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Old 22nd April 2009, 12:48   #1
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Default Payment recovery options in India

hi guys,

just need to check if a company doesn't pay despite submitting the bills for the services rendered, what are the options available to get the money back?
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Old 22nd April 2009, 13:01   #2
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Filing a police complaint may be?
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Old 22nd April 2009, 13:05   #3
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The only recourse is filing recovery suit against the company concerned in the courts however it is a slow and lengthy process.
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Old 22nd April 2009, 13:23   #4
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Quote:
Originally Posted by amtak View Post
Filing a police complaint may be?
No. Usually it is not a criminal offense unless a check bounce is involved.
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Old 22nd April 2009, 13:50   #5
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A consumer court will be a faster road to recovery...
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Old 22nd April 2009, 13:57   #6
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How does a consumer court come into play here? My understanding is that it applies only for the reverse scenario.. ie. someone pays for a service and does not get the promised service delievered. I maybe wrong though, always thought it works one-way.
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Old 22nd April 2009, 14:06   #7
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What is their reasoning for not paying?
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Old 22nd April 2009, 15:13   #8
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@panky12345,
are they your dealers?
first, go with a couple of your staff, talk to them and try to take PDCs, if they do not yield, try to take back your inventory.

PS : sorry, second part of suggestion was not the right path - so post being edited.

Last edited by MuraliR : 22nd April 2009 at 15:30.
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Old 22nd April 2009, 15:27   #9
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Quote:
Originally Posted by MuraliR View Post
@panky12345,
are they your dealers?
first, go with a couple of your staff, talk to them and try to take PDCs, if they do not yield, try to take back your inventory.

beyond all this, if the amount is too huge, and if the customer has a clear intention of cheating, try sending eunuchs.
The Eunuch scene can get you into serious trouble, keep on the right side of the law, its better, send a notice, this is AFTER you have exhausted all mutual ways of extracting payment.

Do not, I repeat, use underhand methods, the other party can file a police complaint getting you into really serious problems, also if something untoward were to happen at the other party's end.

FYI - any one forcefully entering your premises can be prosecuted for tresspass. - the eunuchs will need to enter the party's premise to harass them.
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Old 22nd April 2009, 15:37   #10
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I suggest you send a notice in a registered mail with 2-3 reminders for month and then send a notice for recovery of money.
Is there any contract signed for the services rendered?if yes,ur super safe as per the Contract Act, 1872.There is a quid Pro quo involved.
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Old 22nd April 2009, 15:46   #11
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@ panky - do you have an acknowledgement in any form that will prove that the payment you are seeking is indeed for goods that were desired to be purchased by the defaulting party, and hence delivered to their possession. A delivery challan with the party's signature and stamp is usually proof of this. It would also help if you had a purchase order from the party, or a proforma invoice of your company that they accepted, agreed to and duly returned signed and stamped. In most of these documents, there are clauses that bind the party to pay after accepting the goods after a certain period, and occassionally for interest for the period after the payment deadline. If all this is in order, it hould be easy for you to prove that you are genuinely owed money. Whether the authorities act upon it or not is a different story.

If not, you would be lucky only if you were given a cheque against this payment that may have bounced.

Last edited by Bass&Trouble : 22nd April 2009 at 15:47.
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Old 22nd April 2009, 18:39   #12
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Always best to take a post-dated cheque, if there is a credit period as part of the deal. Cheque bounce cases are far easier to resolve, some within a matter of weeks!
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Old 22nd April 2009, 18:58   #13
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Approach a collections/recovery agent to do the job. There are professional outfits out there other than the Khaderbai setups (which are also very effective, by the way). We have used Khaderbai setups quite effectively in the past without getting on the wrong side of the law. It usually meant spending long evenings drinking chai and eating oily stuff while listening to very very tall tales. Didnt trust their daaru!

You could also try factoring your bills to any of the factoring agents (CanBank Factors was one we used a long time ago when I worked in India), but there's usually a lot of scrutiny and paperwork involved. At least you get a decent part of what's owed to you. I doubt if they will touch something thats already overdue, though.

Times are difficult, its going to be tough to recover money due to you even when your debtor is genuine and wants to make the payment but does not have the funds.
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Old 23rd April 2009, 11:24   #14
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Thanks a ton guys. Its just that the guy (director) is not taking my calls, and saying yes this week or next week. I do have an option of threating him or his family.. but fear that it would do worse than good.

Any inputs on how much a legal notice would cost and how effective would that be?
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Old 23rd April 2009, 15:29   #15
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Quote:
Originally Posted by panky12345 View Post

Any inputs on how much a legal notice would cost and how effective would that be?
Hi Panky, Notice costs here in Bombay are Rs. 1000/- per notice per party.

You mentioned director - i assume its a pvt. ltd co and or a ltd co.

If you have proof of sales and outstanding amounts as B&T has classified, you can file a winding up petition in the high court/small causes court.

Depending upon the amount (I talk of Bombay as I have experience here)

1) Amount less than 50k goes to the Small Causes court.
2) Amount higher than 50k goes to High Court.

If they pay by receiving the notice it is fine, if they do not then you have to move the court - WITHIN 3 YEARS OF THE INVOICE DATE/TRANSACTION DATE - (the applicable law here is law of limitations)

There are court fees, here in Bombay HC it is 10% of the litigated amount, which if you win the case is awarded back to you. Else if you do an out of court settlement - do remember to take back the amount from the party. There are laws on this I am not a lawyer, but this is the part of the costs to the court. Each state has its own laws, women for.e.g in Maharashtra do not need to pay this money if they are the plaintiffs.

How do you find a lawyer ?- network network network - find people who you know have dealt with a lawyer and have successful results from them.

Ask relatives, friends you trust and business associates you can trust, please please take 2 separate feedback about a lawyer's performance. Do not in any situation sign a Power of Attorney or Vakalatnama (unfilled vakalatnama or blank vakalatnama in any one's favour), atleast to anyone who is outside your trusted circle (wife/mom/dad/bro etc)

If you file a winding up petition, you can get your funds back.

And on a lighter note, do not go to R. K Anand,

Cheers
M

Last edited by mmmjgm : 23rd April 2009 at 15:40.
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