Recovering unpaid business dues in India is often more challenging than winning the contract itself. Whether you are an MSME, a supplier, a contractor, or a corporate entity, unpaid invoices can disrupt working capital and growth.
This comprehensive guide explains everything you need to know about filing a recovery suit in Delhi , India, including legal provisions, procedure, summary suits under Order 37 CPC, commercial recovery suits, court fees, timeline, decree execution, and practical recovery strategies.
What Is a Recovery Suit?
A recovery suit (also called a money recovery suit) is a civil legal action filed by a creditor to recover unpaid money from a debtor.
It is typically filed when:
- Invoices remain unpaid
- Loan amounts are defaulted
- Goods supplied are not paid for
- Services rendered remain outstanding
- Contractual payments are breached
The objective of a recovery suit is to obtain a court decree directing the defendant to pay the claimed amount along with interest and costs.
Legal Provisions Governing Recovery Suits in India
Recovery suits are governed primarily under the:
- Code of Civil Procedure, 1908 (CPC)
- Commercial Courts Act, 2015 (for commercial disputes)
- Indian Contract Act, 1872 (contractual basis)
- Negotiable Instruments Act, 1881 (in cheque cases)
The CPC lays down:
- Jurisdiction rules
- Filing procedure
- Trial process
- Decree and execution mechanism
Types of Recovery Suits in India
1. Regular Money Recovery Suit
Filed under ordinary civil procedure where:
- Defendant is given full opportunity to contest
- Evidence is led
- Trial may take longer
Suitable when dispute involves complex facts.
2. Summary Suit under Order 37 CPC
Order 37 of the CPC provides a faster procedure for specific types of monetary claims, including:
- Written contracts
- Bills of exchange
- Promissory notes
- Unpaid invoices
In a summary suit:
- Defendant cannot defend unless court grants permission
- If leave to defend is denied, decree can be passed quickly
This is powerful in clear debt cases.
(You should create a separate detailed blog: Summary Suit under Order 37 CPC Explained and internally link it here.)
3. Commercial Recovery Suit
If the dispute qualifies as a “commercial dispute” under the Commercial Courts Act, 2015, it must be filed before a Commercial Court.
Commercial disputes include:
- Supply of goods
- Distribution agreements
- Joint ventures
- Shareholder disputes
- Infrastructure contracts
- Technology agreements
Key feature:
Pre-institution mediation is mandatory (except urgent relief matters).
Commercial courts are designed to provide faster adjudication.
How to File a Recovery Suit in India (Step-by-Step Procedure)
Step 1: Legal Notice
Though not mandatory in all cases, sending a legal notice:
- Demonstrates seriousness
- Gives debtor final opportunity
- Strengthens your case
Step 2: Determine Jurisdiction
You must identify:
- Territorial jurisdiction (where cause of action arose)
- Pecuniary jurisdiction (based on claim amount)
- Whether dispute qualifies as commercial
Step 3: Drafting and Filing the Plaint
The plaint must include:
- Parties’ details
- Facts of transaction
- Cause of action
- Amount claimed
- Interest calculation
- Court fee
Supporting documents are annexed.
Step 4: Issuance of Summons
Court issues summons to defendant.
In summary suits, summons for judgment follows special procedure.
Step 5: Written Statement
Defendant files written statement.
In commercial matters, strict timelines apply.
Step 6: Evidence and Arguments
- Documentary evidence
- Witness examination (if required)
- Final arguments
Step 7: Decree
Court passes a decree directing payment.
But here’s the truth most law firms don’t explain:
Winning the decree is not the end.
Recovery begins after the decree.
Court Fees for Recovery Suit
Court fees vary state-wise and depend on:
- Claim amount
- Nature of dispute
- State court fee schedule
Generally, it is calculated as a percentage of the claim amount.
In commercial disputes, court fees can be substantial — especially in high-value matters.
