India 
The debt collection procedure in India begins with an assessment of the debtor’s solvency, corporate status, registered office, directors or authorized representatives, available assets, pending litigation, enforcement history and signs of insolvency. It is also important to review the legal basis of the claim, invoices, delivery and acceptance documents, correspondence, payment history, acknowledgments of debt and any dispute resolution clause in the contract. This preliminary analysis helps determine whether it is advisable to start with amicable recovery, file a summary suit, bring a civil or commercial claim, enforce an existing judgment, or consider insolvency-related remedies.
In the absence of current litigations against the debtor or outstanding court decisions regarding debt collection, and provided that the debtor is active, amicable debt collection becomes the preferred approach.
This stage is based on active negotiations with the debtor to reach an agreement regarding payment of the creditor’s claims or other settlement options, such as return of goods, transfer of debt to a third party, exchange of services or goods.
Interaction with the debtor begins with sending a formal demand notice and contacting the debtor through lawful communication channels, including mail, email, telephone or instant messengers. The purpose of this stage is not informal pressure, but structured negotiation with the debtor’s decision makers, verification of the debtor’s position and discussion of a realistic settlement, payment schedule, return of goods, transfer of debt or another legally acceptable solution.
The average term for out-of-court collection is up to 60 days. If lawful negotiations do not lead to payment or settlement, or if the initial assessment shows that the debtor disputes the claim, avoids communication, hides assets, faces enforcement actions or shows signs of insolvency, it is advisable to move to the appropriate legal route: summary proceedings, civil or commercial litigation, enforcement of an existing judgment, or insolvency proceedings.
The limitation period in India for many contractual debt claims is generally three years, depending on the legal nature of the claim and the date on which the right to sue accrues. Under the Limitation Act, 1963, many claims for money payable, the price of goods sold, money lent or compensation for breach of contract fall within a three-year limitation period. If the claim is filed after the applicable limitation period, it may be dismissed as time-barred.
A written acknowledgment of liability or a qualifying part-payment made before the expiry of the limitation period may start a fresh limitation period. For this reason, before filing a claim in India, it is important to analyze the payment history, signed confirmations, settlement proposals, account statements and correspondence in which the debtor admitted the debt.
Indian law provides several procedural routes for debt recovery through court, but for commercial debt claims the key distinction is between a summary suit under Order XXXVII of the Code of Civil Procedure, 1908 and an ordinary civil or commercial suit. The appropriate route depends on the documents supporting the debt, the amount and nature of the claim, the existence of a dispute and the need for urgent interim relief.
A summary suit under Order XXXVII of the Code of Civil Procedure, 1908 is a special procedure for certain document-based monetary claims. It may be used, for example, where the creditor seeks to recover a debt or liquidated demand in money based on a written contract, bill of exchange, promissory note, hundi, statutory obligation or guarantee. The purpose of this procedure is to prevent an unsupported defence from delaying recovery where the claim is clear and properly documented.
In a summary suit, the defendant must enter appearance within the prescribed time and may then seek leave to defend by showing facts that disclose a substantial defence or make it reasonable for the court to allow the defence. If the defendant does not enter appearance, does not apply for leave to defend, or if leave is refused, the creditor may obtain judgment more quickly than in ordinary proceedings. This makes the quality of written evidence especially important at the preparation stage.
An ordinary civil action is initiated by presenting a plaint in accordance with the Code of Civil Procedure, 1908. If the dispute qualifies as a commercial dispute of specified value, it may proceed before the competent Commercial Court or Commercial Division under the Commercial Courts Act, 2015; other claims are considered under the general civil procedure.
Proceedings under the Commercial Courts Act, 2015 depend on the specified value of the commercial dispute. The specified value is generally not less than INR 3,00,000, unless a higher value applies to the relevant court or jurisdiction.
For commercial disputes of specified value, Section 12A of the Commercial Courts Act requires pre-institution mediation before filing a suit, unless the suit contemplates urgent interim relief. The mediation process must be completed within three months from the date of the plaintiff’s application and may be extended by a further two months with the consent of the parties. The period spent in pre-institution mediation is excluded when computing limitation.
As a result of the consideration of the case, the court makes a decision and, where a decree is for payment of money, may award interest under Section 34 of the Code of Civil Procedure, 1908. Interest may cover the relevant period before the decree and the period after the decree until payment, subject to the court’s discretion, the contractual terms and the nature of the commercial transaction. If the contract provides an agreed interest rate, the court will assess it together with the contractual documents and applicable law. If the contract does not specify the rate, the court may determine a reasonable rate, and in commercial transactions may take into account the rate at which nationalized banks lend or advance money in relation to commercial transactions.
In commercial matters, an appeal from a decree or order covered by the Commercial Courts Act is generally filed within sixty days from the date of the judgment or order. The Commercial Courts Act also provides that the appellate court shall endeavour to dispose of the appeal within six months from the date of filing.
A civil claim in general procedure is applicable to all other cases, subject to the following differences. The period for appealing a decision of a lower court by appeal is 30 calendar days from the date of the decision, appealing the decision to the High Court (re-appeal) within 90 days from the date of the decision. When filing an appeal, the higher court may suspend the effect of the appealed decision if the appellant requests it and the court considers such a request to be justified.
A second appeal is limited and may be filed only where the case involves a substantial question of law. Under the Code of Civil Procedure, 1908, a second appeal is not allowed where the subject matter of the original suit is recovery of money not exceeding INR 25,000.
The final decision of the court is executed by the court that made this decision, or by the court that received such a decision for execution. To implement compulsory execution, it is necessary to apply to the competent court with a corresponding application within 12 years from the date of the decision. The main methods of enforcement include attachment and sale of the debtor’s property, sale of property in execution, appointment of a receiver, attachment of debts or bank accounts and recovery from assets or receivables identified during execution. Civil arrest and detention of a judgment debtor may be available only in specific circumstances and under judicial control as an exceptional enforcement measure.
If the creditor already has a foreign court judgment, the enforcement route in India depends on whether the judgment was issued by a court of a reciprocating territory. A decree from a superior court of a reciprocating territory may be executed in India under Section 44A of the Code of Civil Procedure, 1908. Judgments from non-reciprocating territories usually require a separate civil action in India based on the foreign judgment, with the Indian court considering the rules on conclusiveness of foreign judgments.
If the debtor is a corporate debtor and the statutory default threshold is met, insolvency proceedings may be considered under the Insolvency and Bankruptcy Code, 2016. For corporate debtors, the minimum default threshold under Part II of the Code is INR 1 crore. For an operational creditor, the process normally begins with a statutory demand notice, and the existence of a genuine pre-existing dispute may prevent admission of the insolvency application. Within insolvency proceedings, suspicious transactions may be reviewed where they appear to be preferential, undervalued, extortionate, fraudulent or intended to defeat creditors. If such transactions are successfully challenged through the insolvency process, the restored value may increase the asset pool available for distribution according to the statutory order of priority.
As an alternative or parallel legal route, criminal action may be relevant only where the facts indicate conduct beyond ordinary non-payment, such as dishonest entrustment and misappropriation of property, cheating, fraudulent inducement to deliver goods or money, fraudulent concealment or transfer of property to defeat creditors, or similar conduct. Under the Bharatiya Nyaya Sanhita, 2023, such circumstances may fall within provisions dealing with criminal breach of trust, cheating and fraudulent property-related conduct.
If you need support with international debt collection in the Republic of India, Grandliga can review the documents, assess the debtor’s position, determine the appropriate recovery route and coordinate pre-trial, court, enforcement or insolvency-related steps with local legal specialists. You can also send us the documents for a preliminary case assessment.
