Trade debt is recovered on the strength of the bills, delivery records and the buyer's ledger acknowledgements, even without a formal contract. FundRaksha's advocate sends a notice within 24 hours, uses Section 138 if any cheque has bounced, MSME Samadhaan if you are a Udyam-registered trader or manufacturer, and a summary suit on the bills otherwise. 60% of cases settle before court; the fee is 30% of recovery.
Trade credit without a contract: what counts as proof
Most trade transactions have no master agreement. That is fine. The contract is formed by the order (a phone call, a WhatsApp message, a visit by your salesman), the delivery and the acceptance of goods. Proof comes from the documents trade already generates: the GST tax invoice, the delivery challan or lorry receipt signed by the buyer's staff, the e-way bill, your GSTR-1 and the buyer's GSTR-2B showing he claimed credit on your invoice, and the ledger statements exchanged at year end.
A signed ledger confirmation or a part-payment is especially valuable: it acknowledges the balance and restarts the three-year limitation period. Our advocates often obtain one during the notice stage.
Three remedies trade creditors use most
Section 138 for bounced cheques
Trade buyers often give post-dated or security cheques. When one bounces, the Negotiable Instruments Act gives you a criminal remedy: notice within 30 days of the bank return memo, 15 days for the buyer to pay, complaint within one month after that. The penalty is up to two years imprisonment, a fine up to twice the cheque amount, or both. See cheque bounce recovery and the cheque bounce timeline.
MSME Samadhaan for registered traders and manufacturers
Wholesale and retail traders can register under Udyam for priority sector lending, and manufacturers and service providers get the full MSMED Act protection: 45-day payment, interest at three times the RBI bank rate, and the Facilitation Council. See MSME Samadhaan filing.
Summary suit on the bills
Where neither applies, a summary suit under Order XXXVII CPC on the invoices and ledger lets you obtain judgment unless the buyer shows a genuine defence.
How FundRaksha recovers a trade debt
- Free consultation: send the bills, challans, any cheques and return memos, and your ledger for the buyer. We compute the claim and pick the route.
- Legal notice within 24 hours. Where a cheque has bounced, the Section 138 notice goes within the 30-day window.
- Advocate negotiation. Trade buyers often pay in instalments; we secure the plan with post-dated instruments and a written acknowledgement.
- Filing: Section 138 complaint, Samadhaan reference or summary suit; appearance by the advocate; enforcement.
Fee: 30% of the amount recovered, nothing upfront. Court fees, if a civil suit is filed, are told to you beforehand.
Trade sectors and typical disputes
| Trade | Typical dispute | Usual route |
|---|---|---|
| Textiles and yarn | Dealer withholds payment citing shade or quality months later | Notice relying on acceptance; summary suit |
| Steel, metals and hardware | Buyer short-pays citing rate difference | Ledger reconciliation; notice for balance |
| FMCG and pharma distribution | Retailer or stockist stops paying, cheques bounce | Section 138 plus notice |
| Agri inputs and commodities | Seasonal credit never cleared | Notice before limitation; Samadhaan if registered |
| Electronics and mobiles | Dealer closes shop, owner traceable | Notice to proprietor personally; suit |
See textile, steel and metals and agri inputs for industry pages.
Trade recovery in trading hubs
FundRaksha recovers trade debts for businesses in Surat, Ludhiana, Kolkata and every other trading centre, with advocates appearing wherever the matter is heard. City example: trade debt recovery services in Indore. Book a free consultation; bring your bills and ledger and we will tell you what can be recovered.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.