14 Sep Money Recovery: Tips for best legal Recourse
Money hold significant importance for each individual, as they possess the capacity to fulfill the entirety of one’s necessities and desires. In instances where a valuable asset is misplaced, concerted efforts are invariably undertaken to expeditiously effect its recovery. Thus, if we sum up in legal world. Sometimes situations happen where someone doesn’t follow through on their promise to give back a specific amount of money within the time they agreed on. This is especially true when people or companies do money-related stuff like borrowing or lending money. Basically, when one side says they’ll pay back a certain amount by a certain time, but they don’t actually do it. In these cases, the person who’s supposed to get the money faces a problem because the other side didn’t do what they said they would.
Let’s simplify this by way of example which helps to understand how recovery of money situation arises:
Let’s say Mr.X is a freelancer who provided independent secretarial services to a client named ABC Company. You agreed that ABC Company would pay you Rs.10,000 for your work within 30 days of completing the project. You completed the work on time and sent ABC Company an invoice for the agreed amount.
However, 30 days have passed, and you have not received the payment from ABC Company. You have tried calling and sending reminders, but they have not responded or made the payment. In this scenario, you’re encountering a situation where payment has not been made as agreed upon. Consequently, the subsequent steps to facilitate the retrieval of the owed funds are of paramount importance. Our aim is to provide you with an understanding of the range of legal remedies available within the framework of the Indian legal system, all designed to assist those who find themselves in such circumstances.
Summary suit (Order 37, Code of Civil Procedure)
Whenever conflicts arise between individuals, it’s common for them to resort to the phrase “see you in court.” This reflects a prevailing belief in the efficacy of the judicial system’s decisions. The formal approach to presenting one’s case before a court is through the process of filing a lawsuit. This authority is granted by the Code of Civil Procedure, specifically under Order 37 that offers speedy disposal of the suit.
In a summary suit, the plaintiff (the person making the claim) files a suit with the court along with a concise summary of their claim and supporting documents. The court then evaluates whether the claim falls within the criteria specified under Order 37. If it does, the court may issue a summons to the defendant (the person against whom the claim is made) to appear before the court. The defendant is required to obtain leave (permission) from the court to defend the suit within a prescribed period.
If the defendant fails to obtain leave to defend, the court may pass a decree in favor of the plaintiff without a full trial. However, if the defendant is granted leave to defend, the suit will proceed in the usual manner, involving pleadings, evidence, and a regular trial.
Who may file the suit?
Every person, who has a right to sue, can file a money suit. This category of people includes:
- the Principal and Agent
- Co-holders of a debt or actionable claim
- Partners
- Trustee and Trust beneficiary
- A Religious Institution and its Member(s)
- A Hindu Joint Family & Its Members
- Banking Companies and Financial Institutions
- Civil and Military Officers (for recovery of fine or penalty)
- Other Statutory Authorities
- Executor so on and so forth.
Limitation period:
The time period for filing a suit for money recovery is 3 years from the date when the cause of action arises. However, it can also be condoned and subjected to the discretion of the court.
Jurisdiction:
Jurisdiction refers to the legal authority of a court to hear and decide cases. It is a fundamental principle in the legal system that determines whether a court has the power to adjudicate a particular matter.
In this case, we need to take following factors into account:
- Place of residence of defendant
- Place where defendant has his/her business or place of working
- Place where cause of action arises.
- Subject matter of the suit
Thus, they are key important key points take into account while filing summary of suits under Code of Civil Procedure.
Negotiable Instrument Act, 1881
As the name suggest, It mainly focuses on recovery of money arising from instruments such as bill of exchange, cheque, promissory notes etc. One of the simplest example which occurs in the day to day life is when the cheque of opposite party bounces. If a cheque bounces, the bank issues a “cheque return memo” indicating the reason for the dishonor. The payee can then send a “notice of dishonour” to the drawer, demanding payment within 15 days. The drawer has 15 days from the receipt of the notice of dishonour to rectify the issue and make the payment to the payee. If the drawer fails to make the payment within 15 days of receiving the notice of dishonour, the payee can file a criminal complaint against the drawer under Section 138 of the Negotiable Instruments Act. If the drawer is found guilty, they can face imprisonment for up to two years or a fine that can exceed the cheque amount or both. In addition to criminal liability, the payee also has the option to file a civil suit for recovery of the cheque amount, along with any interest or other charges.
Indian Penal Code, 1860
Section 406 and 420 of Indian Penal code provide legal recourse for the recovery of money in cases involving fraudulent activities and breach of trust. Let’s explain one by one to understand better.
Section 406 : Criminal Breach of Trust
If you have entrusted money or property to someone (for example, in a business context) and they have misappropriated or misused it without your permission, you can file a complaint under Section 406 of the IPC. The objective is to recover the misappropriated property or money and hold the offender liable for their breach of trust.
Section 420: Cheating and Dishonestly Inducing Delivery of Property
If you have been cheated or deceived by someone into giving them money or property, you can file a complaint under Section 420 of the IPC. The objective is to hold the offender accountable and seek legal remedies to recover the money or property that was fraudulently acquired.
Legal Recourse: If the court finds the accused guilty under these sections, it may order restitution or compensation to recover the money or property that was dishonestly obtained or misappropriated or defaulter may be imprisoned as may be directed by court.
Specific Relief Act, 1963
Section 37 of the Specific Relief Act, 1963 provides a comprehensive understanding of the concept of injunction. In essence, an injunction is a legal tool that courts employ to regulate certain actions of parties involved. To delve into this notion, let’s explore the core of injunction.
Injunctions as barriers, restraining a party from undertaking particular actions and act as catalysts, compelling a party to execute specific actions as mandated by the court.
Legal Recourse : In specific scenarios involving suits for the recovery of sums owed by a borrower to a moneylender, the moneylender can seek a temporary injunction. This strategic move aims to safeguard the moneylender’s interests until a just resolution is attained for the recovery of the owed amount. This precautionary measure effectively prevents the borrower from potentially dissipating funds or assets prior to compensating the moneylender or settling the debt.
Arbitration:
Getting back money through arbitration means solving a money disagreement between two sides. It’s a way to fix the problem without going to regular court. A fair person who isn’t on either side, called an arbitrator, helps decide what should happen. This decision must be followed. Remember, the arbitrator listens to both sides before making a decision, and the decision can’t be taken to a higher court unless there’s a problem with it or someone can’t pay within a certain time.
Conclusion:
It’s crucial to know that the law has created various ways to hold accountable those who don’t fulfill their obligations. These methods are outlined in different laws. However, the steps you need to take can differ based on where you are, how much money is involved, and what the agreement was about. Getting back money you’re owed can be tricky, lengthy , cumbersome, but having clear proof of what was agreed upon and getting help from advocates can significantly increase your chances of getting your money back successfully.
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