How to Find Out Whether Your Debtor Has Assets Before You Sue

Why check what your debtor owns before you sue?

Because a decree is worth exactly what stands behind it. Nothing more. A court can declare that a company owes you Rs 40 lakh with interest, but if the company has no bank balance, no property and nobody owing it money, you'll recover nothing at all. A search before filing tells you three things. Does suing make commercial sense? Who should you sue: the company alone, or a guarantor or partner who owns property as well? And what should you ask the court to freeze at the start? How those requests fit into the suit is explained on our recovery suit page.

It changes the drafting too. A plaint that comes with a specific list of the defendant's property, and evidence that some of it is being sold, can carry an attachment application that has a real chance. One that only says the defendant "may dispose of its assets" won't get far. The search also shows you which court will end up executing the decree. Property outside the court's limits means the decree has to be transferred to the court where the property lies.

And quite often a search throws up warning signs that change the whole plan, like an insolvency petition a bank has already filed, a string of suits by other suppliers, or a company that hasn't filed accounts for three years. Each points somewhere different. Sometimes away from a suit altogether.

What can you lawfully find out, and what's off limits?

More is public than people realise. And there's nothing improper about using it. Anyone can look at company filings, GST details, registered property documents, registered charges and court records, sometimes after paying a fee. Sending someone to stand outside the factory and see whether it's working, how many trucks are parked and whose name is on the board is fine as well.

Other things are off limits. Full stop. Bank statements, his CIBIL-type credit report, his income tax returns, his call records: all confidential. A bank owes its customer secrecy. Credit information companies give reports only to their members, and only with the person's consent. Then there's the Digital Personal Data Protection Act, 2023 and the Information Technology Act, 2000, which catch anyone getting hold of personal data, or using it, without a lawful basis. Somebody will offer to "pull the debtor's bank statement" for you. Say no. You'd be paying for a criminal problem and a document no court will look at.

The lawful route to private information runs through the court. Once a suit's filed, and much more readily once there's a decree, the court can order the debtor to disclose his assets on affidavit and answer questions on oath. We come to that later. Until then, stick to what's public and what's already in your own records. That's usually more than you'd think.

MCA company search: what the portal tells you about a company or LLP

With a private limited company or an LLP, start on the Ministry of Corporate Affairs (MCA) portal. The free master data search gives you the company's status, whether active, struck off, under strike-off or under liquidation. It shows the registered office address, the date of incorporation, authorised and paid-up capital, the date of the last annual general meeting and balance sheet, and the directors' names and DINs. Then search each director's DIN. You'll see every other company and LLP where that person is a director or designated partner. That's how the sister concern turns up, the one the business has quietly moved into.

Next, the index of charges. Also free. Every charge registered under Section 77 of the Companies Act, 2013 is listed there, showing the lender, how much is secured, when, and whether it's been paid off. Lots of open charges to banks and NBFCs? The assets are already spoken for. There's a quieter signal as well. If a charge on a property was marked satisfied last month and nothing new was registered, the property may have just been sold.

Pay a small fee and the MCA's "view public documents" option gives you the company's filed balance sheets, annual returns and resolutions. Advocate B.K. Singh reads the last three years of a debtor's accounts in a set order. Auditor's report first, looking for any doubt about the company as a going concern. Then trade receivables, because what customers owe the debtor can be attached. Then loans to directors and related parties, which is often where the money has gone. Turnover? He barely glances at it. Those three items tell you far more about whether you'll ever be paid.

What should worry you on an MCA company search? Two or more years without filings. A recent shift of the registered office to some far-off state, or the auditor resigning, or every one of the original directors quietly stepping down. And a sudden jump in borrowings from related parties.

GST, PAN and your own records: the clues you already hold

Search the GSTIN or the PAN on the GST portal's taxpayer search. It shows whether the registration is active or cancelled, the legal and trade name, and the constitution of the business, so proprietorship, partnership, company or LLP. It shows the principal place of business. Most useful of all, it lists any additional places of business. Suppose the head office is in Pitampura and there's a factory in Bawana registered as an additional place. That's exactly the address you want in your attachment application. The return filing table tells you whether he's still filing, which tells you whether the business is alive.

