How to get back money you lent: legal steps in India

Udhar diya paisa wapas kaise le: the steps in order

1. Work out what is owed: principal, interest at the agreed rate, and any part payments.
2. Gather proof: bank or UPI records, any note or cheque, messages, witnesses.
3. Get a signed acknowledgment of the debt. It also restarts the time limit.
4. Send a written demand or a lawyer’s notice with the amount and a date to pay.
5. File a civil suit: a summary suit if there is a pronote or written agreement, otherwise an ordinary suit.
6. If a cheque bounced, follow the strict section 138 timeline.
7. At every step, keep it lawful: no threats, no shaming, no taking things.

Watch the clock throughout. A suit for money lent must usually be filed within 3 years from the date of the loan. See the time limit to recover a loan.

Step 1: Work out exactly what is owed

Start with the exact figure, because every later step quotes it. Suppose you sent ₹80,000 by UPI on 10 Mar 2024 at ₹1 sekda (12% a year, simple), with no date fixed for repayment. On 1 Feb 2026 the borrower paid ₹10,000 and signed a note admitting the loan. A part payment goes first to the interest due, so all of it went to interest and the principal stayed ₹80,000.

So a demand sent on 1 Nov 2026 would ask for ₹95,386.67, with interest of ₹800 a month after that. Why payments clear interest first is explained in part payment: interest first.

Step 2: Gather proof of the loan

• Bank or UPI records showing the money going to the borrower. They prove payment, not the reason, so keep them with something that shows it was a loan.
• Anything in writing: a pronote, a loan agreement, a signed entry in your khata, a receipt for a part payment.
• A cheque the borrower gave you, even an unpresented one.
• Messages and emails where the borrower mentions the loan, asks for time or promises to pay. Do not delete them; keep the phone and a backup.
• Witnesses who saw the money handed over or heard the borrower admit it.

Chats, emails and screenshots are electronic records. The Bharatiya Sakshya Adhiniyam, 2023 says they cannot be refused as evidence just because they are electronic (section 61). To put one in evidence, section 63 asks for a certificate, in the form given in the Act’s Schedule, that describes the record and the device and is signed by the person in charge of it. Your lawyer prepares this.

If the loan was on a promissory note, see pronote: interest, validity and how to fill it.

Step 3: Get a signed acknowledgment, and watch the 3-year limit

For money lent, the Limitation Act gives 3 years from the date the loan is made, even when it was payable on demand (Schedule, Articles 19 and 21). In the example, that is around 10 Mar 2027.

Under section 18, if the borrower signs a written acknowledgment of the debt before that time runs out, a fresh period starts from the day it is signed. A part payment works the same way under section 19, but only if the payment is acknowledged in the borrower’s handwriting or in a writing they sign. The note signed on 1 Feb 2026 moves the deadline to around 1 Feb 2029.

A short dated note is enough: the amount borrowed, the date, that it is still owed, and the borrower’s signature. The exact last day and what counts as an acknowledgment depend on the facts, so ask a lawyer well before the deadline. More dates and examples are in the 3-year rule for loan recovery.

Step 4: Send a written demand or legal notice

A demand letter sets out the loan, the payments received, the amount due with interest worked to a date, and a reasonable date to pay. Many people send it through an advocate as a legal notice. Send it by a method that gives proof of delivery, and keep a copy.

• Claim interest in writing. If no rate was agreed, section 3 of the Interest Act, 1978 lets a court allow interest from the date given in a written notice saying that interest will be claimed.
• For a bounced cheque, a written notice within 30 days is a legal condition of the case. See the cheque section below.
• Stay factual. State amounts and dates. Do not threaten police action, shaming or anything unlawful.

Step 5: File a civil suit, ordinary or summary

A suit for recovery of money is the usual route. The court decides the debt and the interest, and its decree can then be enforced.

• Summary suit (CPC Order XXXVII). Available for suits on promissory notes, hundis and bills of exchange, and for recovering a fixed debt, with or without interest, that arises on a written contract. The borrower must enter appearance within 10 days of being served, and cannot defend at all without the court’s leave, which must be sought within 10 days of the summons for judgment. Leave is refused when the defence is frivolous or vexatious.
• Ordinary suit. For a loan with no written contract or pronote, proved by bank records, messages and witnesses.

