Author: Advocate Harshit Sachar
Place of Practice: Ludhiana, Punjab
Jurisdiction: India

Money can be legally recovered in India either by filing a civil suit for recovery of debt or by initiating criminal proceedings under Section 138 of the Negotiable Instruments Act in case of cheque dishonour. Civil recovery focuses on repayment of dues, while cheque bounce proceedings impose penal consequences for dishonoured cheques.

When Does a Money Recovery Issue Arise?

Money recovery disputes commonly arise in situations such as:

• Unpaid business invoices

• Friendly loans not returned

• Supply of goods without payment

• Breach of financial agreements

• Dishonoured cheques

The law provides separate remedies depending on the nature of the transaction.

1️⃣ Civil Suit for Recovery of Money

A civil recovery suit is filed when:

• A definite sum of money is due

• There is documentary proof (agreement, invoice, ledger, etc.)

• The debtor has failed to repay despite demand

Key Features:

• Filed before the competent civil court

• Based on contractual or legal liability

• Court may award principal amount + interest

In commercial disputes, summary suits under Order 37 CPC may be available for faster disposal.

Important Documents Required

• Written agreement or loan document

• Invoices / bills

• Bank transaction records

• Legal notice demanding payment

• Acknowledgment of debt (if available)

Strong documentation significantly improves chances of recovery.

2️⃣ Cheque Bounce Proceedings (Criminal Remedy)

If repayment was promised through a cheque and the cheque is dishonoured due to insufficient funds, legal action can be taken under:

Negotiable Instruments Act, 1881 – Section 138

Conditions for Filing:

• Cheque must be presented within validity period

• Dishonour memo received from bank

• Legal notice sent within statutory time

• Payment not made within 15 days of notice

Failure to comply allows filing of a criminal complaint before the Magistrate.

Difference Between Civil Recovery & Cheque Bounce Case

Civil

Civil Recovery Case
Focuses on recovery of money
Time-consuming but effective
Interest can be awarded

Cheque Bounce Case

Criminal in nature
Focuses on penal consequences
Strong pressure mechanism
Fine and compensation possible

Both remedies can run simultaneously in appropriate cases.

Which Remedy Should Be Chosen?

It depends on:

• Whether a cheque was issued

• Nature of transaction

• Availability of documentation

• Urgency of recovery

In many cases, cheque bounce proceedings create immediate legal pressure.

Limitation Period

• Civil recovery suits generally must be filed within 3 years from date of default.

• Cheque bounce complaint must be filed within statutory timelines under the NI Act.

Delay can defeat otherwise valid claims.

Common Mistakes Creditors Make

• Not issuing legal notice in time

• Relying on oral transactions

• Accepting repeated extensions without documentation

• Not preserving bank dishonour memo

Timely legal action strengthens recovery.

FAQs

Can I file both civil recovery and cheque bounce case?
Yes, in appropriate cases both remedies can proceed simultaneously.

Is a written agreement mandatory for recovery suit?
Not mandatory, but documentary proof is strongly advisable.

What if cheque was issued as security?
Liability depends on facts and underlying transaction.

Can interest be claimed?
Yes, courts may award reasonable interest depending on agreement and facts.

Final Legal Insight

Money recovery disputes should not be ignored. Early legal action, proper documentation, and timely filing of proceedings are critical to securing repayment. Whether through civil suits or cheque dishonour proceedings, Indian law provides structured remedies to protect creditors’ rights.