Categories
Legal Article

Remedies and Legal Actions to Recover Money in India

Introduction:

This is a very important topic which is discussed here. There are many money lenders who provide money to the people in their need and also there are people who lend money to other people, neighbours and to the cousins in their need but sometimes these people make default in repayment of the amount. Sometimes these people commit fraud or breach of contract or agreement. In this type of cases any individual who has given money to anyone can recover the amount in a legal way. A money lender can file a civil suit in a civil court within her or his jurisdiction or he or she can file a criminal suit for fraud or breach of contract or agreement in a criminal court to recover the money.

A lender should remember that when he or she lends money to anyone, they should lend the money after signing the promissory note or loan agreement because it becomes easy to recover the amount and this promissory note or loan agreement becomes the material of evidence to be produced before the court.

Civil Suit:

A lender can file a civil suit to recover her or his money from the defaulter through promissory note or loan agreement. He or she can file this suit under Order 37 of CPC which allows an individual or lender to file a summary suit. The first step to file a civil suit is to draft a summary suit and then it should be presented to the person who borrowed the amount from the lender. The Court requires some documents along with plain copy and summons before it. When the suit is filed, the person who borrowed money is ordered to be present before the court within 10 days and if he or she fails to do so then the court orders the lender to send another summon to the person who borrowed money (Defendant). Now if the defendant has any defence or claim then he or she can approach to the court and if he or she has no claim or defence then the court will assume that the facts and allegations put forward against the person who borrowed money from the lender is true then the court will pass its judgement.

Out of Court Settlement:

This is the faster way to recover the money from the person who borrowed the money from the lender. The lender can recover the money through arbitration or conciliation or Lok Adalat. Here, both the parties should have their consent and appear for the hearing before the arbitrators. Arbitrators hear both the parties and then reward judgement to the parties and no parties can appeal to the higher courts until the reward is invalid or the party cannot repay the money within a specified time.

Injunction:

The concept of injunction is given in the Specific Relief Act along with its types that are Permanent Injunction and Temporary Injunction. Temporary Injunction is defined under Section 37 of the Specific Relief Act. Temporary Injunction continues for a specific period of time or until the court provides further order and this injunction is given or can be granted at any time or at any stage of a suit. The court grants temporary injunction in order to protect the ends of justice from being defeated and this is defined under Section 94 (c) and (e) of CPC and the procedure for seeking a temporary injunction is given under Order 39 of CPC.

In some suits which demand recovery of the amount from the borrower by the moneylender, the moneylender can approach for a temporary injunction until he gets a fair justice to recover the amount and this is done so that the borrower cannot use up his money or other property before indemnifying the moneylender or before repayment of his money.

Case Analysis:

“Vithaldas Bhavadas vs Yellosa Laxmansa on 30 November, 1959 Karnataka High Court”

Here, the defendant borrowed money on behalf of the plaintiff from Ramnathsa Dharmsa Shidling. Now the court directed that the plaintiff should return the amount to Ramnathsa Dharmsa Shidling and the plaintiff on 14-08-1952 filed a suit against the defendant to recover the amount paid on his behalf to Ramnathsa Dharmsa Shidling. The court found that defendant was an agent of the plaintiff but the amount which he borrowed for the plaintiff was not given to him. The court, however, dismissed the case on the ground of limitation.

“M/S. Nirmal Naha & Beyond & Ors vs The Authorised Officer on 20 April, 2016 Calcutta High Court (Appellete Side)”

“The respondent bank deals with and is the custodian of public money. It is answerable to the public at large for the manner in which it handles the money at its disposal. It lends money to members of public who are in need of loan. Such borrowers are obliged to pay interest on such loans regularly and to repay the principal amount within the agreed period of time. The bank does not have an unlimited amount of money at its disposal. It should be free to take appropriate steps in accordance with law against the defaulting borrowers to recover the moneys lent along with the applicable rate of interest. Indeed the bank is obliged to do so and if it does not do so it will be not in a position to grant financial accommodation to deserving people. In my opinion, too many fetters must not put on the steps that the banks and financial institutions take to recover moneys from the defaulting borrowers. With a view to protecting the borrowers, if the banks and financial institutions are restrained from taking steps for recovery of the moneys lent and advanced at the drop of a hat, the result would be counter-productive. However, needless to say, that the steps taken by the banks and financial institutions must be within the four corners of law and not arbitrary.”

