Money Recovery Suit Under CPC: Format, Process & Court Fees Explained

When an acquaintance, friend, business partner, or client refuses to pay the money they had either borrowed or money which has become due, despite multiple reminders, you can approach the court and file a suit for recovery of money, which is an efficacious legal remedy in order to claim or recover the money back. Whether the dispute concerns unpaid invoices, a failed business agreement,  a friendly loan, a bounced cheque, money lent out of mutual understanding or goodwill etc., a suit can be initiated under the provisions of the Code of Civil Procedure. Such cases or suits filed by individuals are referred to as recovery suit or money suit, in layman language and understanding how the suit transpires from drafting, filing, to the payment of applicable court fees for money recovery suit, and passing of the final decree, can make the difference between smooth proceedings and a suit that gets delayed or dismissed on technical grounds.

At Malik Law Offices India, our team regularly assists Individuals, NRIs, and Businesses in drafting and filing of money recovery suits under CPC before the courts of Delhi and other states. This guide walks you through the meaning, format, process, applicable court fees, limitation period so you know exactly what to expect before approaching a recovery suit lawyer in Delhi and other states.

WHAT IS A MONEY SUIT? UNDERSTANDING RECOVERY SUIT MEANING

The term Money suit or Recovery Suit or Suit for Recovery of Money, refers to a civil suit filed by an individual before a court of competent jurisdiction (both pecuniary and territorial) to recover a sum of money that the plaintiff claims is due from the defendant i.e. the other party. A recovery suit typically arises out of:

• A friendly loan.

• Business loans which were never paid back.

• Personal loans citing personal difficulty.

• Dishonoured cheques.

• Outstanding invoices for goods or services.

• Money advanced under an agreement, promissory note, or acknowledgement of debt.

A suit for recovery of money is a civil remedy which is aimed at recovering the money back, along with interest and damages, and therefore doesn’t attract any penal action as under the cheque bounce cases filed under the Negotiable Instruments Act. 

JURISDICTION OF FILING A SUIT FOR RECOVERY OF MONEY

A suit for recovery of money is filed before the competent civil court having appropriate pecuniary and territorial jurisdiction. Section 20 of the Code of Civil Procedure (CPC), 1908 deals with the territorial jurisdiction of such cases, stating that a suit for recovery of money is to be instituted where either the defendant/s reside or where the cause of action arises, i.e. where- 

(a) the defendant, or each of the defendants at the time of commencement of the suit voluntarily resides, or carries on business, or personally works for gain or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, or 

(c) where the cause of action, wholly or in part, arises. 

For example, one Raghav is a tradesman in Calcutta and one Gopal carries on business in Delhi. Gopal, through his agent in Calcutta, buys goods of Raghav and requests Raghav to deliver them to the East Indian Railway Company. Raghav delivers the goods accordingly in Calcutta. Therefore, Raghav may sue Gopal for the price of the goods either in Calcutta, where the cause of action has arisen, or in Delhi, where Gopal carries on business.  

Types of Recovery Suit: Civil, Summary and Commercial Suit for Recovery of Money

The type of recovery suit to be filed depends on the nature of the transaction, claim and the evidence available. A recovery suit can be filed under three heads- 

1. Ordinary Civil Suit for Recovery of Money

An ordinary civil suit for recovery of money is a simpliciter suit filed before the appropriate court of competent jurisdiction to claim or recover the amount from the other party which may involve disputed facts and requires detailed evidence and the debtor generally contests the liability. In the said proceedings, complete trial as per the CPC takes place which involves filing of plaint, written statement, framing of issues, evidence, and final arguments. 

2. Summary Suit for Recovery of Money (Order XXXVII CPC)

A summary suit for recovery of money can be filed in cases where the debt is backed by a written contract, promissory note, bill of exchange, or clear acknowledgment. As the name suggests, such proceedings are faster and offer quicker resolution. In contrast to the ordinary civil suit for recovery, the defendant in these proceedings does not have an automatic right to contest the suit rather the defendant is obliged to seek the leave of the court to defend the case. The seeking of the said leave in legal term is known as a leave to defend. The defendant files all such supporting documents in support of this leave to raise issues which require trial and cannot be decided summarily. Thereafter, the court decides as to whether the defence taken by the defendant raises a triable issue or is mere illusory, moonshine, sham. If the court finds the defence to be plausible, then the court allows the leave to defend application and the said suit is converted into an ordinary suit. On the other hand, if the court finds the defence to be sham, the court passes a decree right away. 

