Quick answerTo recover unpaid money in India, start with a legal notice demanding payment. If the debtor does not pay, file a civil suit within three years of the date the money fell due. Where the claim rests on a written contract, invoice acknowledged in writing, promissory note or cheque, a summary suit under Order XXXVII of the Civil Procedure Code is faster. Small suppliers registered under Udyam can apply to the MSME Facilitation Council, and operational creditors owed ₹1 crore or more can use the Insolvency and Bankruptcy Code.
- Law
- CPC 1908, Limitation Act 1963, MSMED Act 2006, IBC 2016
- Time limit
- 3 years from the due date
- Forum
- Civil or Commercial Court, MSEFC, NCLT
- Decree valid for
- 12 years for execution
Choosing the right recovery route
There is no single "money recovery case". The right forum depends on who owes you, why, how much, and what paper you hold. The main options are:
| Route | Best suited for | Key condition |
|---|
| Legal notice and negotiation | Every case, as the first step | Clear demand with a deadline |
| Summary suit (Order XXXVII CPC) | Written contracts, promissory notes, cheques, guarantees, acknowledged invoices | A debt or liquidated sum arising on a written document |
| Regular civil or commercial suit | Disputed claims, damages, unwritten loans | Proof by documents and witnesses |
| MSME Facilitation Council (Section 18, MSMED Act) | Micro and small suppliers of goods or services | Udyam registration and a delayed payment by the buyer |
| Insolvency petition (Section 9, IBC) | Operational creditors of a company or LLP | Undisputed default of at least ₹1 crore |
| Cheque bounce complaint (Section 138, NI Act) | Where the debtor gave a cheque that was dishonoured | Notice within 30 days of the return memo |
These routes can run together. A creditor holding a bounced cheque often files a Section 138 complaint for pressure and a summary suit for a decree.
Step one: a demand notice that does real work
A well-drafted legal notice recovers a large share of debts without litigation, because it shows the debtor that you are organised and ready to sue. It should state the transaction, the invoices or loan, the amount due with interest, the documents you rely on and a clear deadline, usually 15 days. Send it by registered post and email so delivery can be proved.
The notice also matters later. A debtor's reply, or silence, often becomes evidence. A written admission of the debt or a part payment made before the limitation expires gives you a fresh three-year period under Sections 18 and 19 of the Limitation Act, 1963.
Summary suit under Order XXXVII: the faster civil route
Order XXXVII of the Code of Civil Procedure provides a summary procedure for suits on bills of exchange, hundis and promissory notes, and for recovery of a debt or liquidated sum payable under a written contract, an enactment or a guarantee. It is available in High Courts, City Civil Courts, Commercial Courts and other courts notified by the High Court.
- The defendant must enter appearance within 10 days of service of summons.
- The plaintiff then serves a summons for judgment, and the defendant must apply for leave to defend within 10 days, showing a substantial defence.
- If leave is refused, or the defence is plainly sham, the court passes a decree straight away. Leave may also be granted on condition that the defendant deposits the amount or part of it.
Since the Commercial Courts Act, 2015, claims arising from ordinary commercial transactions of a specified value of ₹3 lakh or more go to Commercial Courts, and a suit that does not seek urgent interim relief must first go through pre-institution mediation under Section 12A. Skipping it can lead to the plaint being rejected.
MSME Samadhaan: delayed payment claims of small suppliers
The Micro, Small and Medium Enterprises Development Act, 2006 protects micro and small enterprises that supply goods or services. A buyer must pay within the agreed period, which cannot exceed 45 days from acceptance. If it does not, Section 16 makes the buyer liable to pay compound interest at three times the bank rate notified by the RBI, with monthly rests.
Under Section 18, the supplier can refer the dispute to the Micro and Small Enterprise Facilitation Council of its state, usually through the MSME Samadhaan portal. The Council first tries conciliation and, if that fails, arbitrates or refers the case to arbitration. Under Section 19, a buyer that wants to challenge the award must first deposit 75% of the awarded amount. Two points need care: the supplier should hold Udyam registration, and courts have held that the date of registration relative to the contract matters, so check this before filing.
Insolvency as a recovery lever: Section 9 IBC
An operational creditor, such as a supplier or service provider, owed money by a company or LLP can start insolvency proceedings before the National Company Law Tribunal under Section 9 of the Insolvency and Bankruptcy Code, 2016. The minimum default is ₹1 crore. The creditor first serves a demand notice under Section 8; if the debtor does not pay or point to a pre-existing dispute within 10 days, the petition can be filed.
