakes People Make
- Waiting too long to act — the limitation period is three years, but evidence gets harder to collect with time.
- Destroying or losing communication records like WhatsApp chats and emails by clearing storage.
- Signing any "no dues" certificate or settlement without reading it carefully — this can waive your claim.
- Threatening the employer publicly on social media; this can be used against you in court.
- Engaging an advocate who does not regularly handle small claims or labour law matters — domain-specific experience helps in choosing the right forum (Labour Commissioner vs. civil court) and presenting evidence effectively.
- Giving up because the recovery amount is small — many options are low-cost or free.
FAQs People Normally Have
Can I file a police complaint for unpaid stipend?
No. Non-payment of a contractual stipend is a civil matter, not a criminal offence like cheating. A police complaint will likely not be entertained unless there is clear fraud, such as a forged offer letter. Stick to the Labour Commissioner or civil court route.
Do I need a lawyer for a Labour Commissioner complaint?
No. You can file the complaint yourself. But a legal notice from a lawyer often works faster.
What if the employer is from a different state?
You can file a complaint in the state where you performed the internship or where the employer has a registered office. The Labour Commissioner's office may transfer the matter to the relevant state.
Can I sue the employer for mental harassment?
In a civil suit, you can claim damages for mental harassment only if you can prove malice or intentional harm. This is difficult to prove for a small stipend case. Stick to recovering the principal amount plus interest and legal costs.
What if the employer files bankruptcy?
If the employer is a company that goes into insolvency, your claim becomes an unsecured debt. You may register it with the resolution professional under the Insolvency and Bankruptcy Code, 2016, but recovery is uncertain. Act quickly before such a situation arises.
This article is general legal information, not legal advice. Consult a qualified advocate about your specific situation.
Advocate Sudhir Rao, Supreme Court of India