Do you have to send a notice first?
Against a private person or a company, the law does not make a notice compulsory before a suit for money.
Against the Government, or a public officer for an act done in their official capacity, it does. Section 80 of the Code of Civil Procedure, 1908 says no suit shall be filed "until the expiration of two months next after notice in writing has been" delivered.
Business disputes have their own first step. If the claim is a "commercial dispute", such as one arising from "ordinary transactions of merchants, bankers, financiers and traders", Section 12A of the Commercial Courts Act, 2015 says a suit "shall not be instituted unless the plaintiff exhausts the remedy of preinstitution mediation". This does not apply to a suit that seeks urgent interim relief. This applies when the claim is of the "Specified Value" in Section 2(1)(i), which "shall not be less than three lakh rupees". That figure was one crore rupees until Act 28 of 2018 cut it to three lakh, from 3 May 2018.
Why send one anyway
A notice costs far less than a suit, and many people pay once they see a demand in writing. It also does two things in law.
It can start interest. Where you had no agreement on interest, Section 3 of the Interest Act, 1978 lets the court allow interest "from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed". If the debt was payable on a fixed date under a written document, such as a promissory note, interest can instead run from that due date. So the notice should say, in plain words, that you will claim interest and from which date. The rate is the court's call, "at a rate not exceeding the current rate of interest". If you did agree on interest, the agreement governs instead.
The reply can reset the clock. If the other side writes back and admits the debt, that letter may start a fresh limitation period. More on this below.
The time limit, and why a notice does not stop it
Most money claims must be filed in court within three years. The periods are in the Schedule to the Limitation Act, 1963, and the Supreme Court set out the main ones in Syndicate Bank v. Channaveerappa Beleri (10 April 2006).
| Claim | Time limit | Counted from |
|---|---|---|
| "For money payable for money lent" (Article 19) | Three years | "When the loan is made" |
| "For money lent under an agreement that it shall be payable on demand" (Article 21) | Three years | "When the loan is made" |
| "Any suit for which no period of limitation is provided elsewhere in this Schedule" (Article 113) | Three years | "When the right to sue accrues" |
Other articles cover unpaid bills, promissory notes and loans with a fixed repayment date, and their start dates differ. Ask an advocate which article fits your claim.
A late suit fails even if the other side never raises the point. Section 3 says it "shall be dismissed, although limitation has not been set up as a defence".
Your own notice does not extend this period. Only two things written by the other side do.
| What happens | Effect | Law |
|---|---|---|
| They admit the debt in a letter, email or message they sign | "a fresh period of limitation shall be computed from the time when the acknowledgment was so signed" | Section 18 |
| They pay part of the debt, and the payment is acknowledged in their writing | "a fresh period of limitation shall be computed from the time when the payment was made" | Section 19 |
Both must happen before the three years end. Section 18 needs a writing "signed by the party against whom such property or right is claimed". A reply can count even if it "is accompanied by a refusal to pay". For a part payment, Section 19 needs that the acknowledgment "appears in the handwriting of, or in a writing signed by, the person making the payment".
So keep every reply and every payment record.
What the notice should say
- The parties. Your full name and address, and the other side's correct name and address.
- The amount. The exact sum due, with a short breakup if it was paid in parts.
- How the debt arose. The date and purpose of the loan, the invoice or the work done.
- The proof. Bank transfers, receipts, a promissory note, chats or emails. List them. Do not attach the originals.
- Interest. That you will claim interest, and from which date.
- A deadline. A clear date to pay, such as 15 days from receipt.
- The next step. That you will go to court if the money is not paid.
Keep it factual. Threats and claims you cannot prove only help the other side. Mask any Aadhaar or PAN number on a paper before it goes out with the notice.
How to send it
Send it by registered post or speed post with acknowledgement due, to the other side's last known address. Keep the receipt and the tracking printout, since they prove the date of delivery. Send a copy by email or WhatsApp too, as an extra.
If you want it drafted for you, see our legal notice service.
When a different rule applies
If the money was paid back with a cheque that bounced, you have a separate criminal remedy with its own 30-day notice deadline. Read the cheque bounce notice guide first, because that clock is much shorter.
If the money is owed by a government department, the two-month notice under Section 80 must go before the suit, unless the court gives leave for an urgent suit without it.
What happens after
If the other side pays, the matter ends. If they do not, you can file a suit for recovery in a civil court, or go to pre-institution mediation first if your claim is a commercial dispute of three lakh rupees or more. For commercial disputes, Section 12A says the time spent in mediation "shall not be computed for the purpose of limitation".
Court fees differ by state, so check your state's rate. Talk to an advocate about the right court and the right article before the three years run out.