Notice, suit, DRT filing

Category: Legal Services. From ₹9,999. Typical timeline: 3–12 months.

Overview

Debt recovery covers the full legal process of collecting outstanding dues from customers, borrowers or business counterparties — starting with a formal demand notice and escalating, where required, to a civil recovery suit, a Debt Recovery Tribunal (DRT) application, or proceedings under the Insolvency and Bankruptcy Code, depending on the amount, the debtor and the security available. Kanoons assesses the strongest and fastest recovery route for each case rather than defaulting to a one-size-fits-all suit.

Who needs it

• A business with unpaid customer invoices after repeated follow-up
• An NBFC or lender with a defaulting borrower and no response to demand notices
• A vendor owed money by a company that has stopped communicating
• A creditor holding a dishonoured cheque needing action under Section 138 of the Negotiable Instruments Act

Eligibility

• Businesses and individuals owed money under an invoice, loan agreement or contract
• Banks and NBFCs with dues above ₹20 lakh eligible for DRT proceedings
• Operational or financial creditors of a corporate debtor eligible for IBC proceedings above the statutory threshold

Documents required

• Invoices, loan agreement or contract evidencing the debt
• Statement of account or ledger showing outstanding amount
• Any cheques issued and dishonour memo, if applicable
• Correspondence and prior demand notices sent to the debtor

Process

1. Demand notice — A formal legal notice is issued demanding payment within a stipulated period, often a precursor to any court action.
2. Forum selection — Based on the amount and debtor type, the matter is routed to summary suit, DRT or Section 138 proceedings.
3. Filing — Recovery suit, DRT application or criminal complaint is drafted and filed with the appropriate court fee.
4. Hearings & interim relief — Applications for attachment or interim orders may be filed to secure assets pending final decision.
5. Execution — Once a decree or order is obtained, execution proceedings are initiated to realise the amount from the debtor's assets.

Government fees

• Court fees for recovery suit: Ad-valorem, typically 1–7.5% of claim value depending on state
• DRT application fee: ₹12,000 for claims up to ₹10 lakh, higher slabs for larger amounts

Professional fee

Starts at ₹9,999 for notice and initial filing, scaling with the forum and value of the claim; covers drafting, filing and representation up to the stage engaged.

Timeline

A demand notice can be issued within a day; recovery through summary suit or DRT typically takes 3–12 months to a decree, with actual recovery timing depending further on execution against the debtor's assets.

Deliverables

• Legal demand notice with proof of dispatch
• Filed recovery suit or DRT application
• Certified copy of decree/order and execution petition where applicable

Frequently asked questions

Is a legal notice mandatory before filing a recovery suit?

It is not always mandatory but is standard practice, as it often prompts payment or settlement and strengthens the case if litigation follows.

Can I recover money from a company that has been dissolved?

Recovery becomes very difficult once a company is struck off or dissolved; creditors should act before the company is deregistered or apply for restoration where justified.

What is the difference between DRT and a civil suit for recovery?

DRT has jurisdiction only over debts owed to banks and financial institutions above ₹20 lakh and follows a faster summary procedure, whereas civil suits are available for any creditor but generally take longer.

Common mistakes

• Waiting too long to act, allowing the limitation period of three years for most money claims to lapse
• Not maintaining a clear paper trail of invoices, delivery proof and acknowledgments
• Filing in an ordinary civil court when a faster summary suit or DRT route was available
• Ignoring available cheque bounce remedies under Section 138 alongside civil recovery

Penalties for non-compliance

• Debt claims become time-barred three years from the date they fall due if no action is taken
• Delay in recovery increases risk of the debtor becoming insolvent or dissipating assets
• Cheque dishonour under Section 138 can attract imprisonment up to two years or fine up to twice the cheque amount, or both

Legal references

• Code of Civil Procedure, 1908 (Order XXXVII) — governs summary suits for recovery
• Recovery of Debts and Bankruptcy Act, 1993 — governs DRT proceedings for bank/FI dues
• Negotiable Instruments Act, 1881 (Section 138) — governs cheque dishonour prosecution
• Insolvency and Bankruptcy Code, 2016 — governs creditor-initiated insolvency proceedings