Top 5 Ways to Recover Money From a Company That Is Avoiding You

A company can dodge you. It can't dodge the law

In law a company is a person, and that person has an address anyone can look up. The owners can stop taking your calls, move to a new email domain and shift the godown to Manesar. What they can't easily do is stop the company existing. The Registrar of Companies holds its registered office on file. Its directors are named there. So are the charges over its assets, and its GST registration lists every place it trades from. Serve summons at that registered office and the company is served, whether anyone inside bothers to open the envelope or not.

So going after a company is a different exercise from going after a person. Every tool below works on the company as a legal entity. Whether anyone feels like talking to you hardly matters. They escalate, too. A notice served at the right address costs very little. A suit costs more. An insolvency notice is heavy artillery, and we keep it for files that can carry it.

Keep one thing in mind from day one. A private limited company is separate from its directors and shareholders. It's the company that owes you, not the people running it, except in particular cases like a personal guarantee, fraud or a bounced cheque a director signed. When those exceptions apply is explained in our guide on recovering dues from the directors of a private limited company.

Before picking a route, open the MCA portal

Once a debtor company stops answering, Advocate B.K. Singh opens its master data on the Ministry of Corporate Affairs portal before anything else. The status line is the first thing to read. Active? Under process of striking off? Struck off, under insolvency (CIRP), or in liquidation? The same page gives the registered office, the directors and the date the last annual filing went in. Ten minutes' work. And it can turn the advice upside down. A company in liquidation can't be sued without the tribunal's leave, and one already in CIRP sits behind a moratorium, so your claim gets lodged with the resolution professional instead.

Read the filing history too. A company that hasn't filed annual returns or financial statements for two or three years is often getting ready to vanish. Check the charges registered against it. A bank charge over its plant and receivables tells you the secured lenders get paid first. Then look at the directors' other companies. If one was incorporated recently, with a similar name and the same address, make a note. It may matter later if the business is being shifted across.

Strike-off works through a public notice. That's true whether the company asked to be struck off itself or the Registrar started the process, and the notice invites objections. You're an unpaid creditor, so you're entitled to object within the period stated in it. Missing that window isn't the end. A creditor can still go to the National Company Law Tribunal after strike-off and ask for the company to be restored under Section 252(3) of the Companies Act, 2013, as long as it's within twenty years of the strike-off notice.

Five routes that work against a company

• 1. A demand they can't wriggle out of. Send the legal notice to the registered office and every business address you know, and email it to the addresses the company itself gave the Registrar and the GST department.
• 2. A summary suit or commercial suit. That's a money recovery suit after Section 12A mediation, filed as a summary suit if your papers allow it, so the company has to earn the right to defend at all.
• 3. Freezing assets before and after judgment. Attachment before judgment if the company is moving assets out, then an execution petition after the decree that reaches its bank accounts and receivables.
• 4. The MSME Facilitation Council. Open to registered micro and small suppliers. There's no court fee, interest runs at three times the bank rate, and the buyer has to deposit 75 percent before it can challenge an award.
• 5. An insolvency demand notice. Used for undisputed operational debts of Rs 1 crore or more, through a notice under Section 8 of the Insolvency and Bankruptcy Code, 2016. Control of the company itself is then on the line.

Way 1: serve a demand they can't say they never got

Most notices to companies fail for a boring reason. They're sent to the wrong place. The purchase manager's Gmail, a warehouse they gave up last year, a branch office nobody visits. Speed post yours to the registered office on the MCA master data, to the principal place of business listed on the GST portal, and to every other office you ever dealt with. The company's official email is in its Registrar filings. Use that, along with any official accounts-team and director addresses you have. And make it out to the company through its directors, rather than to one employee by name.

List each invoice or payment, the amount, the due date and the interest, and give a fixed time to pay. Ask the company to confirm the balance or put any dispute in writing. A company that's avoiding you will probably ignore it. That's fine. The notice has done its work if it was served properly. How that silence gets used against them later is explained in our guide on what happens after a legal notice is ignored.

Don't underrate what a proper notice can stir up inside a company. A notice addressed to the board reaches the directors, and sometimes the auditors. A company that's still trading wants its bank lines and tender eligibility left alone. For that kind of company, a notice that obviously leads to a suit is often enough to restart payment talks.

Way 2: sue the company, summarily if you can

Unpaid dues of Rs 3 lakh or more under a business contract make your case a commercial suit. Before filing, you go through pre-institution mediation under Section 12A of the Commercial Courts Act, 2015, unless you're asking for urgent interim relief. A company that's dodging you usually ignores the mediation notice as well. You get a non-starter report within weeks, and the way to filing is clear.

Got a written contract, a signed balance confirmation, a promissory note or a cheque behind the claim? Then it can usually go in as a summary suit under Order XXXVII of the Code of Civil Procedure, 1908. The company gets 10 days from service to enter appearance and, after the summons for judgment, another 10 days to ask for leave to defend. Ignore the summons and it faces a decree. Turn up with a thin defence and it may be allowed to defend only after depositing the amount. Which documents qualify is set out on our summary suit page.