You can settle at any stage. Write down the amount and the payment dates and have both sides sign.

If a cheque bounced: the section 138 timeline

When a cheque given to repay a debt is returned unpaid, section 138 of the Negotiable Instruments Act makes it an offence, but only if every deadline is met. The court presumes the cheque was given for a debt unless the drawer proves otherwise (section 139).

• Punishment: up to 2 years in prison, or a fine of up to twice the cheque amount, or both.
• Interim compensation: the court may order the drawer to pay up to 20% of the cheque amount while the case runs (section 143A).
• Settling (compounding): the offence can be compounded (section 147). In *Sanjabij Tari* (25 Sep 2025) the Supreme Court set the costs: none if settled before the defence evidence is recorded, 5% of the cheque amount after that but before judgment, 7.5% in the Sessions Court or High Court, and 10% in the Supreme Court.
• Faster service: the same judgment told trial courts to serve summons by email, mobile or WhatsApp as well, and to let the accused pay online at the first stage.

How much interest a court can allow

• Before the suit: if a rate was agreed, you claim at that rate, and the court can still examine an excessive one (see the legal interest rate in India). If none was agreed, the Interest Act, 1978 lets the court allow interest at up to the "current rate of interest", which the Act links to banks’ deposit rates, and not interest on interest.
• From the suit to the decree: interest at a rate the court thinks reasonable (CPC section 34).
• After the decree: up to 6% a year (₹0.50 sekda) on a loan that is not commercial. For a loan connected with a trade or business it can be higher: up to the agreed rate, or without one, the rate nationalised banks charge on commercial loans.

So a ₹1 or ₹2 sekda rate may not carry on after a decree: 6% a year is ₹0.50 sekda. The amount a court finally allows is its decision.

Which section applies if someone doesn’t return money (kaun si dhara)?

Usually none: not repaying a loan is mainly a civil matter, recovered through a suit. Three points:

• Cheating needs dishonest intent from the start. The Supreme Court said "the mere inability" to return a loan cannot lead to a cheating prosecution unless dishonest intention is shown at the beginning of the transaction (*Satishchandra Ratanlal Shah*, 2019). Cheating is now section 318 of the Bharatiya Nyaya Sanhita, which replaced IPC section 420.
• A bounced cheque is an offence under section 138 of the NI Act, as above.
• A police complaint is not a recovery tool. Talk to a lawyer before you file one, because a complaint that does not fit the offence can fail and delay your civil case.

What not to do: harassment is a crime

• Do not threaten the borrower or their family. Threatening someone with harm to their body, reputation or property to make them act can be criminal intimidation (section 351 of the Bharatiya Nyaya Sanhita).
• Do not take their phone, vehicle, gold or anything else without a court order, and do not use force.
• Do not shame them in public, on social media or in family groups, and do not keep calling their workplace.
• Some states also have laws against coercive loan recovery. Recover only through the steps above.

Sources

• Limitation Act, 1963, Schedule: Articles 19 and 21 (money lent)
• Limitation Act, 1963, section 18 (acknowledgment in writing)
• Limitation Act, 1963, section 19 (part payment)
• Bharatiya Sakshya Adhiniyam, 2023, sections 61 and 63 (electronic records)
• Interest Act, 1978, section 3
• Usurious Loans Act, 1918, section 3, as discussed in Dayawati v. Inderjit (Supreme Court, 1966)
• Code of Civil Procedure, 1908, section 34 (interest)
• CPC Order XXXVII rule 1(2), as reproduced in Mahou India v. Aradhna Wines (HP High Court, 2019)
• IDBI Trusteeship Services v. Hubtown (Supreme Court, 2016): Order XXXVII rule 3, leave to defend
• Negotiable Instruments Act, 1881, sections 138, 139, 142 and 147
• Noor Mohammed v. Khurram Pasha (Supreme Court, 2022): text of section 143A
• Sanjabij Tari v. Kishore S. Borcar, 2025 INSC 1158 (Supreme Court, 25 Sep 2025)
• Satishchandra Ratanlal Shah v. State of Gujarat (Supreme Court, 3 Jan 2019)
• Adarsh Parasramka v. State of West Bengal (Calcutta High Court, 12 Aug 2026): cheating under BNS section 318
• Income-tax Act, 2025, section 185 (no loans of ₹20,000 or more in cash)