The IBC is a collective insolvency process, not a debt collection court. The Supreme Court in Mobilox Innovations held that a genuine dispute existing before the demand notice defeats a Section 9 petition. Used correctly, however, the threat of losing control of the company often brings a solvent debtor to settle. If it is admitted, your claim is paid only from the resolution plan or liquidation, often at a discount, so weigh this before filing.
After the decree: execution
A decree is only paper until it is executed. Under Order XXI of the CPC, the decree holder can seek attachment of bank accounts, attachment and sale of movable and immovable property, attachment of salary, and in some cases arrest of a wilful defaulter. An execution petition can be filed within 12 years of the decree. The Supreme Court in Rahul S. Shah v. Jinendra Kumar Gandhi (2021) directed executing courts to decide execution proceedings within six months. We trace the debtor's assets early, even before the suit, so that attachment before judgment under Order XXXVIII can be sought where there is a real risk the debtor will dispose of property.
Common mistakes and what recovery costs
- Waiting too long. The three-year limitation under the Limitation Act usually runs from the date payment fell due. Late suits are dismissed however strong the claim.
- No written trail. Purchase orders, delivery challans, ledger confirmations, emails and WhatsApp messages win recovery cases. Ask for balance confirmations every year.
- Suing the wrong party. Check whether you dealt with a company, a firm or an individual, and whether there is a personal guarantee.
- Ignoring the arbitration clause. If your contract has one, a suit may be referred to arbitration; see our arbitration team.
Court fee on a money suit is ad valorem, a percentage of the claim set by each state, so it varies between states. Professional fees depend on the route and the amount; we quote a fixed fee for the notice and a stage-wise fee for the suit or reference, in writing.
Documents you need
Bring whatever shows the transaction and the debt. The more written proof, the faster the route:
- Contract, purchase order, quotation or loan agreement
- Invoices, delivery challans and proof of delivery or service
- Ledger account and any balance confirmation signed by the debtor
- Emails, letters and WhatsApp messages about the payment
- Cheques, promissory notes or guarantees, if any
- Udyam certificate (for an MSME claim)
- Debtor's full name, address and, for a company, its CIN or GSTIN
How we handle it for you
Assess the claim
We check limitation, the documents and the debtor's status and recommend the route in writing.
Send a legal notice
A detailed demand notice with interest and a deadline, sent by post and email.
File in the right forum
Summary suit, commercial suit, MSEFC reference or Section 9 petition, after mediation where required.
Push for early payment
Leave-to-defend opposition, conditional deposits and settlement talks at each stage.
Execute the decree
Asset tracing, attachment of accounts and property, and sale until the money is recovered.
Why clients choose ProudLegal
Advocates who appear in courtYour matter is drafted and argued by enrolled advocates, not call-centre staff.
Company and tax filings in-houseCompany secretaries and tax professionals handle registrations and returns.
Fees agreed in writingYou receive a written fee quote before any work begins.
Updates on WhatsApp and emailEvery hearing date, filing and document is shared as it happens.
Please note: this page explains the law and procedure in general terms as on 30 October 2026. Fees, limits and timelines change, and the facts of each case matter, so take advice on your own papers before acting.
Frequently asked questions
What is the time limit to file a money recovery suit?
Generally three years from the date the money became payable. A written acknowledgment of the debt or a part payment within that period starts a fresh three-year period.
Can I recover money given to a friend without any written proof?
Yes, a suit can be filed on oral evidence, bank transfers and messages, but it will be a regular suit rather than a summary suit, and proof will be harder.
What is a summary suit?
A suit under Order XXXVII of the CPC on written contracts, negotiable instruments and similar documents, where the defendant cannot defend without the court's leave, so judgment comes faster.
How much interest can I claim?
The rate agreed in the contract or invoice, if any. Otherwise the court awards reasonable interest under Section 34 of the CPC, and MSME suppliers can claim compound interest at three times the RBI bank rate.
Is mediation compulsory before a commercial recovery suit?
Yes, under Section 12A of the Commercial Courts Act, unless you seek urgent interim relief. The mediation must be completed within the prescribed period before the suit is filed.
Can I file insolvency against a company that owes me money?
Yes, as an operational creditor under Section 9 of the IBC if the unpaid amount is at least ₹1 crore and there is no pre-existing dispute.
Who can use MSME Samadhaan?
Micro and small enterprises registered under Udyam that supplied goods or services and have not been paid within the agreed period, which cannot exceed 45 days.
How long does a recovery suit take?
It depends on the court and the defence. Summary suits and MSME references are usually quicker than regular suits, and many cases settle after notice or at the leave-to-defend stage.