A PAN search can turn up other GST registrations under the same PAN in other states, which usually means branches, godowns or projects you didn't know existed. With a proprietorship, the PAN is the proprietor's own. Every registration under it is his.

Then open your own files. The cheques he gave you, and the RTGS or NEFT credits in your bank statement, tell you which bank and branch he uses. Plenty of debtors print their account details on invoices and letterheads anyway. Your e-way bills and the transporter's receipts show where goods were dropped, and those drop points are his godowns and sites. Any TDS certificate he issued carries his TAN and PAN. And emails from his accounts staff give you the names of people who know where the money goes. Check all this before paying anyone for a search. It's free.

Debtor property search: land, buildings and leasehold plots

Of everything a debtor owns, immovable property is the thing most likely to still be there after a long suit. Under Section 57 of the Registration Act, 1908, anyone can inspect the register of documents about immovable property at the sub-registrar's office, and take certified copies on paying the fee. If you know or suspect he owns property in an area, search at that sub-registrar's office. Or run an encumbrance search on a specific property. Either one shows registered sale deeds, gift deeds, mortgages and leases.

Online, every state has its own system. For Noida, Greater Noida and Ghaziabad you'd use UP's IGRS portal for registered documents. Gurugram and Faridabad land sits on Haryana's Jamabandi portal, where you search village by village. Delhi is more old-fashioned. You usually go to the sub-registrar's office for that locality, and the MCD's property tax records give a second lead on ownership. Older documents often aren't online at all. Paying a search clerk, or a local advocate who knows the office, tends to be money well spent.

Industrial plots in Noida, Greater Noida and many Haryana estates are leasehold allotments from the development authority. They aren't freehold. The allottee can't transfer one without the authority's permission, and the authority's records show who holds it. That helps you. A leasehold industrial plot can be attached. And a transfer application pending with the authority is a warning sign you should put in front of the court.

Don't stop at the debtor. Look at property in the guarantors' names and, for a proprietorship or partnership, the owners personally. Property in his wife's name isn't his just because they're married. It only matters if you can show he paid for it, or moved it to her to defeat creditors.

Charges, mortgages and CERSAI: who gets paid before you?

Owning an asset and owning it free aren't the same. Banks and NBFCs register their security interests with CERSAI, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India. Anyone can search it for a small fee, mostly by property or asset details. Put that together with the MCA index of charges for a company and you'll know whether his factory, flat or machinery is already mortgaged to someone.

A mortgaged property isn't useless, though. Say it's worth Rs 3 crore and Rs 1.2 crore is still due on the loan. That leaves Rs 1.8 crore of equity above the bank's claim. The equity can be attached, subject to the mortgage. You'll need a rough idea of the value and of what's outstanding, and a property dealer's estimate along with the charge amount on the MCA portal will give you that in outline.

Keep reading the newspapers. Lenders enforcing security under Section 13(4) of the SARFAESI Act, 2002 publish possession notices, and sale notices follow. If his property appears in one, he's already in trouble with his bank. The bank will take that property first. We cover the lender's side of this on our network site for DRT and SARFAESI work.

Court and tribunal records: is anyone else already chasing him?

Try the eCourts services portal. It lets you search district court cases by party name in most districts of Delhi, UP and Haryana, and the Delhi High Court has a separate search. You're looking for recovery suits, summary suits, cheque bounce complaints and execution petitions with his name on them. Three suppliers suing him in a year? He's not paying anybody. Whatever's left will go to whoever attaches it first, so you'll want to be quick.

Next stop, the NCLT. Check its case status, and the public announcements on the Insolvency and Bankruptcy Board of India (IBBI) website. If a corporate insolvency resolution process has begun against the company, Section 14 of the Insolvency and Bankruptcy Code, 2016 imposes a moratorium. No suits, no execution. You'd file your claim with the resolution professional instead. Our guide on when insolvency makes more sense than a recovery suit goes through that decision.

