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Nitin Kotian (Advocate)     17 October 2012

Friendly loan with no documents

Sir/Madam,

 

A friend of mine( Say Mr A) had issued a friendly loan to his friend(Say Mr B) . Now Mr B issued a cheque of Rs 1,00,000/- which has got bounced.

My queries are

1)      Should a summary suit be filed or u/s of 138 of The Negotiable Instruments Act 1881

2)      There is no written document written by either of the parties for what the amount was issued.

3)      Any other  remedy which can be in favour of Mr A

 

 

Regards,

 

Nitin P Kotian



Learning

 2 Replies

Nitish Banka (lawyer)     24 December 2017

Posted by: nitish788  Categories: Uncategorized 
 

 

Sometimes in usual course of business blank cheques are handed over to trusted persons and the cheques are often misused by these persons under the guise a friendly loan is given to the accused.

Now this amount as shown by the complainant is in cash and since its a friendly loan no paper work is done.

But since burden to prove that the cheque was not issued as a legally enforceable debt is on the accused in cheque bouncing case then how he will discharge this burden is the main ground.

Cross examination is an opportunity granted to the accused in such cases as well as his statement under 313 CrPC

Image result for cheque bounce

In cross examination following questions must be put up-:

  1. Have you withdrawn the money from the bank ? if the accused has  in fact given a loan to the accused person he must have withdrawn such money from the bank. if the answer is no there will be no record of such transaction.
  2. If the amount is above Rs. 20000/- an dis in cash it is hit by section 269SS of income tax and is a transaction prohibited by law. for this just as have you paid money all in cash?
  3. Have you signed any acknowledgement of debt from the accuse? since its a friendly loan no record was available for this?
  4. Have you shown this amount in ITR? If he produces ITR and balance sheet then ask for the basis on which he has mentioned loan against the accused in balance sheet when no document in support of transaction is there. If the complainant does not produce the ITR then the cash is black money and again rebutting the presumption of legally enforceable debt.

As held in Sanjay Mishra vs Ms.Kanishka Kapoor The learned Judge held that the applicant has failed to establish that the cheque was issued by the 1st respondent in discharge of legal liability of the loan amount. The learned Judge observed that the 1st respondent has denied her signatures on the bill of exchange as well as the cheque subject matter of the complaint. The learned Judge has taken into account various circumstances borne out by the evidence on record and has passed order of acquittal. The learned Judge also considered the admission of the applicant that the amount advanced was an unaccounted amount which was not disclosed to the Income Tax Authority.

Therefor recovery of black money is impermissible in law.

Advocate Nitish Banka

nitish@lexspeak.in

 

Sudhir Kumar, Advocate (Advocate)     29 December 2017

Money given to friends and relatives is always a charity in the garb of loan which is given in expectation of refund but always taken with intention of non-refund.

 

Such loan is taken by a person:-

 

  1. Who lacks business sense and cannot raise funds out of his own business and suddenly wants to be rich.

 

  1. who cannot raise bank loan because :-

 

Either

he himself is not creditworthy

 

Or

 the purpose for which he seeks loan is illegal

 

or

the purpose for which he seeks loan is not at all commercially viable.

 

  1.  Who knows he can afford not to refund.
  2. Who trusts his thick skin
  3. Who intends not to refund
  4. Who has made fortification against action of refund.

 

So he has to find someone who can part with his money. SO he finds a lender near him (friend or relative)

 

Such loans are given by the persons :-

 

  1. Who has surplus money.
  2. Who displays and boasts of such surplus money.
  3. Who stupidly believe that there will be a refund.
  4. Fails to realise as to why he alone (not bank) is being contacted for loan.
  5. Who has extreme trust on the debtor
  6. who are either stupid or extremely greedy of the unusual (or illegal) rate of interest.

 

Such loans are always given

 

  1. Without documentation.
  2. Without witness
  3. Without guarantor.
  4. During cordial relations

 

Soon after giving such loan :-

 

  1. Relations are no more remain cordial
  2. Business started by such money  (easy money belonging to other) invariably fails.
  3. Such loans always sink and not refunded.
  4. Person seeking such refund suffers at legal process.
  5. Person seeking such refund legally or by persualtion is socially criticised.

 

 


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