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

Mr. Kumar, a small-scale hardware supplier in the city of Jayanagar, is facing a difficult situation. He supplied construction materials worth ₹18,000 on credit to a contractor, Mr. Verma. Mr. Verma, whose company ‘Verma Infra’ is based in Ratnapur, was working on a road project in Jayanagar. Once the project was completed, Mr. Verma returned to his city. For the last three years, he has completely ignored Mr. Kumar’s attempts to collect the payment. He does not answer calls or respond to messages, and has now blocked Mr. Kumar’s number. Mr. Kumar knows that Mr. Verma is financially sound, as he frequently posts about his lavish lifestyle and new projects on social media. For a small trader like Mr. Kumar, ₹18,000 is a significant amount, and he is seeking a way to recover his hard-earned money.

Advice in such cases

When a client deliberately avoids paying a legitimate due, it is not just a financial loss but also a breach of trust and contract. Here is some advice for handling such a situation:

• Send a Legal Notice: The first formal step is to have a lawyer send a strong legal notice to the defaulter’s registered office address and personal address. This notice will detail the transaction, the amount due, the failure to pay, and the intention to initiate legal proceedings if the payment is not made within a specified period (e.g., 15 or 30 days). Often, a formal notice from a lawyer is enough to prompt payment.
• File a Civil Suit for Recovery: If the legal notice is ignored, the next step is to file a civil suit for the recovery of money in a court of appropriate jurisdiction. Given that the amount is relatively small, it would likely be filed in a Small Causes Court or a court of a Civil Judge (Junior Division), depending on the jurisdiction.
• Consider a Summary Suit: A summary suit under Order XXXVII of the Code of Civil Procedure, 1908, can be a faster option if the claim is based on a written contract, such as an invoice or a bill of exchange. In a summary suit, the defendant (the client) is not allowed to defend the case unless they can prove to the court that they have a substantial and bona fide defence.
• Be Mindful of the Limitation Period: A suit for the recovery of money must be filed within three years from the date the debt became due. In this case, as three years have already passed, it is crucial to act immediately. If there has been any written acknowledgment of the debt from the client during this period, the limitation period might be extended.
• Criminal Complaint: If it can be proven that the client had a dishonest intention to not pay from the very beginning of the transaction, a criminal complaint for cheating under the Bharatiya Nyaya Sanhita, 2023 (BNS) can be filed. However, the burden of proof is higher, as you must establish fraudulent intent, not just a simple failure to pay.
• 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

Several legal provisions are relevant in such cases:

• The Code of Civil Procedure, 1908 (CPC): This code governs the procedure for filing and conducting civil suits, including suits for the recovery of money. Order XXXVII of the CPC specifically provides for a summary procedure for quicker disposal of cases based on written documents.
• The Limitation Act, 1963: This Act prescribes the time limits for initiating legal proceedings. For recovering money based on a contract or invoice, the limitation period is three years from the date the cause of action arises (i.e., the payment due date).
• Section 316 of the Bharatiya Nyaya Sanhita, 2023 (BNS): This section deals with the offence of ‘Cheating’. To invoke this, you must demonstrate that the client had a dishonest intention from the outset and fraudulently induced you to deliver the goods without any intention of paying for them.
• The Indian Contract Act, 1872: The entire transaction is based on a contract (even if oral, supported by an invoice). The failure to pay is a breach of this contract, which gives you the right to sue for damages and recovery.

If you are the complainant

If you are the one who is owed money, you must be proactive and systematic in your approach:

• Organize Your Documents: Compile all relevant documents, including the original invoice, delivery challan or receipt signed by the client, purchase order, and any communication records (WhatsApp messages, emails, call logs) where you have requested payment.
• Initiate with a Legal Notice: Do not delay. Hire a lawyer to send a clear and firm legal notice. This is a crucial step that establishes your formal intent to pursue legal recourse.
• File the Suit Promptly: If the notice period expires without a response or payment, immediately file a civil suit. Your lawyer will guide you on the appropriate court and type of suit (regular or summary). The jurisdiction will typically be where the defendant resides or where the cause of action (the transaction) took place.
• 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

As a victim of non-payment, your actions can significantly impact the outcome:

• Preserve All Evidence: Keep a record of every interaction. Take screenshots of the client’s social media activities that indicate their financial well-being. This can be used to counter any potential claim of bankruptcy or financial distress they might make in court.
• Act Within the Time Limit: The law helps those who are vigilant. The three-year limitation period is strict. Delaying action beyond this period will likely result in your case being dismissed as “time-barred.”
• Do Not Engage in Unlawful Recovery Methods: Avoid threats or harassment. Pursue the matter legally to ensure you remain on the right side of the law.
• 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

Typically, the police view disputes over non-payment as civil matters arising from a breach of contract. They are often reluctant to register a First Information Report (FIR) for cheating. They might advise you to approach a civil court for recovery of your dues. However, if your lawyer drafts a complaint that clearly outlines the elements of criminal intent—such as deception from the very beginning, a pattern of similar behavior with other vendors, or providing false information to secure the goods on credit—the police may be more inclined to register an FIR under Section 316 of the BNS. An FIR can put significant pressure on the defaulter to settle the matter.

FAQs people normally have

What evidence is required?

To build a strong case for the recovery of money, you will need the following evidence:

• The original invoice or bill for the goods supplied.
• Proof of delivery, such as a signed delivery challan or courier receipt.
• Any written agreement or purchase order.
• Records of communication demanding payment, such as emails, WhatsApp chats, or call records.
• A copy of the legal notice sent to the client and proof of its delivery.
• Bank statements showing that the payment was never credited to your account.
• Any witness who can testify about the transaction or delivery.

How long will the investigation take?

The duration of legal proceedings can vary:

• Legal Notice: The process takes about 15-30 days, which is the time given to the other party to respond.
• Summary Suit: If the defendant cannot show a valid defence, a summary suit can be decreed in a few months.
• Regular Civil Suit: A standard civil suit can be a lengthy process, potentially taking anywhere from one to three years, depending on the court’s caseload and the tactics used by the defendant.
• Criminal Complaint: If an FIR is filed, the police investigation to file a chargesheet can take a few months. The subsequent criminal trial can take a considerable amount of time.

Advocate Sudhir Rao, Supreme Court of India