Recovering pending dues can be quite a hassle, whether it is from a former client or an employer who is keeping a tight hold on your payments. But first, let us clearly understand the meaning of pending dues.
What are pending dues?
Pending dues can be defined as payment or anything due from one party to another in the form of cash, monetary compensation or other forms including goods which has not been reimbursed to the receiving party as of yet.
Professional institutions like finance companies and large banks usually have strong recovery processes and technology set in place, but for individuals who can’t afford it or who are unaware of this practice, usually end up being cheated of their money.
Thus, the main question arises:
How to recover these pending dues in a clean and legal manner with minimal resources?
Some common ways of getting back money from your debtors are:
1. Come to a settlement with the debtor. You can agree to accept the payment in instalments, this way it isn’t too burdensome for the debtor and you can get your money back.
2. Get a mediator or professional help.
3. Send a Legal Notice
4. File a summary suit.
Even though filing a summary suit is a time taking procedure, and involves certain amount of legal, in most times sending a strong Legal Notice is sufficient to recover the dues.
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The customary way to do so is through Order 37 of the Civil Procedure Code or the CPC, which enables the creditor to file a complaint against the debtor in case of non-receipt of the agreed payment.
This is called a ‘summary suit’, and the only difference between a summary suit and a normal suit is that summary suits are dealt with quicker than normal suits.
Let us assume that Company A sold Company B some goods on credit and a stipulated date was agreed for repayment of the money back to A. As it so happened, B was unable to repay A up till the given deadline which prompted A to file a summary suit against B.
B was summoned to court and the trial ensued wherein the court found B to be guilty of non-repayment of A’s pending dues, thus B had to immediately reimburse A as previously agreed.
Suppose that B had not shown up to court for 10 days even after being summoned, he would automatically be found guilty and the court would pass the order for B to reimburse A for the same.
In such cases, interest is also imposed on the defaulting party along with reimbursement of legal expenses.
The question that arises here is, what are the requirements of the transaction from the creditor to the debtor to be qualified for filing a summary suit in court?
A summary suit works in a different manner than normal suits: the court passes judgement without listening to the defence of the defendant. While this goes against the principle of “nobody should be condemned unheard”, a summary suit can only be passed when the defendant has virtually no defence to protect his case.
How To Avoid This Problem From Occurring?
It is always best to take precautions from early on, rather than search for a cure later on. The best way to avoid the ‘Pending Due Trap’ from occurring is to follow these steps:
1. Legal experts advise that you get an agreement or a contract drafted that states each party’s terms and stipulates everything in a clear manner.
2. Make sure that all the transactions are done through legal means and no use of illicit devices is being made.
3. Make sure that the agreement/contract is clear and agreed to by both parties, and that the same is duly signed by them.