What to do when someone has not returned your money?

Last Updated at: May 14, 2020
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What to do when someone has not returned your money

People lend money because they have the confidence that the borrower will duly return it. But it is important for the lender has to make a gentle reminder about the repayment of loan often. The lender may suggest a certain plan to the person who got money for repayment. Even then if the person has not fully returned the money then the lender has to send a letter stating the date of loan, the exact amount borrowed and also the repayment terms. The letter should be certified and should demand a response. If none of the steps works out, then he has to consult a lawyer and file a suit against the person who has not repaid.

Legal actions to be taken

The lender should lend the money only after signing the promissory note or the loan agreement which consist of the terms and conditions. In case of default in the payment of money, the lender can approach the court and file a civil suit for recovery of money or a criminal suit for fraud/ breach of the agreement.

The different ways of recovering money from loan defaulters

Civil suit

The lender can file a civil suit for recovering the money he owed through promissory note or loan agreement. He can do so under Order 37 of CPC which allows the lender to file a summary suit. He can file this suit in any high court, City Civil Court, Magistrate Court, Small Causes Court. This suit consists of an important declaration stating the specific relief the lender pleas and the relief should not be beyond the ambit of the order as final relief. The first step is drafting the summary suit and then it should be summoned to the person who borrowed money. The court requires certain documents to be produced before them along with the copy and summons. Once the suit is filed, the defendant will be asked to appear before the court within 10 days. If the person fails to appear, the lender has to produce the summons that had been sent earlier and then the court orders him to send another summon. If the person has any defence he can claim before the court, if not the court assumes the lender’s allegation as true and rewards the judgment accordingly.

The lender can also file a suit under the Negotiable Instrument (NI) Act. This can be filed only for a person who has not returned the money that was borrowed by the lender by cheques, bills of exchange etc. In case the person has returned the money through cheque to the lender. And later if it is found that the cheque has been bounced, the lender can file a suit under Section 138 of NI Act and the person has to repay within 30 days.  If the person fails, the lender can further file a criminal suit against him. If the court is found guilty, the person will be imprisoned for two years and also he has to pay the double amount of the cheque he issued.

Criminal suit

The lender has to prove that the person had committed criminal breach of trust and had not returned back the money. So he can file a suit under Section 420 of IPC as the person whom he had to lend the money has cheated him and also under Section 406 of IPC for Criminal Breach and if the court finds guilty, the person will be imprisoned and has top repay the money he borrowed. Generally, the court takes a long time for the cases filed under this section.

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Out of court settlement

The lender may opt for out of court settlement for recovering the money dues through arbitration, conciliation or Lok Adalat. It is one of the economical and fastest ways for recovering. For out of court settlement both the parties should be willing and has to appear for the hearing. The arbitrators generally hear from both the parties and the award will be given. Once if the award is pronounced they cannot appeal unless if the award is invalid or the person cannot repay within the specified time.

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What to do when someone has not returned your money?

12256

People lend money because they have the confidence that the borrower will duly return it. But it is important for the lender has to make a gentle reminder about the repayment of loan often. The lender may suggest a certain plan to the person who got money for repayment. Even then if the person has not fully returned the money then the lender has to send a letter stating the date of loan, the exact amount borrowed and also the repayment terms. The letter should be certified and should demand a response. If none of the steps works out, then he has to consult a lawyer and file a suit against the person who has not repaid.

Legal actions to be taken

The lender should lend the money only after signing the promissory note or the loan agreement which consist of the terms and conditions. In case of default in the payment of money, the lender can approach the court and file a civil suit for recovery of money or a criminal suit for fraud/ breach of the agreement.

The different ways of recovering money from loan defaulters

Civil suit

The lender can file a civil suit for recovering the money he owed through promissory note or loan agreement. He can do so under Order 37 of CPC which allows the lender to file a summary suit. He can file this suit in any high court, City Civil Court, Magistrate Court, Small Causes Court. This suit consists of an important declaration stating the specific relief the lender pleas and the relief should not be beyond the ambit of the order as final relief. The first step is drafting the summary suit and then it should be summoned to the person who borrowed money. The court requires certain documents to be produced before them along with the copy and summons. Once the suit is filed, the defendant will be asked to appear before the court within 10 days. If the person fails to appear, the lender has to produce the summons that had been sent earlier and then the court orders him to send another summon. If the person has any defence he can claim before the court, if not the court assumes the lender’s allegation as true and rewards the judgment accordingly.

The lender can also file a suit under the Negotiable Instrument (NI) Act. This can be filed only for a person who has not returned the money that was borrowed by the lender by cheques, bills of exchange etc. In case the person has returned the money through cheque to the lender. And later if it is found that the cheque has been bounced, the lender can file a suit under Section 138 of NI Act and the person has to repay within 30 days.  If the person fails, the lender can further file a criminal suit against him. If the court is found guilty, the person will be imprisoned for two years and also he has to pay the double amount of the cheque he issued.

Criminal suit

The lender has to prove that the person had committed criminal breach of trust and had not returned back the money. So he can file a suit under Section 420 of IPC as the person whom he had to lend the money has cheated him and also under Section 406 of IPC for Criminal Breach and if the court finds guilty, the person will be imprisoned and has top repay the money he borrowed. Generally, the court takes a long time for the cases filed under this section.

Talk to our Legal Experts

Out of court settlement

The lender may opt for out of court settlement for recovering the money dues through arbitration, conciliation or Lok Adalat. It is one of the economical and fastest ways for recovering. For out of court settlement both the parties should be willing and has to appear for the hearing. The arbitrators generally hear from both the parties and the award will be given. Once if the award is pronounced they cannot appeal unless if the award is invalid or the person cannot repay within the specified time.

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