1. Commercial Suit for Recovery of Money

The disputed which are commercial in nature fall under the Commercial Courts Act, 2015. Once the transaction/dispute in question qualifies for a commercial dispute, the plaintiff firstly files a mandatory pre-institution mediation requirement as per the mandate of Section 12A of the Commercial Courts Act, 2015. The said procedure promotes the negotiation at the pre litigation stage to avoid any unnecessary litigation. However if the said pre institution fails, then the plaintiff would have a cause of action to institute the suit before the designated commercial court of competent jurisdiction. the said mandatory requirement of pre institution litigation however can be done away with in exception matters requiring urgent relief. The proceedings in the commercial courts follow strict timelines, mandatory document disclosure.   

 A Division Bench of the Delhi High Court vide judgment dated 27.10.2022 passed in Chandra Kishore Chaurasia v. R.A Perfumery Works Private Ltd. 2022/DHC, has held as under:-

"29. A plain reading of Sub-section (1) of Section 12A of the Commercial Courts Act, 2015 indicates that the institution of a suit, which does not contemplate any urgent interim relief, is proscribed unless the plaintiff exhausts the remedy of pre- institution mediation in accordance with the procedure as may be prescribed. There is no ambiguity that a suit, which contemplates urgent interim relief, is excluded from the rigor of Section 12A(1) of the Commercial Courts Act, 2015. Thus, a plaintiff seeking to institute a suit involving urgent interim relief(s) is not required to exhaust the remedy of pre-institution mediation.”

What must a Petition for Suit for Recovery of Money contain? (Recovery Suit Format)

Drafting and filing the correct suit for recovery of money is one of the most important and technical step and must be taken care of, by an experienced attorney. A defective recovery suit format can lead to objections, return of the plaint, or even dismissal. A properly drafted plaint under Order VII CPC must include:

• The title of the case i.e. name of the court, details of the plaintiff/s and defendant/s with complete addresses

• Jurisdiction clause stating that the court before which the suit has been filed, has the pecuniary and territorial jurisdiction and reasons for the same.

• Details as to the cause of action.

• Details of the amount in dispute- principal amount along with Interest and damages, if any.

• Confirmation on the suit being filed within the period of Limitation.

• Prayer clause describing the relief being sought from the court. 

• Sworn Affidavit of the Plaintiff. 

Court Fees for Money Recovery Suit in India

Court fees for money recovery suit proceedings in India are calculated on an ad valorem basis depending upon the amount being claimed by the plaintiff. The higher the amount, the higher is the court fees. The said Court Fee has to be ascertained depending upon the state where the suit is to be instituted. In Delhi, the court fee structure is governed by the Court Fees Act as applicable to Delhi courts. Insufficient court fee for any reason whatsoever would attract objections from the opposite party and may also lead to rejection of the suit. 

Step-by-Step Process to File a Money Recovery Suit Under CPC

1. A litigant may or may not send a legal demand notice stating all the facts with respect to the transaction in question calling upon the other side to make the payment along with interest to avoid any legal battle. This is an option available to the litigant and not a pre-requisite to the filing of the suit.

2. If no response or outcome from the legal demand notice is received, an application in the prescribed format for pre-institution mediation must be filed if the claim qualifies as a commercial dispute under Section 12A of the Commercial Courts Act, else, an ordinary suit for recovery of money must be filed before the appropriate court.

3. If the matter is settled at the stage of pre-institution mediation, a settlement agreement is executed and entered into between the parties. If, however, the other party fails to appear at this stage or the dispute isn’t settled, then the plaintiff can proceed with filing of the suit before the appropriate court.

4. Once the case is filed and notice is issued by the court, the other party makes appearance and accordingly present evidence and arguments if the matter proceeds to trial.

5. After conclusion of the trial, the judgement is delivered, and if, however, the other party still doesn’t pay, the execution proceedings under Order XXI CPC to enforce recovery.

Each of these steps have specific procedural requirements and hence engaging the services of a recovery suit lawyer in Delhi in a timely manner helps pursue the case in the correct manner and avoid any lapses or delays.

Facing delayed payments or unpaid dues? Request a Consultation with our litigation team to discuss your recovery suit, or discuss your legal matter via WhatsApp today.