This suit says that when a borrower takes money from the bank as a loan they should return it to the bank along with interest within the specified time and if they fail to repay the money on time then the bank can take necessary steps to recover the amount paid by them and it is also said that the bank should follow the law and they cannot illegally recover the money.

Criminal Cases:

There are different provisions under which criminal case can be filed for recovery of money from the borrowers. When money borrowed through cheque or bills of exchange and it is not paid then the moneylender can file a case under Negotiable Instrument Act and if the money paid through cheque or bills of exchange but it has bounced then the moneylender can file a case under Section 138 of Negotiable Instrument Act and the borrower has to pay the amount within 30 days. If the borrower fails to repay the amount then a criminal case can be filed against him and then the borrower will be punished for two years imprisonment along with repayment of the amount.

When a lender files a criminal case in the court to recover money from the borrower, he has to prove that the borrower has committed a breach of trust. When an individual or person cheats the moneylender, a moneylender can file a case under Section 420 of IPC and if the borrower commits a criminal breach, the moneylender can bring action against the borrower under Section 406 of IPC. When the borrower found guilty by the court, he is imprisoned and has to repay the amount to the moneylender.

Case Analysis:

Ms. Mamta Yadav and others vs Sh. Banarasi Dass and Smt. Asha Rani (Cr. Case/292423/2016 on 27 May, 2019 Delhi District Court)

This case says that the accused had cheated and committed a breach of trust to many people by taking money from them. Hence, they were punished under Section 406 and 34 of IPC as well as under Section 4 and 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

“John K Abraham vs Simon C Abraham & Anr on 5 December 2013

Supreme Court of India”

“The issue involved in this appeal arises under Section 138 of the Negotiable Instruments Act. The complaint was preferred by the respondent No.1 before the Chief Judicial Magistrate, Pathanamthitta alleging that appellant borrowed a sum of Rs.1,50,000/- from him and issued a cheque for the said sum on 20.06.2001 drawn on Indian Overseas Bank, Plankamon branch in discharge of the debt. It is the further case of the respondent–complainant that when the cheque was presented for encashment through Pathanamthitta District Co-operative Bank, Kozhencherry branch, the same was returned by the bankers with the endorsement ‘insufficient funds in the account of the accused’. The respondent-complainant stated to have issued a lawyer’s notice on 14.07.2001, which was received by the appellant on 16.07.2001, but yet there was no reply from the appellant. Based on the above averments alleged in the complaint, the case was tried by the learned Chief Judicial Magistrate.”

“Keeping the said statutory requirements in mind, when we examine the facts as admitted by the respondent-complainant, as rightly concluded by the learned trial Judge, the respondent was not even aware of the date when substantial amount of Rs.1,50,000/- was advanced by him to the appellant, that he was not sure as to who wrote the cheque, that he was not even aware when exactly and where exactly the transaction took place for which the cheque came to be issued by the appellant. Apart from the said serious lacuna in the evidence of the complainant, he further admitted as PW.1 by stating once in the course of the cross- examination that the cheque was in the handwriting of the accused and the very next moment taking a diametrically opposite stand that it is not in the handwriting of the accused and that it was written by the complainant himself, by further reiterating that the amount in words was written by him. We find that the various defects in the evidence of respondent, as noted by the trial Court, which we have set out in paragraph 7 of the judgment, were simply brushed aside by the High Court without assigning any valid reason. Such a serious lacuna in the evidence of the complainant, which strikes at the root of a complaint under Section 138, having been noted by the learned trial Judge, which factor was failed to be examined by the High Court while reversing the judgment of the trial Court, in our considered opinion would vitiate the ultimate conclusion reached by it. In effect, the conclusion of the learned Judge of the High Court would amount to a perverse one and, therefore, the said judgment of the High Court cannot be sustained.”

