Money Recovery Suit: How to File, Where to file?

• Summary suit : Summary suits are fast track civil adjudication governed by Order 37 of the Code Civil Procedure (CPC) .They pertain to claims arising either from a written contract or from a negotiable instrument where the defendant has limited defenses so that a quick decision is made without the necessity for a full trial.


• Suits under the Negotiable Instruments Act:  The suits under the Negotiable Instruments Act relate to recovery on the negotiable instruments of cheques and promissory notes, which fall under the Negotiable Instruments Act, 1881. It provides actionable machinery in respect of suits brought especially for the dishonored instruments so that the creditor can take immediate legal recourse in the courts of law.


• Ordinary Suits:  In ordinary suits, the claim arises when the legal issues are intricate, the evidence is massive, or there are disputes that cannot be saved by summary procedures. They basically follow an ordinary process in civil litigation, i.e., full trials, examination of witnesses, and deep judicial review of the facts and legal issues.

Choosing an appropriate jurisdiction is one of the most important factors that affects the outcome of money recovery suit.The jurisdiction of civil courts can be distinguished on the basis of pecuniary, territorial, and subject matter

• Territorial Jurisdiction: The territorial jurisdiction would mean that the court has the jurisdiction to entertain the suit within whose territorial limit the residence or workplace of the defendant is situated, or where the cause of action has arisen.As per CPC, 1908 a suit can be filed at any of the given territorial jurisdiction:
  • The defendant is involved in trade business.
  • The cause of action arose, either wholly or partially
  • The defendant resides


• Pecuniary Jurisdiction:  This means jurisdiction over the pecuniary value of the claim. Different courts have different monetary limits up to the amount that empowers them to try a case, which should be considered in determining under which court to file a case.
  • High Court deals with cases the amount of which is over ₹ 20,00,000
  • District Courts handle suits between ₹ 1 and ₹ 20,00,000

As per the Constitution of India and relevant statutory provisions, creditors have several legal resources to initiate action against debtors for the recovery of outstanding amounts.

• Code of Civil Procedure, 1908:   The Code of Civil Procedure has been enacted by the Indian Parliament under its authority conferred by the Constitution of India. The Indian civil procedure is mainly regulated by the Code of Civil Procedure (CPC). It deals with the jurisdiction, procedure of framing the issues, process of pleading, format of presenting writing and serving summons, management of the trial process, and implementation of the Decrees. This comprehensive statute makes sure that money recovery suits are done in an organized and standardized manner and that there is equity and legal compliance.


• Indian Contract Act, 1872:   The Indian Contract Act serves as the foundation of contractual law in India, regulating the formation, execution, and enforcement of contracts. It specifies the legal prerequisites for a valid contract, which encompass offer, acceptance, and consideration. In instances where a party breaches a contract, this act establishes the legal framework for the pursuit of claims, including suits for the recovery of monetary damages, thereby ensuring that aggrieved parties have the ability to seek judicial remedies for violations of contractual obligations.


• Negotiable Instruments Act, 1881:  It regulates such commercial papers as cheques, promissory notes, and bills of exchange, which are among the most commonly used in business. It affords special legal remedies for situations arising out of the dishonoring of such instruments, including when a cheque bounces, for instance. This statute accords to creditors the right to file lawsuits to recover money based on the provisions in the law to reclaim such debts through court acti


• Limitation Act, 1963:   The Limitation Act lays down the statutory period within which an action has to be filed. Money recovery suits generally have a three-year limitation period when the cause of action first arises. Default on filing a suit within the laid period mostly leads to the claim being barred by limitation, and hence it is very crucial to make sure that legal action is taken on time in the right to recover debts

Drafting the Plaint

• The drawing up of a plaint is basically the foundation on which a suit for recovery of money is instituted. A plaint is written in order to show the details of the case along with the amount claimed precisely. It should contain the following necessary elements:
  • Names of the court where the suit will be filed
  • Plaintiff's name, address, description
  • Name, address and description of Defendant
  • Particulars of cause of action and when it arose
  • Facts establishing the court's jurisdiction
  • Plaintiff's claim for relief and costs (Prayer clause)
  • Total amount of the suit's subject matter
  • Verification and Signing by the Plaintiff
  Following that, in that respect, according to Rule 2 of Order VII of the CPC, exactly how much has to be recovered from the defendant must be stated clearly. Similarly, in those cases where the suit relates to immovable property of some description, under Rule 3 of Order VII, it shall be properly and justifiably presented before the court.


• Court Fees Payment:   Filing is very much based on the fee associated with court payment. In most cases, the fee is usually a percentage of the amount claimed.
  • 10% for amounts up to Rs. 10,000
  • 7% on the next Rs.10,000/-
  • 5% on the next Rs. 30,000
  • 3% on the balance
  It has to be stated herein that, without the payment of the court fee, the suit shall not be entertained by the court. For more than one promissory note, the court fee needs to be paid separately for each note, as each claim has been treated as a separate suit under Section 6(2) of A.P.C.F & S.V Act.


• Submitting the Suit:  While filing the suit, the plaintiff has to make sure there is territorial and pecuniary jurisdiction. The territorial jurisdiction is determined by
  • The defendant's residential address.
  • Place of Business of Defendant
  • Where the cause of action arose wholly or in part
  Pecuniary jurisdiction relates to the amount of money involved in the suit and provides for which court shall try the case. Territorial jurisdiction needs to be determined before examining pecuniary jurisdiction. The limitation for recovering money by means of court action is 3 years, starting from the date on which the debt falls due. Again, it can be extended by the period if acknowledgement of debt or part payment is made by the debtor.