Dodging companies pin their hopes on service. They shouldn't. Order XXIX Rule 2 of the Code allows summons on a company to go to its secretary, any director or another principal officer, or simply to be left at or posted to the registered office. Commercial courts add courier and email on top. And when a company still manages to avoid it, the judge can order substituted service, for instance by pasting the summons on the registered office door or printing it in a newspaper. Evasion costs you weeks, maybe months. It doesn't stop the suit.

Way 3: stop the assets walking out, before and after the decree

Say the company is selling off machinery, closing bank accounts, or moving its customers and stock to a new entity. You can ask the court under Order XXXVIII Rule 5 to make it furnish security, or to attach its property before judgment. The court will want specific facts showing an intent to obstruct or delay the decree. Think sale notices, a new company at the same address with the same directors, a sudden drop in filings, or what former employees say. A general worry that they won't pay isn't enough. Because this is urgent relief, the suit can go in without mediation first. The urgency has to be real, though. What courts look for is on our page on attachment before judgment.

After the decree comes execution, and that's where money actually changes hands. The decree-holder can ask for attachment of the company's bank accounts, garnishee orders on money its customers owe it, attachment and sale of movable and immovable property and, in some cases, a receiver. In execution against companies, Advocate B.K. Singh moves early for an order under Order XXI Rule 41, which lets the court examine an officer of the company on oath about its debts and property, and asks for an affidavit of assets. In Rahul S. Shah v. Jinendra Kumar Gandhi (2021) the Supreme Court encouraged these affidavits and asked courts to ordinarily decide execution within six months. The process is covered on our execution of decree page.

And where assets have been parked with a related company to beat creditors, there's Section 53 of the Transfer of Property Act, 1882. It lets a creditor have a transfer of immovable property, made with intent to defeat or delay creditors, set aside at its option. These claims need careful pleading and solid evidence. But they're real.

Way 4: the MSME Council, for registered micro and small suppliers

Suppose you were registered on the Udyam portal as a micro or small enterprise when you supplied goods or services to the company. The MSMED Act, 2006 then gives you a route companies find hard to brush off. Section 15 makes the buyer pay within the agreed period, and nobody can agree a period longer than 45 days. Under Section 16, late amounts carry compound interest with monthly rests at three times the bank rate notified by the Reserve Bank. And Section 18 lets you refer the dispute to the Facilitation Council, which tries conciliation first and then arbitrates.

What really makes a company sit up is Section 19. A buyer that wants to challenge the Council's award in court must first deposit 75 percent of the amount awarded. The company can skip the Council's hearings. It can't skip the award, which is enforceable like a decree. There's no court fee either. The weak spots are the registration date (registering after the supply invites questions), your status if you're only a trader, and limitation. Get those checked before you file. The MSME and arbitration guides on arbitrationlawyer.in go through the Council route in detail.

Way 5: the IBC demand notice, for big debts nobody disputes

Suppose the company owes you Rs 1 crore or more and there's no genuine argument about the figure. If you supplied goods or services, you're an operational creditor, and you can serve a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016. From then the company has 10 days. It either pays or shows a dispute that was already alive before your notice. If it does neither, you can go to the NCLT under Section 9 and ask for the corporate insolvency resolution process to begin. If you lent it money, your route is different, as a financial creditor under Section 7.

It works on a dodging company for one reason. It threatens the people in charge. Once insolvency is admitted, the board is suspended and a resolution professional takes over. Plenty of companies pay or settle at the notice stage. But don't mistake it for an ordinary collection tool. In Mobilox Innovations v. Kirusa Software (2017) the Supreme Court held that any plausible pre-existing dispute is enough to reject an operational creditor's application. And if the company does go into insolvency, you're one creditor among many, often getting back a fraction. The trade-off is laid out in our guide on when insolvency beats a recovery suit, and ncltlawyers.in deals with the NCLT side.

The 5 ways side by side: time, cost and when each fits

Which route suits your file

Begin with the paperwork. With a company that won't engage, it decides your speed. If you hold a signed contract, purchase orders, a balance confirmation or a cheque, think summary suit. Emails, invoices and delivery challans without any signed acknowledgment point towards a regular commercial suit, maybe with an application for summary judgment. A Udyam registration dated before your supplies opens the MSME Council. And a large, clean debt that nobody disputes, owed by a company that's still trading, is IBC notice territory.

Then look at the company. If it's trading and has receivables and bank accounts, a suit and execution can make it pay. If it's emptying itself out, you need Way 3 straight away. A company that has already shut down needs a different plan altogether, usually built around whether the directors gave personal guarantees, whether assets were moved away, and whether restoration or liquidation claims are worth chasing. Our guide on recovering money from a debtor who has shut his business covers that.

Last, think about what you actually want. If you're hoping to keep supplying them, a notice and mediation keep the relationship breathing. If all you want is the money, a summary suit with an attachment application tells the company you mean business. You can combine some routes. Don't run a suit and an MSME reference on the same claim at the same time. A cheque bounce complaint, though, can run alongside a civil suit.

