This guide explains the legal remedies available in India when a vendor or seller accepts full or advance payment for goods but subsequently fails or refuses to deliver them. It is written for general understanding and does not constitute legal advice for any specific case.

The two possible tracks

The remedy depends on the vendor’s intent at the time the deal was made:

• Civil breach of contract — the vendor genuinely meant to deliver but is now failing to do so (cash flow issues, stock problems, disputes over terms, etc.)
• Criminal cheating — the vendor never intended to deliver and took the money knowing they wouldn’t Performa breach of contract is a later failure to perform a promise that was honest when made, while cheating requires dishonest intention at the time the promise was made.

Courts are strict about this distinction. A subsequent breach of contract or failure to deliver goods does not, by itself, constitute the offence of cheating — dishonest intent has to be shown to have existed right from the start (e.g., fake documents, a shell company, vendor absconding, pattern of doing this to multiple buyers).

Step 1: send a legal notice

Before anything else, have a lawyer send a formal legal notice demanding delivery of goods within a specified time (say 15 days), or a full refund with interest. This:

1. Creates a paper trail showing you gave the vendor a chance to perform
2. Is often enough on its own to prompt payment/delivery
3. Is a prerequisite for most further legal action

Step 2: Civil remedies (most likely applicable route)

1. Suit for recovery of money with interest, under the Code of Civil Procedure, if you’d rather have your money back than the goods
2. Suit for specific performance under the Specific Relief Act, 1963, if you specifically want the goods delivered (courts are more willing to grant this for unique/non-fungible goods)
3. Suit for damages for losses caused by non-delivery, in addition to recovery
4. If there’s an arbitration clause in your contract/PO, you may be required to go to arbitration instead of civil court
5. If you’re a “consumer” under the Consumer Protection Act, 2019 (goods for personal use, not resale/business), you can file before the Consumer Commission — faster and cheaper than a civil suit, and covers deficiency in service/unfair trade practice

Step 3: Criminal route (only if intent-to-deceive is evident)

If there’s real evidence the vendor never meant to deliver — fabricated proof of dispatch, vanishing after payment, a pattern of similar complaints from others — you can file a police complaint/FIR for cheating under BNS Section 318 (replacing IPC 420). This carries imprisonment up to 7 years and a fine. If the police refuse to register an FIR, you can file a written complaint before the Magistrate under Section 223 BNSS (formerly Section 200 CrPC).

What to gather now

Payment proof (bank transfer/UTR), purchase order or contract, any written promises of delivery dates, WhatsApp/email correspondence, and anything showing the vendor is stalling or has gone silent — all of this strengthens both the civil and (if applicable) criminal case.

Given the amount involved (₹10 lakh), I’d strongly recommend engaging a lawyer directly rather than proceeding on general information — they can review your contract terms, advise which forum is fastest, and draft the notice/suit properly.

1. The Threshold Question: Civil Breach or Criminal Cheating?

Everything about your remedy path depends on this single question: did the vendor intend to deliver the goods when they took your money, or did they take the payment knowing they never would?

Civil Breach of Contract

The vendor entered the deal in good faith — they meant to supply the goods — but something went wrong afterward: a supplier failure, cash-flow crunch, price dispute, capacity issue, or simple bad faith that developed later. This is the far more common scenario, and it is a civil matter, not a police matter.

Criminal Cheating (Section 318, Bharatiya Nyaya Sanhita, 2023)

The vendor never intended to deliver — the payment was obtained by deception from the very start. Indian courts apply this distinction strictly. Failure to deliver goods, by itself, does not amount to cheating. Dishonest intention has to be shown to exist at the time the promise was made, not afterward.

Evidence That Points to Criminal Intent (rather than ordinary breach)

1. Vendor used a fake or non-existent company name, forged registration, or a shell entity
2. Vendor produced fabricated dispatch proof, fake tracking numbers, or fraudulent invoices
3. Vendor has gone completely untraceable — phone switched off, office vacated, no response
4. Multiple other buyers report an identical pattern (a strong signal of a scam, not a one-off failure)
5. Vendor never had the goods, licence, or capacity to fulfil the order in the first place

Evidence That Points to Ordinary Civil Breach

1. Vendor is reachable and offers excuses, part-refunds, or revised timelines
2. Vendor is a genuine, verifiable, operating business with a track record

2. Step-by-Step Course of Action

Step 1 — Gather and preserve your evidence

Before anything else, compile a complete paper trail. This determines how strong every remedy below will be.