“Having regard to our above conclusion, this appeal stands allowed. The order impugned is set-aside, the conviction and sentence imposed on the appellant is also set aside.”

The above case clearly speaks about the Negotiable Instruments Act. Here it says that the plaintiff had given money to the defendant and the defendant afterwards returned the amount through cheque but the cheque was bounced then the plaintiff took necessary steps to recover the money and then he filed a case in the court to recover the money.

Quashing of Criminal Complaints Having a Civil Nature:

If a person files a case in a criminal court but the case is originally a civil suit and then the court will dismiss the case filed. The court will direct the party to file a civil suit in the civil court since this case has civil nature and not a criminal nature. In cases of recovery of money by the money lender from the borrower, the moneylender sometimes files a civil suit in a criminal court and when the court finds that the case before them is a civil suit rather than a criminal case, they direct the party to file a civil suit in the civil court since the case has civil nature and the court quash the case presented before them.

Consumer Forum:

Consumer Forum deals with the cases which have defective in goods and deficiency in services and it does not deal with cases which have no defective in goods and deficiency in services and it is not maintainable under Consumer Protection Act. Consumer Forum does not deal with the recovery of money but if the recovery of money is linked to the transaction of defective goods and deficiency in services then Consumer Forum can deal with these types of cases.

Case Analysis:

“Kanpur Vidyut Supply Company Anr. vs Ram Kishun Verma & Anr. on 7 January, 2015 National Consumer Disputes Redressal”

“The complainant while residing in Type-III House No.83 in Kendranchal Colony, Gulmohar Vihar, Kanpur obtained an electricity connection for residential purpose. He claims to have vacated the said house on 19-08-1994. The electricity connection was got disconnected by him on 16-08-1994. According to the complainant after the aforesaid disconnection he paid the last bill dated 27-08-1994 amounting to Rs.234.97/-. The complainant, thereafter, started residing in a Type IV quarter situated in the same colony. The security deposit of Rs.720/-, according to the complainant, was not refunded to him despite disconnection of the electricity. The complainant received a bill of RS.1,35,245/- from the petitioners. He was called from his house and detained in civil prison. A sum of Rs.50,000/- along with connection charges of Rs.5,000/- was got deposited by him before he was released from the civil prison from 7:30 A.M. to 4:30 P.M. on 15-07-2003. The complainant then approached the concerned District Forum, seeking refund of the security deposit along with interest as well as refund of the amount which was taken from him when he was lodged in civil prison. He also sought compensation from the petitioners.”

“The complaint was opposed by the petitioners. The contention of the respondent is that the connection taken by the complainant was not got disconnected by him and was disconnected by them on account of non-payment of the dues. This is also the case of the petitioners that an amount of Rs.1,35,245.06/- was due to them from the complainant against the aforesaid connection. Another plea was taken that in view of the provisions of the UP Zamindari Abolition & Land Reforms Act, 1950, the consumer forum has no competence to hear the complaint.”

“We also note that the District Forum has directed the petitioners to prepare a bill for the period from 23-06-1994 to 16-02-1995, by adding six months to the date of disconnection for 820 units at the rates applicable at the relevant time and adding Rs.200/- towards disconnection charges. The aforesaid direction in the facts and circumstances of the case cannot be said to be unjustified. Obviously, the petitioners have to give adjustment for the amount which it has already recovered from the complainant at the time he was lodged in civil prison. Therefore, we find no infirmity or illegality in the impugned order. The revision petition is devoid of any merit and is hereby dismissed.”

Conclusion:

The above body explains about the recovery of money from the borrower by the moneylender. There are different cases relating to recovery of money which are arising day by day. The above analysis discusses all the necessary steps that a moneylender can adopt to bring action against the borrower. If any individual faces these types of problems then they should at first instance contact with a lawyer and consult with him about the matter to recover the amount. For more details, comment below or contact here.

Ask any Query...

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.