Debt Recovery-India FAQs
- What are the main debt recovery routes available in India?
The main routes are: a civil recovery suit for commercial debts; a summary suit under Order XXXVII CPC for liquidated debts from written contracts where no credible defence exists; DRT proceedings for banks and financial institutions on debts above Rs 20 lakh; IBC application before the NCLT as a financial or operational creditor; and enforcement for secured creditors.
- What is a summary suit and when should it be used?
A summary suit under Order XXXVII CPC is available for liquidated debts arising from written contracts, bills of exchange, or negotiable instruments. The defendant must apply for leave to defend within 10 days — leave is granted only where there is a genuine triable issue. Where leave is refused, judgment is entered summarily, often within weeks. Summary suits are most effective for trade debts evidenced by invoices or accepted purchase orders where the debtor has no credible defence on the merits.
- What is a Debt Recovery Tribunal and who can use it?
Debt Recovery Tribunals are specialist courts for recovery of debts owed to banks and financial institutions above Rs 20 lakh. Banks, scheduled banks, financial institutions, and notified NBFCs can file DRT applications. DRTs issue recovery certificates enforced by the tribunal’s Recovery Officer , the process is faster than a civil suit for secured and unsecured bank debt.
- Can a GCC-based company recover a debt from an Indian debtor?
Yes. A GCC-based company can file a civil recovery suit or summary suit in India, use the IBC demand notice and NCLT route if the debtor is a company in default of Rs 1 crore or more, or apply to enforce an existing UAE judgment or arbitral award under the applicable bilateral framework.
- What is an interim attachment order and when can it be obtained?
An interim attachment order is available where the creditor can demonstrate that the debtor is likely to dissipate, remove, or conceal assets to defeat the recovery. The application is made at or after filing the recovery suit and may be granted ex parte where urgency requires.
- What happens after a court decree is obtained?
A decree is not self-enforcing, the creditor must file a separate execution application identifying the debtor’s attachable assets. The court issues attachment warrants against specified assets — bank accounts, movable property, shares, or immovable property. The debtor’s property is then sold at court auction and the proceeds applied to the decree amount.