How To Recover Your Money From Friend Legally?

Borrowing and lending money among friends is quite commonplace. Problems arise when the borrower refuses to return the amount. There are legal remedies if your friend keeps avoiding repayment. Whether it was through cheques or online transfers or simply a verbal transaction, you can take appropriate legal steps to have your dues recovered. This article sheds light on the legal procedure, types of courts, and laws such as the Civil Procedure Code (CPC), 1908, and Sec 420 of IPC/Section 318 (4) of BNS relating to money recovery.

Steps to Recover Your Money from Friend Legally

Step 1: Collect Evidence of Loan

Before approaching the court, collect all evidence that would prove that:

• You gave the money.
• Your friend agreed to return it.
• Payment mode, if any, was through bank transfer, cheques, UPI, etc.
• Any communication via messages, emails, or call recordings.

It is most important in building a strong money recovery suit.

Step 2: Send a Legal Notice

The first step is serving a legal notice through a lawyer. The notice should contain the loan details, demand for repayment, and deadline for repayment (usually 15-30 days). If at all your friend ignores the notice, you can then proceed to file a case.

Step 3: Select the Appropriate Court

You may approach one of the following courts based on the amount and nature of your claim:

• Small Causes Court: If the amount is small (generally below ₹1 lakh).
• City Civil Court: For civil matters involving a higher claim.
• Magistrate Court: For starting criminal proceedings, such as a cheating complaint.
• High Court: For writ petitions or appeals, depending on the jurisdiction.

Step 4: Initiate a Money Recovery Suit

Pursuant to the Civil Procedure Code, 1908, you may file a case in court a money recovery suit. This civil action will enable the court to direct your friend to pay back the amount with interest.

You must sue within the limitation period. In case your friend has recognized the debt in writing, the limitation period shall begin anew according to Section 18 of the Limitation Act, 1963. 

Step 5: Criminal Proceedings (Optional)

An option for criminal proceedings may be chosen if you feel that your friend took the money with fraudulent intentions.

Pertinent provisions include:

• Sec 420 of IPC/ Sec 318 (4) of BNS: Cheating Complaint: If your friend never intended to repay and deceived you.
• Section 406 IPC/Section 316 BNS: Criminal Breach of Trust: In case the money was given for a specific purpose and that money was misappropriated.
• Section 316(2) BNS: It provides for criminal breach similar in nature under the new Bharatiya Nyaya Sanhita (BNS).
• Section-318(4) of the Bharatiya Nyaya Sanhita (BNS): Punishes dishonest misappropriation of money.

You have the option to lodge a police complaint or approach Magistrate Court to lodge the First Information Report (FIR).

Step 6: Cheque Bounce Cases

You can file a case against your friend under Section 138 of the Negotiable Instruments Act if he has issued a cheque that has subsequently bounced. The legal notice should be sent within a period of 30 days after dishonour. If payment is not received within 15 days, you may file a case in the Magistrate Court.

Step 7: Explore Settlement or Mediation

Sometimes courts suggest mediation. If you and your friend come to a settlement, it will be a great way to save on time and cost. Courts like City Civil Court or Small Causes Court usually provide legal assistance for settlements.

Step 8: Enforce the Court's Decree

If the judgment is in your favour and your friend still refuses to pay, you can move for execution of the decree. The court will be able to:

• Attach movable/immovable property.
• Freeze bank accounts.
• Direct salary garnishment. 

In persistent cases of non-payment, you may seek insolvency action if the dues are significant.

Step 9: Invoke the Insolvency and Bankruptcy Laws

If the debtor does not pay and the amount is above ₹ 1 lakh, one may file a case under the new Insolvency and Bankruptcy Code (IBC). This has a stronger remedy.

Key Legal Points to Remember

• One redresses a civil suit, which includes money recovery, under the general provisions of the Civil Procedure Code (CPC) 1908.
• Section 406 of IPC if it amounts to criminal breach of trust; Section 420 of IPC or Section 318(4) of BNS if it amounts to cheating.
• New legal remedies introduced under BNS are Section 316(2) BNS and Section 318(4) of the Bharatiya Nyaya Sanhita (BNS) for fraud and misappropriation.
• Section 18 of the Limitation Act, 1963, extends the limitation if the debt is acknowledged in writing.
• In case of smaller amounts, the Small Cause Court or the City Civil Court is to be approached.
• Magistrate Court has the original jurisdiction in criminal matters.
• High Court needs to be approached for appeal as well as writs.

Keep in mind: It is possible for money recovery and criminal action to be instituted simultaneously in courts like the High Court, Magistrate Court, or City Civil Court.

By way of a classic scenario in lending money to a friend, punctual recovery is of utmost significance. The law has, through its civil, criminal, and insolvency-related remedies, bestowed upon a creditor an efficient mechanism for money recovery encounters. A creditor can lawfully enforce repayment under the provisions of Civil Procedure Code (CPC), 1908, Penal Sections like Sec 420 IPC / Sec 318(4) BNS. Always keep those records; always get advice beforehand but also act quickly within the limitation period. 

Even if the borrower is a close friend, do not hesitate to use the law for the protection of your legal financial rights.

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