Does the debtor owe banks? Then look at the Debts Recovery Tribunal cause lists and case status too, because a pending DRT case means the bank's already ahead of you on the secured assets.

Bank accounts, receivables and other movable assets

A bank account can be attached in execution. In a strong case, even before judgment. Its balance doesn't matter to you at this stage. Knowing the bank and the branch is enough, since the court's order is sent straight to the bank. Then there's money owed to the debtor by others. Order XXI Rule 46 of the Code of Civil Procedure (CPC) lets the court send a prohibitory order to the person who owes the judgment debtor money, and that person then pays into court. That's why his big customers matter. Write them down: the hospital chain he supplies, the builder whose sites he works on, the government department he raises bills on.

Vehicles are out on the road, often registered in the business name. Machinery you'll see on a site visit. Trademarks registered to him show up on the trade marks registry's public search, and a well-known brand has value that can be attached and sold. Shares he holds in other companies appear in those companies' annual returns.

None of this will be complete. It doesn't need to be. The pre-suit search isn't meant to produce a perfect inventory. You want enough specific information to decide whether to sue and to back your first interim application. Fuller disclosure comes later, from the court.

Asset search on a debtor in India: a routine that works

This is the order we follow for a business debtor in Delhi NCR. You can get through most of it in a week. Property searches take longer.

1. Go through your own records

   Pull the debtor's PAN, GSTIN, bank branches, delivery addresses, and the names of his people and customers out of your invoices, cheques, bank statements, e-way bills, TDS certificates and emails. Put it all on one sheet.

2. Run the MCA and GST searches

   For a company or LLP, pull the master data, the directors and their other directorships, and the index of charges. Then buy the last three years' financial statements. Whatever the business, search the GSTIN and PAN on the GST portal for status and additional places of business.

3. Check the courts and tribunals

   Search eCourts, the Delhi High Court site, NCLT case status, IBBI public announcements and DRT records. You're looking for cases by or against the debtor and his directors.

4. Search property and charges

   Run CERSAI searches, and sub-registrar or state portal searches, for properties you know about or suspect. For leasehold industrial plots, check the development authority's records. Wherever there's a charge, note the lender and the amount.

5. Go and look

   Get someone to visit the registered office, the factory and the godowns. Photograph signboards, stock, machines and vehicles with the date and location showing. Is the unit actually working? Note that down.

6. Write a one-page asset note

   List each asset with its location, the document behind it, any charge on it and a rough value. Mark what's at risk of being moved. This page becomes the base for the interim application in the plaint. Later, it feeds the execution petition.

Do all this before the legal notice goes. A debtor who gets a notice and has property he wants to protect will often transfer it within weeks. And a transfer made before you sue is much harder to undo than an attachment obtained at the start of the case.

Checklist of sources for a debtor asset search

• Your own invoices, purchase orders, delivery challans, e-way bills and transporter receipts
• Your bank statements showing his payments, which tell you the bank and branch they came from
• Any cheques of his that were cancelled or bounced
• TDS certificates he issued to you
• On the MCA portal: master data, director search, index of charges, and the financial statements he's filed
• A GST portal search, once by GSTIN and once by PAN
• eCourts and the Delhi High Court case search, plus NCLT case status, IBBI public announcements and DRT case status
• CERSAI, and a sub-registrar or state portal search for property
• Development authority allotment records, if he holds a leasehold industrial plot
• The trade marks registry's public search
• Photos from the site visit, with date and location

What each source shows, and what it costs in time and money

What can the court make the debtor disclose?

Once you're in court, his private information comes within reach. Before judgment, an attachment application under Order XXXVIII Rule 5 CPC needs you to specify the property. But in suitable cases, courts hearing commercial suits in Delhi have directed defendants to file affidavits disclosing their assets, so that any decree that follows isn't defeated. These directions depend on the facts and on the judge. Don't count on one.

