Getting the Money Back: Legal Routes to Recovery After Fraud, in India and Abroad

The first conversation after a fraud is discovered is often with an angry promoter. The business they built has been cheated, often by someone they trusted, and they want two things: the money back, and the person punished. Both are reasonable. The order in which they are pursued decides whether either happens.

Manage the anger, so it does not manage you

Anger tends to produce three early moves: confronting the wrongdoer, filing a police complaint the same day, and telling people. Each alerts the person who has the money. Within hours, accounts can be emptied, property transferred to relatives and records destroyed.

Our advice is to acknowledge the anger openly, then agree a plan with a clear objective. Recovery and punishment can both be pursued, but recovery usually depends on doing things quietly first.

Step 1: trace before you act

Every recovery route depends on knowing what assets exist and where. Before anyone is alerted, build a picture from bank records the company holds, property and company registries, beneficial ownership of connected entities, lifestyle indicators and open-source intelligence. Our guides to asset tracing in India and pre-litigation asset searches explain the sources.

Tracing also answers the commercial question: is there enough to recover to justify the cost?

Step 2: secure the assets

Interim relief prevents assets from disappearing while the claim is decided. In India the main tools are:

• Attachment before judgment under Order 38 Rule 5 of the Code of Civil Procedure 1908, where the defendant is about to dispose of or remove property to obstruct or delay execution of a decree.
• Temporary injunctions under Order 39 restraining dealings with specific assets or accounts, and the appointment of a receiver under Order 40.
• Interim measures in arbitration, from a court under s. 9 of the Arbitration and Conciliation Act 1996 or from the tribunal under s. 17, where the claim is subject to an arbitration agreement.

Applications can be made without notice in urgent cases. Commercial suits normally require pre-institution mediation under s. 12A of the Commercial Courts Act 2015, but not where urgent interim relief is sought.

Step 3: choose and sequence the routes

Civil recovery

A suit for recovery or damages, or arbitration where the contract provides for it, is the route the company controls. Summary procedure under Order 37 can be faster for liquidated claims on written contracts.

Criminal complaint

Depending on the facts, conduct may amount to criminal breach of trust by an employee (s. 316(4) of the Bharatiya Nyaya Sanhita 2023), cheating (s. 318), falsification of accounts (s. 344) or fraud under s. 447 of the Companies Act 2013. Information is given to the police under the Bharatiya Nagarik Suraksha Sanhita 2023, and where police do not act, a Magistrate can be approached. Under s. 107 of the BNSS, a court can, on a police application, attach proceeds of crime and distribute them to victims.

A complaint brings searches, seizures and access to bank records. It also hands control to the authorities and can take years. File it deliberately, usually after assets are secured.

Money laundering

Where proceeds of a scheduled offence have been laundered, the Enforcement Directorate may act under the Prevention of Money Laundering Act 2002, with provisional attachment for up to 180 days under s. 5, confirmed by the Adjudicating Authority under s. 8. The Act provides for restoring property to claimants with a legitimate interest who have suffered a loss. The ED acts on its own investigation; the company can provide information but does not control the process.

Insolvency

Where the wrongdoer's company or a counterparty is a corporate debtor in default, insolvency under the IBC 2016 is possible. It is a collective process, not a private recovery tool, but a resolution professional can pursue avoidance transactions under ss. 43, 45 and 50, and fraudulent trading under s. 66. See our article on fraudulent and wrongful trading under s. 66.

Step 4: watch the time limits

• Civil claims: most money claims must be brought within three years under the Limitation Act 1963, which also applies to arbitration. Where a suit is based on fraud, s. 17 starts the clock when the fraud was discovered or could with reasonable diligence have been discovered.
• Criminal cases: limitation for taking cognisance applies only to less serious offences, but delay still weakens evidence and credibility.
• Insurance: crime and fidelity policies have notification deadlines and require recovery rights to be preserved.

When money has gone abroad

Cross-border recovery needs local counsel in each jurisdiction, and speed.

• Freezing orders. Courts in England and Wales can grant domestic and worldwide freezing injunctions, and many common-law jurisdictions offer similar relief.
• Norwich Pharmacal orders require third parties caught up in the wrongdoing, typically banks, to disclose information identifying wrongdoers or tracing funds.
• Chabra relief extends a freezing order to assets held by a third party where there is reason to believe they belong to the defendant.
• US discovery. Under 28 U.S.C. § 1782, a US federal court can order discovery for use in foreign court proceedings.
• Mutual legal assistance. In criminal matters, evidence and freezing requests can be made through mutual legal assistance treaties and letters rogatory, with the Ministry of Home Affairs as India's central authority. These routes are slower and run by the authorities.
• Enforcement. Judgments from reciprocating territories can be executed in India under s. 44A of the Code of Civil Procedure; foreign arbitral awards under the New York Convention are enforced under Part II of the Arbitration and Conciliation Act 1996. Enforcing Indian judgments abroad depends on local law.

Common mistakes

• Acting on anger. A same-day confrontation or complaint warns the person holding the money.
• No asset search. Litigation against someone with no reachable assets is expensive symbolism.
• Settling too early. Repayment of the amount found may be a fraction of the amount taken.
• Missing limitation. Assuming time runs from the report, not from when the fraud could have been discovered.
• Treating jurisdictions in sequence. Assets move faster than courts; coordinate across countries at once.

Where we can help

Our asset tracing and recovery team traces and maps assets in India and abroad, and works alongside counsel to support interim relief. Our litigation and arbitration support team quantifies loss and supports proceedings, and our insolvency forensics team identifies avoidance transactions. Speak to us in confidence.