1. Purchase order / contract / quotation with agreed price, quantity, and delivery date
2. Proof of payment — bank transfer (UTR/reference number), RTGS/NEFT/IMPS receipt, or cheque details
3. All written communication — WhatsApp, email, SMS — especially any promises of delivery dates
4. GST invoice or tax invoice, if one was issued
5. Vendor’s identity details — GSTIN, company registration (CIN, if a company), address, phone, website
6. Any part-delivery, defective delivery, or false dispatch/tracking proof provided

Step 2 — Send a formal legal notice

Have an advocate send a legal notice to the vendor demanding, within a stated period (commonly 15 days), either delivery of the goods as originally agreed, or a full refund of n10,00,000 with interest. This step matters even if you expect no response:

1. It is often sufficient by itself to prompt the vendor to act, since it signals you are serious
2. It creates a dated, documented record showing you gave the vendor a fair opportunity to perform
3. It is a practical prerequisite before filing most civil suits or consumer complaints
4. Send it by a traceable mode — registered post with acknowledgement due (RPAD) and email — and keep proof of delivery

Step 3 — Choose your primary forum

Based on the facts, pick the appropriate track from Section 3 below. You are not limited to one — a consumer complaint and a criminal complaint (where justified) can run in parallel, though a civil suit and a consumer complaint over the same cause of action generally cannot both proceed at once.

Step 4 — Consider interim protection where the vendor may dissipate funds/assets

If you have reason to believe the vendor is about to move money or assets out of reach, your lawyer can seek an interim injunction or attachment before judgment from the civil court, alongside the main suit.

3. The Consumer Protection Route (Often the Fastest Practical Option)

If you purchased the goods for personal use, or for your own use in earning a livelihood by self-employment (not for large-scale resale or commercial manufacturing), you likely qualify as a “consumer” under the Consumer Protection Act, 2019, and can approach a Consumer Disputes Redressal Commission. Non-delivery after payment is treated as a deficiency in service / unfair trade practice.

Where to file — pecuniary jurisdiction

1. District Commission: consideration paid up to 50 lakh
2. State Commission: consideration paid above 50 lakh, up to 2 crore
3. National Commission: consideration paid above 2 crore

At 10 lakh, your complaint would ordinarily go before the District Consumer Disputes Redressal Commission in the district where you reside, work for gain, or where the vendor resides/carries on business.

What you can claim

1. Refund of the full amount paid, with interest
2. Compensation for loss, harassment, and mental agony caused by the deficiency
3. Cost of litigation
4. In some cases, delivery of the goods/service itself, or replacement

Why buyers often prefer this route

1. Filing fees are low and procedure is simpler than a regular civil suit
2. You are not required to engage a lawyer, though it is advisable for a claim of this size
3. Commissions are meant to dispose of matters relatively quickly compared to civil courts

4. The Civil Suit Route

If you don’t qualify as a “consumer” (for instance, the goods were purchased in bulk for resale or large-scale business use) — or you prefer a plenary civil trial — you can file a civil suit.

Recovery suit

A suit for recovery of money under the Code of Civil Procedure, 1908, claiming the n10,00,000 paid, plus interest (often claimed at a reasonable commercial rate, e.g. 12–18% per annum, subject to the court’s discretion) and costs of the suit.

Specific performance

Under the Specific Relief Act, 1963 (as amended in 2018), you can ask the court to direct the vendor to actually deliver the contracted goods, rather than merely pay damages. Courts are generally more willing to grant this where the goods are unique, customised, or not easily available elsewhere in the market; for standard, freely available goods, courts often consider damages an adequate remedy instead.

Limitation period

Under the Limitation Act, 1963, a suit for recovery of money or for breach of contract must generally be filed within 3 years from the date the breach occurred (i.e., generally from the date delivery was due and was not made, or the date the vendor clearly refused to deliver/refund). Don’t delay — the clock is running from that point.

Interim relief

Where there is a real risk that the vendor will transfer, hide, or dissipate assets or sale proceeds before the suit concludes, your lawyer can apply for an interim injunction or attachment before judgment (Order XXXVIII, CPC) to secure your claim while the case is pending.