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Under Indian law, there are various options for recovery of dues. This includes civil and criminal remedies, as well as special provisions for financial institutions such as banks and non-banking financial companies (NBFCs).

Civil Remedies:

Code of Civil Procedure, 1908

In order to recover money through the civil court system, a creditor can file a summary suit under Order 37 of the Code of Civil Procedure, 1908 (CPC). These types of suits are generally disposed of more quickly than regular civil suits. Once the suit is initiated and summons are issued, the defendant must attend to the process outlined in Rule 2(3) within 10 days of being served with the summons. After appearing in court, the plaintiff serves the defendant with a summons for judgment along with an affidavit verifying the claim, the amount sought, and the absence of any defenses, in the plaintiff's opinion.

According to Rule 2(6), if the defendant does not request permission to defend the case, the plaintiff will either be granted an immediate judgment or the Court may order the defendant to provide security. If the defendant can provide adequate justification for their delay in appearing or requesting leave to defend, the delay may be excused under sub-clause 7.

Therefore, a plaintiff must show that their case falls under the purview of Order 37 in order to file a summary suit. It is then up to the defendant to establish their right to defend the case. If successful, the Order 37 suit will be converted into a regular civil suit and the defendant will be required to submit a written statement within 30 days.

Negotiable Instruments Act, 1881

The Negotiable Instruments Act, 1881 provides a legal framework for the recovery of money arising from instruments such as bills of exchange or cheques. The Act includes various sections that outline the procedures for recovering money under specific instruments. For instance, Section 138 addresses bounced cheques and requires that a legal notice be sent to the issuer within 30 days of receiving the returned cheque. If the issuer fails to make payment within 30 days of receiving the notice, the payee has the right to file a criminal complaint under this section.

It is important to note that the complaint must be filed in a magistrate's court within one month of the notice period expiring. If this deadline is not met, the suit may be considered time-barred and may not be heard by the court unless the payee can provide a sufficient and reasonable cause for the delay. Upon receiving the complaint, along with an affidavit and supporting documentation, the court will issue summons and proceed with the case. If the issuer is found guilty, they may face a prison sentence of up to two years and/or a fine of up to twice the amount of the cheque.

Criminal Proceedings:

The Indian Penal Code, 1860 (IPC) provides a range of provisions for individuals seeking remedies for overdue money. Some provisions that may be applicable include:

Cheating (Section 415): This section applies when a person uses fraud or deception to obtain property from another individual. The maximum penalty for cheating is imprisonment for up to one year, a fine, or both.

Criminal Misappropriation (Section 403): This section applies when a person dishonestly uses another person's property for his/her own benefit. The penalty is imprisonment for up to two years, a fine, or both.

Criminal Breach of Trust (Section 405): This section applies when a person dishonestly misappropriates or converts another person's property for his/her own benefit. This is similar to criminal misappropriation, but in this case, the person is entrusted with the property. The penalty is imprisonment for up to three years, a fine, or both.

Recovery of Dues by Financial Institutions:

In India, the recovery of dues by financial institutions is governed by the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. These laws provide for the recovery of debts due to banks and financial institutions, and empower them to take certain measures to recover the dues.

Under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, a bank or financial institution can file a petition in the Debt Recovery Tribunal (DRT) for the recovery of the dues. The DRT has the power to attach the assets of the defaulting borrower and sell them to recover the dues. The DRT can also pass orders for the recovery of the dues by attaching the salary or other income of the defaulting borrower.

Under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), a bank or financial institution can take possession of the securities provided by the borrower, and sell them to recover the dues. The Act also provides for the appointment of a recovery officer who can take possession of the assets of the defaulting borrower and sell them to recover the dues.

In cases where the borrower is a company, the bank or financial institution can also initiate proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) for the recovery of the dues. The Code provides for a time-bound resolution process for the recovery of the dues, and empowers the banks and financial institutions to take control of the assets of the defaulting company.

References:

https://m.economictimes.com/news/company/corporate-trends/how-to-recover-your-pending-dues/articleshow/31659068.cms

https://blog.ipleaders.in/legal-notice-for-recovery-of-money/?amp=1