A 30-day plan for when a company stops responding

Below is how we'd sequence the first month once a company goes silent. We've assumed the claim is Rs 3 lakh or more and nothing in the contract sends it to arbitration.

1. Days 1 to 3: get the company's paperwork off the portals

   From the MCA site, save the master data, the directors' list, the registered charges and whichever financial statements were filed last. On the GST portal, note the principal and additional places of business. Write the company's status at the top of your file.

2. Days 3 to 7: get your numbers straight

   Prepare a ledger of every invoice, payment and credit note, with interest to date. Dig out any signed balance confirmation, the TDS they deducted on your invoices, and any email where they admitted the amount.

3. Days 7 to 10: get the notice out

   Send the legal notice by speed post to the registered office and every business address, and by email to the official addresses. Keep the tracking reports. You'll need them.

4. Days 10 to 25: pick the forum

   Use the table above to settle on a commercial suit, the MSME Council or an IBC notice. If there's any sign of assets being shifted, the suit gets drafted now, with an attachment application alongside.

5. Days 25 to 30: file

   Apply for Section 12A mediation, file the MSME reference, or send the IBC demand notice. Have the plaint and document bundle ready so you can file the day the mediation report comes out.

Worried there's nothing left in the company to collect from? The public records worth searching are listed in our guide on checking a debtor's assets before you file.

Which court, and in which city

Under Section 20 of the Code of Civil Procedure, you can file where the defendant carries on business, or where all or part of the cause of action arose. For companies, the Explanation to Section 20 fixes the place of business as the sole or principal office. If the dispute arose where it runs a subordinate office, that office counts instead. In supply cases, part of the cause of action often arises where the order was placed, where you delivered, or where you were to be paid. Quite possibly your own city. A contract clause giving one of those courts exclusive jurisdiction will generally be upheld.

Delhi splits commercial suits by value. Up to Rs 2 crore, they go to the District Judge (Commercial Court) for the district concerned, which might sit at Saket, Rohini or Patiala House. Anything bigger goes to the Commercial Division of the Delhi High Court. There's been a proposal to raise that district ceiling, so check the current limit before you file. In Noida, Ghaziabad, Gurugram and Faridabad, the suit goes to whichever court is designated as the district's Commercial Court. A company registered in Mumbai or Bengaluru can often still be sued in Delhi NCR, as long as part of the cause of action arose here.

Papers and records to gather

• Whatever the deal was made on: PO, work order, agreement or a quotation they accepted. Flag any arbitration or jurisdiction clause.
• Every invoice, plus delivery challans, e-way bills and GRNs, or sign-offs if you provided a service.
• Your ledger for the company, checked against your bank statements.
• Balance confirmations, emails or WhatsApp messages admitting the amount, and the TDS entries in your tax credit statement.
• Printouts from the MCA portal: master data, directors, charges, and the latest financial statements on file.
• GST registration details showing where the company does business.
• Your legal notice with the postal tracking reports and email delivery proof, plus any reply.
• Your Udyam registration certificate, if you're going the MSME Council route.
• Anything showing assets being moved, like sale ads, a new company at the same address, or customers suddenly being billed by a different entity.

A private limited company compared with other kinds of debtor

When you recover dues from a private limited company, the decree is against the company and gets executed against the company's assets. That's a strength if the company has receivables and accounts. It's a weakness if it's a shell. A proprietorship is different, because the business and the owner are the same person, so a decree reaches the owner's own property. In a partnership firm, the partners are jointly and severally liable for the firm's debts. An LLP sits closer to a company. Its partners generally aren't personally liable for its debts.

Big companies dodge creditors in their own way. They rarely disappear. They delay, push your invoice through layer after layer of approval, and raise small disputes to buy time. Against them, a summary suit or an MSME reference is usually the strongest push, since both force an early answer on whether there's a real defence. Small private companies are likelier to go silent and shift business. With them, speed and Way 3 count for more.

Mistakes that let a dodging company off the hook

• Chasing the old contact person. He left in June. Your claim was never against him anyway, so serve the company at its registered office.
• Waiting for things to "settle down" at their end. Companies that stop answering rarely recover by themselves, and limitation keeps running the whole time.
• Threatening directors personally with nothing behind it. Without a personal guarantee, fraud or a cheque, directors aren't liable for the company's trade debts. Empty threats only make you look weaker.
• Using an IBC notice on a disputed debt. One genuine dispute from before the notice and the application is thrown out. That's months gone.
• Ignoring the strike-off notice. Objecting on time is a letter. Getting the company restored later is a whole NCLT case.
• Taking post-dated cheques without a written settlement. Cheques bounce. A signed settlement with a default clause leaves you much better placed if they do.

What to do this week

Spend half an hour on the MCA and GST portals and note down the status, registered office, directors and every place of business. Get your ledger to tally. Then hunt out the single document in which they owned up to the debt. Send a notice that actually reaches the registered office. Then pick the route that fits your file from the table above. For most suppliers and service firms, that's mediation followed by a summary or regular recovery suit, with an attachment application if the company is moving assets.

If you'd like a straight answer on which of these five routes fits your claim, send your papers to Advocate B.K. Singh's team through the contact page.