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A pre-litigation demand sent by a creditor (or their advocate) demanding repayment of a debt before filing a civil suit. Understanding the type of claim shapes your entire defense strategy.
Informal loans between individuals without written agreement. Key defense: establish terms, any repayment made, or dispute existence of the loan. Oral loans are hard to prove.
Unpaid invoices, goods supplied, services rendered. Best defenses: quality disputes, setoff for counter-supply, incorrect invoicing, and limitation on old invoices.
Formal written instruments. Strong evidentiary value for creditor. Defenses: discharge by payment, want of consideration, material alteration, limitation (3 years from due date).
Banks/NBFCs have additional remedies: SARFAESI (for secured loans), DRT proceedings, and attachment. Defenses: challenge valuation, improper notice under SARFAESI S.13(2), dispute outstanding amount.
MSME suppliers have a statutory right to payment within 45 days. If you are the buyer, liability for interest (3× RBI rate) applies automatically. If you are the MSME, SAMADHAAN provides fast recovery.
Pre-execution notices before attaching assets under a court decree. Defenses: show decree is satisfied, challenge court jurisdiction, limitation (12 years for decree enforcement).
The right law determines which court has jurisdiction and what remedies the creditor can pursue. Limitation is the most powerful procedural defense available to you.
| Law / Provision | Applies To | Limitation Period | Key Point |
|---|---|---|---|
| CPC Order XXXVII | Bills, notes, written contracts for money | 3 years | Summary suit — defendant must get leave to defend |
| Limitation Act — Art. 18 | Money lent under written instrument | 3 years | From date money lent / date of written contract |
| Limitation Act — Art. 19 | Money lent / payable on demand | 3 years | From date of demand — partial payment resets clock |
| Limitation Act — Art. 136 | Execution of court decree | 12 years | From date of decree or date of default of installment |
| NI Act 1881 — S.25 | Promissory notes | 3 years | From date note falls due for payment |
| SARFAESI Act 2002 — S.13(2) | NPA notices by banks / NBFCs | 60-day reply window | Reply within 60 days or bank can take possession |
| MSMED Act 2006 — S.16 | MSME supplier dues | 45 days mandatory | Buyer liable for compound interest at 3× RBI rate |
| Interest Act 1978 | Interest on delayed payments | N/A | Court may award interest from date of notice / suit |
⚠️ Limitation Reset Warning
Any partial payment, written acknowledgment of debt, or part-payment of interest resets the limitation period from the date of that act. Be careful about making any payments after limitation has run without legal advice.
These are the most effective legal defenses Indian advocates use when responding to money recovery demands. Multiple defenses can be combined in a single reply.
If the debt fell due more than 3 years ago and there has been no payment or written acknowledgment, the claim is completely barred by limitation under the Limitation Act 1963. No court can entertain a time-barred suit (Section 3 — a mandatory bar, not a discretionary one).
For informal loans and oral agreements, the claimant must prove the debt exists. Deny the existence of the debt or the claimed amount if incorrect. Under the Evidence Act, the burden to prove debt lies on the person claiming it. A bare denial shifts the burden back.
If you have repaid the full amount or any part of it, produce the documentary evidence: bank transfer records, receipts, RTGS/NEFT confirmations. Challenge the claimant's accounting — many notices inflate the amount by ignoring payments or miscalculating interest.
Challenge the interest rate claimed: (a) no agreed rate → only RBI-rate interest applicable; (b) compound interest not agreed in writing → only simple interest allowed; (c) penalty exceeding actual loss → unenforceable under Contract Act S.74; (d) incorrect calculation of principal after payments.
Claim that the creditor owes you money too — for goods supplied, services rendered, damages caused by their breach, or security deposits not returned. A setoff (CPC O.VIII R.6) reduces or eliminates the claim. A counterclaim (O.VIII R.6A) can exceed the original claim.
Without a written loan agreement, the claimant cannot use Order XXXVII CPC (summary suit). They must file an ordinary civil suit where you have full rights to defend. Dispute repayment terms, interest rate, and conditions that were never agreed in writing.
If you previously settled this debt (even for a lower amount), or if the terms were restructured/novated, that settlement is a complete defense. Produce the settlement agreement, discharge letter, NOC, or any written confirmation of settlement.
For bank NPA notices: challenge incorrect NPA classification date, outstanding amount (check statement), valuation of security, failure to follow RBI guidelines, improper service of notice. Challenge before DRT within 45 days under SARFAESI S.17.
Follow these steps within the timeline stated in the notice (typically 15–30 days for pre-litigation notices; 60 days for SARFAESI S.13(2) notices).
Identify: (a) what law / agreement the notice relies on; (b) the exact amount claimed and how it's calculated; (c) the deadline for reply; (d) whether it's a pre-litigation notice or a statutory notice (SARFAESI S.13(2) / Order XXXVII pre-summons). The type determines your response strategy and timeline.
Collect: loan agreement / written contract, all payment receipts and bank statements showing transfers, correspondence with the claimant (WhatsApp messages, emails), security deposit receipts, any settlement letters, NOCs, or discharge certificates. Create a chronological record of all transactions and communications.
Determine when the debt originally fell due. Count forward 3 years (for most debts) or 12 years (for decrees). If limitation has run, this is your strongest defense and must be stated prominently. Also check if any payment or written acknowledgment resets the clock — if so, calculate limitation from that date.
Prepare your own account statement: principal × interest rate × period = amount you accept (if any). Identify: payments not credited, excess interest charged, penalties not agreed, compounding not contracted for. Your reply must state the amount you admit (if any) and the basis for contesting the balance.
Your advocate's reply must: (a) deny the claim specifically (not generally); (b) raise all defenses including limitation; (c) state any admitted amount with proposed payment terms; (d) assert any setoff or counterclaim; (e) call upon the claimant to produce all original documents. Send by Registered Post AD + Email + WhatsApp to create a complete delivery trail.
If the debt is valid, explore negotiated settlement: one-time settlement (OTS) at a discount, EMI restructuring, partial waiver of interest. Any settlement must be documented in writing with a full discharge clause. Ensure settlement agreement explicitly states "in full and final settlement" and all original documents (promissory note, loan agreement) are returned cancelled.
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If you received a notice from a bank or NBFC citing SARFAESI Act Section 13(2), this is a statutory NPA notice. You have exactly 60 days to send a representation to the bank. If you do not respond within 60 days, the bank can:
Challenge before the Debt Recovery Tribunal (DRT) under SARFAESI S.17 within 45 days of possession notice. Grounds: incorrect NPA date, wrong outstanding amount, improper valuation, procedural non-compliance.
Common questions advocates get from clients receiving money recovery notices.
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Trusted by 3,400+ Indian advocates · All 23 notice types · Limitation Act 1963 — all 137 Articles