In short
- An unpaid loan is usually a civil matter: a claim for money owed under a contract, even an informal one.
- Proof matters most: bank transfers, a written agreement or promissory note, and messages acknowledging the debt.
- The usual time limit is three years, and a signed written acknowledgement, or a part-payment acknowledged in writing, can restart it.
- Routes include a written reminder, a legal notice, a civil suit (often a summary suit), mediation, or a Section 138 complaint if a cheque given to you bounced.
Reviewed by 3 advocates · 2 Bar Councils
Approved ·
Practises banking and civil disputes
Reviewed this guide for accuracy against the sources listed below.
Approved ·
Practises civil and consumer law
Reviewed this guide for accuracy against the sources listed below.
02What the law says
A loan is a contract, whether written or oral. If it isn't repaid, the lender can sue to recover it. Under the Limitation Act, 1963, a claim for money lent generally has to be filed within three years, usually counted from when the loan was made (Articles 19 and 21 of the Schedule). Different starting points can apply where there is a promissory note, bond or agreed repayment date. If, before the time runs out, the borrower signs a written acknowledgement of the debt (Section 18), or makes a part-payment that is acknowledged in writing signed by them (Section 19), a fresh limitation period can start.
Where the claim is based on a written contract, a promissory note or a cheque, a summary suit under Order XXXVII of the Code of Civil Procedure can be faster, because the borrower has to get the court's permission to defend.
If the borrower gave you a cheque that bounced, Section 138 of the Negotiable Instruments Act may also apply.
A loan that isn't repaid is not, by itself, a crime. Police complaints are generally for cases where there was cheating or fraud from the beginning.
03Where you can go
- The borrower, in writing. A message asking for repayment, and any reply acknowledging the debt, becomes evidence.
- Legal notice. A formal demand, usually through an advocate.
- Civil court. A recovery suit or summary suit in the court that has jurisdiction, based on the amount and place.
- Mediation or Lok Adalat, if both sides are willing.
04How it usually works
- 01
Lenders usually put together a timeline: amount, date, how it was paid, and any repayments.
- 02
Repayment is asked for in writing, and the reply is kept.
- 03
If unpaid, a legal notice is a common next step.
- 04
If there's still no payment, a suit is filed, and the court decides after hearing both sides.
05Time limits
- Three years for most claims for money lent, depending on the terms. A signed written acknowledgement, or a part-payment acknowledged in writing by the borrower, made before expiry can restart it.
- If a cheque bounced, the much shorter Section 138 deadlines apply.
06Documents to gather
- Bank transfer records, UPI history or receipts
- Any written agreement, promissory note or IOU
- Messages or emails where the borrower mentions the loan or promises to repay
- Cheques given by the borrower, and any bank return memo
- Names of witnesses, if the loan was in cash
07Common questions
08Questions to ask an advocate
If you speak to an advocate, these questions can help make the conversation useful.
- Is my claim within the time limit, and has anything restarted it?
- Is a summary suit available on my documents?
- Which court has jurisdiction, and what will the court fees be?