The basic human nature of giving loan to someone is to earn interest as profit, from the money given to the borrower. The lender lends the money with the belief that the borrower will return the money with interest but in order for doing that, the lender must be specific for the repayment of the money he wants back.
In case, the borrower is not paying back the money which he took as loan from the lender, then the person who gave the money as loan can send the notice to the borrower stating the date and amount of the given loan. Also, he has to specify the mode of repayment in the notice. Usually, it is prescribed for the lender to only lend the money as loan after signing the loan agreement or the promissory note in which specifically all the terms and conditions of the given loan should be prescribed.

Under such scenarios where the repayment of money has not been done by the borrower, there are ways through which the lender can get his money back. Among those ways, the most prominent and effective one is to approach the court. The lender can file a civil suit or even a criminal suit for the recovery of money. Under criminal suit he sues the borrower for fraud, cheating or even breach of agreement. There were cases found where if the borrower is from the same family as of lender or as a matter of fact even a friend of lender then it is seen that the terms and conditions of the repayment are not specific because it might affect the relation between the lender and borrower. The importance or necessity of a loan agreement or promissory note must be analyzed every time before lending someone money as loan.

A promissory note has been considered as one of the most important instrument when it comes under the process of giving money as loan or even its repayment. A promissory note usually contains simple terms and conditions unlike an agreement which contains several clauses. A promissory note is basically a single page document containing the terms and conditions of the loan and its repayment which is absolutely legal according to the Negotiable Instruments Act 1881. As mentioned above if in cases where the borrower does not pay the loan he took from the lender, then the later can approach the court with a civil or either criminal suit against the borrower against the repayment of the loan.

Civil suit
The lender on the failing of repayment by borrower can file a civil suit for the recovery of money on the basis of a loan agreement or a promissory note containing the specific terms and conditions of loan. Under order 37 of CPC the lender can file a summary suit in which he should be stating for specific relief and such specific relief should not be ambit of order as final relief. It is also to be noted that Res Judicata is not applicable to summary suits.
After drafting the suit, the rule 2 states: the summons from the court should be sent to the borrower i.e. the party who borrows the debt. If the defendant fails to appear before the honorable court then the court can assume that the allegations made against the defendant are seemed to be true and the court can pass an exparte decree against the defendant. Such decrees in summary suits are more likely to be strict as compare to the ordinary suits. Only under the special circumstances the defendant can afford to miss the hearing of the court. Apart from the civil suit, the lender can file a case under Negotiable Instruments Act, 1881 under certain circumstances.

Criminal case
The burden of proof is on the person who gives the money to the borrower that the later has committed a criminal offence of breach of trust and has no intentions of returning the money, then under those circumstances the lender can file criminal offences of criminal breach of trust under section 406 and of Cheating and Fraud under Section 420 of IPC. Upon finding guilty by the court, the borrower may be sentenced for imprisonment for a term not more than 7 years and the court can even ask the borrower to pay fine to the lender if it thinks fit.

Until now the one approach which lender could take was to approach the court i.e. by filling the civil or criminal suit against the repayment of the loan but the most effective way is to settle the matter outside the court.

Out of court settlement
One of the most effective ways for the settlement of unpaid debt recovery is to approach with the view of out of court settlement through the process of Conciliation, Arbitration or even Lok Adalat. Generally this process occurs when both the parties of the case agrees upon the involvement of a conciliator or arbitrator who after listening to both the parties will suggest ways for the settlement of the case. The out of court settlement method is one of the most effective and money saving method for the recovery of debt. There are 4 types of out of court settlement matters i.e. conciliation, negotiation, arbitration and mediation. Under most circumstances, the awards passed by the arbitration tribunals are not appealable i.e. it is not appealable in the court of law. It is one of the main reasons that arbitration is the speedy way for recovering the money given as loan.