After a decree, it's different. Disclosure becomes your right, and you should use it. Order XXI Rule 41 CPC allows the court to have the judgment debtor examined on oath about what it owns and what others owe it. If it's a company, its officers can be examined. Rule 41(2) goes further. The court can make the judgment debtor swear an affidavit listing its assets. Ignore that order and Rule 41(3) kicks in: up to three months in civil prison. The Delhi High Court settled a detailed format for these affidavits in Bhandari Engineers and Builders v. Maharia Raj Joint Venture (2016). Five years later, in Rahul S. Shah v. Jinendra Kumar Gandhi (2021), the Supreme Court told executing courts to actually use these powers. Many still need reminding.

An asset affidavit is only as good as your ability to test it. Put it next to your pre-suit search. Maybe there's a property on the sub-registrar's register that the affidavit leaves out. Maybe last year's balance sheet showed receivables that have now vanished with no explanation. Either is a ground to ask for him to be examined on oath. Our guide on building an execution petition that traces assets shows how we use these tools, and the general route is on our execution of decree page.

Reading the results: when do the assets justify a suit?

If the business is still running, with a live GST registration, regular filings and money coming in, it's usually worth suing. Even with the property mortgaged. A decree can still reach its bank accounts and whatever its customers owe it. Clean, unmortgaged property in the debtor's or a guarantor's name is another good sign, and that property belongs in the plaint.

A company with no filings for years, open charges on everything, other creditors already in court and an insolvency petition pending is another story. Winning the suit isn't the question there. The question is whether anything will be left once the secured lenders have taken their share. Insolvency, a negotiated settlement or a write-off may make more sense. The closed-business version of this problem is covered in our guide on what to do when the debtor has shut down his business.

Most cases fall somewhere in between. Thin assets aren't a reason to give up if he's still trading. A decree hangs over a business for twelve years. It gets in the way of every loan application, tender and property sale. In our experience, plenty of debtors settle once they realise the decree holder knows where their accounts and customers are.

Mistakes businesses make when checking a debtor's assets

• Sending the legal notice first. The notice is basically a reminder to him to hide things. Search first. Notice after.
• Looking only at the company. Guarantors, partners and proprietors own property in their own names, so search them as well.
• Forgetting about charges. A Rs 5 crore factory carrying a Rs 5 crore bank loan adds nothing to what you'll recover. Check the index of charges and CERSAI.
• Buying illegal reports. Bank statements and credit reports got through the back door can't be used in court. They can get you prosecuted.
• Writing vague applications. No judge is moved by "all movable and immovable assets of the defendant". A specific property with a document behind it is a different matter.
• Searching once and stopping. Assets change. Run the search again before you file the execution petition, and every six months while the decree stays unpaid.

How the search shapes your plaint and first applications

The asset note doesn't just sit in your file. Bits of it go into the plaint, to show the court the defendant's finances and how he's behaved. Specific properties go into the schedule of the attachment application. His customers' and bankers' names wait for the execution petition. And proof that a related party has taken money out supports a request for disclosure. What the court needs to see is explained on our attachment before judgment page.

Before drafting a single paragraph of a recovery plaint, Advocate B.K. Singh asks one question. If we win, what does the client execute against? If the honest answer is "nothing we know of", the first job is the search. The plaint can wait. A suit planned around known assets is shorter and cheaper than one that wins and only then starts the hunt.

Our money recovery suit page covers the rest. Drafting, mediation, filing. The guide on ways to get money out of a company that's avoiding you lists the pressure points that work alongside a suit.

What to do this week

Start a single sheet with everything you already know: PAN, GSTIN, bank branches, addresses, drop points, customers, names. Do the free MCA and GST searches today. Put his name into eCourts and the IBBI announcements, then pick which property searches are worth paying for. Hold the notice till all that's done.

Already have a decree? List what you know and ask the executing court for an asset affidavit at the first hearing. If you'd like your search results and recovery papers looked at before you pick a route, send them to Advocate B.K. Singh's team through the contact page.