Limitation Period for Recovery Suit
Under the Limitation Act:
- 3 years from date of default
- 3 years from invoice due date
- 3 years from acknowledgment of debt
Delay can extinguish legal remedy.
Documents Required for Money Recovery Suit
Typical documents include:
- Signed contract
- Purchase orders
- Invoices
- Delivery challans
- Email correspondence
- Ledger statements
- Bank records
- Notice copy
Strong documentation = stronger recovery probability.
Execution of Decree: The Most Critical Stage
This is where most creditors struggle.
After winning the case, if the debtor does not pay voluntarily, you must initiate execution proceedings under Order 21 CPC.
Execution methods include:
1. Attachment of Property
Movable or immovable assets can be attached.
2. Garnishee Proceedings
Third parties holding debtor’s money can be directed to pay.
3. Arrest and Detention (in specific cases)
4. Sale of Attached Assets
Many decree holders abandon execution due to:
- Cost
- Complexity
- Time
- Lack of strategy
This is why decree execution is the real recovery battlefield.
(Separate detailed blog recommended: Execution of Decree for Money Recovery.)
Recovery Suit vs Cheque Bounce Case
Cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881 are criminal in nature.
Recovery suit is civil.
Key differences:
| Aspect | Cheque Bounce | Recovery Suit |
|---|---|---|
| Nature | Criminal | Civil |
| Objective | Punishment + compensation | Money recovery |
| Timeline | Varies | Varies |
| Simultaneous filing | Yes | Yes |
Both remedies can be pursued together.
Commercial Recovery Strategy: Practical Insights
Before filing a recovery suit, evaluate:
- Does debtor have assets?
- Is company operational?
- Any insolvency risk?
- Possibility of settlement?
- Enforcement jurisdiction?
Strategic planning increases recovery probability.
How to Actually Recover Money After Winning a Case
This is where most businesses fail.
They assume decree = payment.
Reality:
- Debtor may delay
- Assets may be transferred
- Bank accounts may be emptied
- Companies may become dormant
Recovery requires:
- Asset tracing
- Swift execution filing
- Strategic attachment
- Professional follow-up
- Financial stamina
And this is where structured recovery support becomes critical.
Frequently Asked Questions (FAQs)
1. What is the time limit for filing a recovery suit in India?
Generally 3 years from date of default or acknowledgment.
2. Can I file a recovery suit without sending legal notice?
Yes, unless contract mandates notice.
3. How long does a recovery suit take?
Regular suits may take several years. Commercial courts aim for faster timelines.
4. What if debtor does not pay after decree?
You must file execution proceedings under CPC.
5. Can I recover interest?
Yes, if contract provides or court grants reasonable interest.
How LegalFund Helps Businesses Recover Money Without Upfront Legal Cost
Many MSMEs and businesses hesitate to file recovery suits because:
- Legal fees are high
- Court fees are substantial
- Execution costs are uncertain
- Recovery is not guaranteed
This financial pressure often stops genuine claims.
LegalFund supports businesses by:
- Funding recovery litigation
- Supporting decree execution
- Financing enforcement actions
- Bearing legal risk
Most importantly:
We do not charge any upfront fees.
If the case is unsuccessful or recovery fails, you do not pay us.
We work on a success-based model — we share in the recovered amount only after successful recovery.
This allows businesses to:
- Preserve working capital
- Pursue strong legal claims
- Convert unpaid invoices into enforceable recovery
Instead of letting outstanding dues sit idle, structured recovery funding enables businesses to pursue justice without financial strain.
Final Thoughts
A recovery suit in India is not just about filing a case.
It involves:
- Strategic legal planning
- Proper jurisdiction selection
- Correct procedure
- Effective execution
- Financial endurance
Winning the case is step one.
Actual recovery requires execution strategy.
If you are dealing with unpaid commercial dues, the key question is not “Should I file a case?”
The real question is:
“Can I afford not to recover what is legally mine?”