Introduction:
In India, we often see that money transactions with friends, relatives or contact persons without entering a written agreement are very common. But such money transactions become pennies for lenders when the borrower is not willing to repay. In that situation, the lender is hopeless to recover the money that was lent without a written agreement. But still, there are certain options to recover owed debt in the absence of a written agreement in India. Indian law provides some legal remedies for the breach of contract. You can gather evidence that shows the money transaction occurred. Such as Bank transaction details, WhatsApp messages, email, UPI transaction records, statements of witnesses, etc.; all of these are acceptable as evidence in Indian courts. In this article, we explore the legal pathway for recovery of money lent without a written agreement in India.
Gather Transaction-Related Evidences:
This is the first step that you need to follow before planning to take legal action against the borrower. You need to collect all appropriate evidences which is directly relates to the loan transaction. Such as Bank statements or transaction receipts as proof that the owed money was transferred. Records of online payment platforms, like UPI, Google Pay, Paytm, PhonePe, whatever you used for making the loan transaction.
For gathering evidence, you can also collect records of WhatsApp chats, SMS messages related to loan or repayment discussions, email or any written slips that show that the loan transaction was done. Witness testimony who knows about the loan transaction. All these evidences are helpful. You can gather the borrower’s bank account details with supporting documents like their email, SMS, or WhatsApp reply, as a prof of debt is your owed. That becomes strong evidence in court.
Send a Legal Notice:
This is the first legal step to recovering money lent without a written agreement or contract. You need to send a legal notice to the borrower with the details of the due amount borrowed, transaction date, repayment terms, failure of the borrower to repay the loan, and make a demand for your due payment within a specified period. (commonly it’s given 15 to 30 days). The legal notice should be sent through a legal professional or an expert lawyer, who can handle such types of disputes in a court of law.
Most disputes can be settled at this stage because the borrower really thinks that, as a lender, you are ready to enter into a legal battle, and they don’t want to fight with you about this matter.
File a Civil Suit for Recovery of Money:
After completion of the legal notice period, if the borrower does not act or does not respond to the notice. Now it’s time to file a civil suit in the civil court to recover the money which is lent by you. The jurisdiction of the court is depend up to amount. If you have any written proof about the transaction, you can file a summary suit under section 37 of the Civil Procedure Code, 1908.
But one important thing you should note is that the limitation period for claiming money in court; there is a limitation period of 3 years from the date the payment was due as per the provisions of the Limitation Act, 1963. You can file a money suit within this period.
Criminal Remedies against Recovery of Money
If you think that the borrower does not want to return your money and intentionally avoids or delays repayment of your loan, which is considered fraud or cheating against you under the provisions of the Indian Penal Code. In this situation, you can file a criminal complaint against the borrowers.
Conclusion:
There is a provision under Indian law for recovering money lent without a written agreement. But before taking legal action to recover the money lent without an agreement, you need to collect sufficient evidence related to the transaction. In this way, you can collect bank transfer or statement records, WhatsApp chat, email, and online transaction records. If you made a loan transaction using online payment options such as Google Pay, Paytm, etc., that will also be useful for you. After gathering sufficient evidence against the borrower, you will be able to file a lawsuit against them. You can choose to file a money suit for recovery of money, or if you have any written proof related to the transaction, you may file a summary suit under section 37 of the Civil Procedure Code. Before starting legal action against the borrower to recover your loaned money, you need to file a legal notice for recovery purposes. If they are not willing to follow your legal notice instructions, you can file a civil suit against the borrower to recover your due amount of the loan.
But for all these processes, you should note that the claim for recovery of due payment from the borrower should be filed within the limitation period. According to the provisions of the Limitation Act, 1963, a period of 3 years is defined. You should file your claim within this limitation period. There are also criminal remedies available against the borrower. You can file a criminal complaint if the borrower’s intention is not to repay the loan amount; this may count as cheating or fraud under the Indian Penal Code.
