Meaning of Debt Recovery

The loan or debt which was borrowed by the financial institution or departments needs to be repaid and if not paid by the borrower then the lender may follow the legal mechanism to recover the amount which he/she had lent. Now, let us understand what is Debt Recovery.

What is Debt Recovery? 

The debt recovery can be defined as the legal process that is being taken by the lender to recover the amount that was sanctioned by him to the borrower, we can also say that it is a legitimate way of getting back the amount borrowed.

How Debts are recovered?

There are number of the method in India to recover the debts but here we will classify it in two different categories that is the legal way and the illegal way, illegal way refers to the way where the lender through the agent harasses the customer to get back the or to recover the borrowed amount.

The legal way for the recovery of the amount are as follows:-

Civil Remedy for the Recovery of the debt

This method is said to be the one of the most common process of debt recovery in  India, in order to initiate this process the person need to send the Legal Notice to the opposite party by highlighting the key points to return the money or if the money is not paid by him then the civil suit may instituted against him for the recovery of the amount, the provision for civil suit is filed under the Order IV of the Civil Procedure Code and the limitation period to file a suit is 3 years from the date such action is taken, the jurisdiction is determined as per the location where such action is taken place or where the defaulter business is carried out.

Summary Suit: 

As we all know that the civil suit takes a long time to finalise its decision but in order to reduce the time taking process there are provisions under the CPC where a person can file a summary suit under the Order 37 of the CPC, the amount should not exceed for more than 10 lakh Rupees and when the suit is file against the person that person need to appear before the the court within the ten days to appear before the concerned court and if the person against whom the suit is filed fails to appear before the court, the court shall presume that the valid claim are being made by the plaintiff and thus the court may pass the award immediately.

Criminal case under the Indian Penal Code

These methods are used in wider sense to recover debts in the country, there are certain offences and the punishment that given under the Indian Penal Code for the repayment of debt, the person aggrieved can file the case under these sections:-

1. Section 405 and 406 tells about the Criminal Breach of Trust
2. Section 403 Dishonest Misappropriation of property 
3. Section 415 and 417 talks about cheating

These above mentioned offences are categorised under cognisable and non cognisable offences or bailable and non bailable that may put the defaulter into serious problem.

There are other more acts and the provisions that deals with debt recovery process and those are-

• Negotiable Instrument act
• Relief under Indian Contract 
• Recovery of Debts due to Bank and Financial Institutions act
• Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest ( SARFAESI ACT 2002)
• Insolvency and Bankruptcy Code, 2016

How can Lead India Help?

There are various methods given under the law for recovery of the debt, the legal experts of lead India will help you to go through the legal process and method to recover the debt and also draft the legal notice on your behalf and send it to the defaulter.