Is a criminal case the right route?
When a friend or relative does not repay a loan, the first instinct is often to file a police complaint of cheating. Unless there was deception at the time the money was borrowed, non-repayment is a civil matter. If a cheque was given and dishonoured, a complaint under Section 138 of the Negotiable Instruments Act may also be available.
The legal notice
A legal notice demanding repayment within a fixed time sets out the amount, the date and mode of the loan, and the evidence. It is not compulsory before a money suit, but it often leads to payment or settlement and creates a record.
Limitation: three years
Under the Limitation Act, 1963, a suit for money lent is ordinarily to be filed within three years from the date of the loan, or from the date fixed for repayment where there was one. A suit filed later is liable to be dismissed.
How the period is extended
- A written acknowledgement of the debt, signed by the borrower before the period expires, starts a fresh period of three years under Section 18
- A part payment made before the period expires, acknowledged in writing or in the payer's handwriting, also restarts the period under Section 19
- Messages and emails admitting the debt may count as acknowledgements if they meet these conditions
Evidence that helps
- Bank transfer records, UPI history or cheque counterfoils
- A promissory note or written agreement
- Messages asking for or admitting the loan
- Witnesses to a cash payment
The suit
A money suit is filed in the civil court with jurisdiction over the place where the defendant lives or where the loan was given, with court fees according to the amount claimed under the Bihar court-fees law. Interest may be claimed at the agreed rate or, if none was agreed, at a rate the court finds reasonable. Where the claim is based on a written contract or a promissory note, a summary suit under Order XXXVII of the Code of Civil Procedure may be faster.
Frequently asked questions
Can I recover a cash loan given without any document?
It is harder but not impossible. Witnesses, messages and the borrower's own admissions can prove the loan. The court weighs the evidence as a whole.
About the author
Advocate Vivekanand
Founder & Principal Advocate, Vivekanand Law Firm · MA (English), MBA, LL.B., Author. Full profile
This article is general legal information, not legal advice. It does not create an advocate–client relationship. Legal provisions referred to should be verified for your specific situation and the date of the events concerned.