• Privately owned
• Minimum paid-up capital: Rs. 1 lakh
• 2-50 members

• Publicly traded
• Minimum 7 shareholders
• Minimum paid-up capital: Rs. 5 lakh

• Unlimited liability for members
• Personal assets can be used to settle debts
• Can re-register as limited company

• One owner
• Unlimited liability
• Simplest structure

• Family-owned and managed
• Governed by Hindu Law

• Two or more partners
• Shared profits
• Governed by Indian Partnership Act 1932

• Ministry of Corporate Affairs
• Private reporting agencies

• Sales contracts
• Purchase orders
• Invoices
• Correspondence
• Other relevant documents

For proper understanding of your case and for initiating legal action, all supporting documents pertaining to the case are required.

Documents such as sales contracts, purchase orders, pro forma invoices, commercial invoices, bills of lading or air waybills, statements of account, entire correspondence exchanged between you and your debtor (letters or emails), and any other documents that may be relevant to your claim, are required.

• Security against buyer's default or insolvency
• Contractual stipulation recommended

Retention of title allows the seller to retain ownership over the goods supplied until certain contractually defined conditions are met, therefore providing the seller with a form of security against the buyer's default or insolvency.

It's recommended that retention of title clauses are specifically stipulated by contract as recovery of debts can prove challenging through any ROT claims which are not acknowledged by the debtor.

A warning notice to the debtor is not mandatory before filing any enforcement claims. Good practice dictates that a notice should still be given which contains:

• Creditor name and overview of the claim
• The total amount of the claim, including penalties (interest)
• Payment method required
• A warning that the claim will be enforced through the enforcement authority if not settled by the required date
• Information on how to dispute the claim

If this measure has been taken and the payment still has not been made after a notice period, the creditor may file for enforcement.

• 9% interest rate typically awarded by courts
• Interest not customary in amicable collection

The limitation period is three years from the date at which an invoice falls due as per the Limitation Act, 1963.

This period may be extended if there is a form of acknowledgement of the debt from the debtor.

• Five statutory methods
• Arbitration most common for commercial disputes

There are five methods of ADR with statutory recognition:

• Arbitration
• Conciliation
• Mediation
• Judicial settlement
• Settlement through Lok Adalats (people's courts)

Of these, arbitration is the most relevant to large commercial disputes and is regulated by the Arbitration and Conciliation Act, 1996. It is preferred to the much lengthier court process. A large proportion of high-value and complex disputes are resolved through arbitration, particularly those related to the construction and infrastructure sectors, public works contracts and maritime law.

Arbitration, conciliation and Lok Adalat awards have the same force as a court decree and mediated or negotiated settlements are binding if they are recorded as a consent award/decree.

• Hierarchical structure
• Specialized tribunals

India's judicial system is built upon a hierarchy:

• Supreme Court of India (highest level)
• High courts of the respective states
• District courts

There is also the National Company Law Tribunal (NCLT) which handles corporate insolvency cases.

• Filed in debtor's jurisdiction
• Long duration
• Costly proceedings

Recovery actions are executed before the court of the jurisdiction in which the debtor is registered to recover the unpaid, overdue debt value.

Such proceedings may last anywhere between four to eight years depending on the parties involved, debt value amount and the number of hearings required.

Given such lengthy proceedings, any recovery procedures which are initiated by the creditor tend to be more costly than winding-up proceedings as they involve a high amount of court fees.

• Recovery actions: up to 8 years
• Winding-up proceedings: about 2 years

• Court fees
• Lawyer's fees
• Various other costs

It's not possible to give an estimation of the legal costs as they depend on many factors, including the complexity of the case.

Generally, legal costs involve the following:

• Court fees (percentage of principal value subject to jurisdiction)
• Lawyer's fees (hourly charge)
• Process serving (a fee for the issuance of court notices)
• Drafting (fees for the issuance of petitions and applications by lawyers)
• Publication (costs to publish notices in media outlets as per court instruction)
• Miscellaneous (photocopies, translation, stamping fees, etc.)

• Property delivery
• Attachment and sale
• Arrest and detention

A judgement may be enforced by:

• Delivery of any property specified in the decree
• Attachment and sale or sale without attachment of any property
• Arrest and detention in civil prison of the judgment-debtor
• Other means as the nature of the relief may require

• 12-year limitation period
• 2-4 years to finalize
• Moveable and immoveable property

An enforcement (execution) may be executed by the court which issued the judgement or by the court in the jurisdiction in which the debtor is registered. An application for enforcement must be executed within the twelve-year limitation period. An execution petition may take two to four years to finalise.

For moveable assets, the sheriff can seize and auction the debtor's assets or hold them to force repayment.

For immoveable property, the creditor must provide details and proof of the debtor's residential properties. The money from the sale is first sent to the creditor to recover the unpaid debt.

• Insolvency and Bankruptcy Code 2016
• Companies Act
• Board for Industrial and Financial Reconstruction

Companies are governed by the following insolvency and restructuring regimes:

• Insolvency proceedings are under the Insolvency and Bankruptcy Code 2016; a code which covers both restructuring and liquidation.
• The Companies Act covers the schemes of arrangement.
• The Board for Industrial and Financial Reconstruction has been set up for the restructuring or rescue of companies.

• Liquidation: quick asset sale
• Restructuring: continuation of company

The winding-up of a debtor, and its liquidation, aims to sell the debtor assets as quickly as possible with a view to distributing the cash proceeds to creditors as dividends.

A statutory restructuring of a debtor is designed to ensure continuation of the debtor company through involvement of an administrator. Such an administrator oversees, audits, and assesses a debtor's financial position and tries to reduce the debt position via a settlement proposal to creditors.