Friendly loan with property sale agreement

I had lent friendly loan of 15L to a friend. The loan was issued starting from Dec-2014 till June-2015 in parts, most of it through NEFT bank transfers. 

Source of my income : Salary savings accumulated & investments, for which I have IT payment proof

For the above loan, an interest of 2% was agreed per month and undated cheques totalling 14L was issued. However, since the money got stuck in his construction of appartment, my friend was not able to pay any interest or principal back. In april 2016, we discussed and he gave me a sale agreement for one of his apartments, as he said, he wont be able to repay till the construction work is completed. 

The terms of the agreement : 

Stamp paper : Rs .200 (only sale agreement, property not registered yet)

Date : April -2016

Amount mentioned as paid in the agreement: 25L, apartment value : 90L

Other terms in agreement : a) apartment will be ready for posession before 3 years  b) If required, I can refuse the apartment and ask the money back without any penalty with a notice of 2 months

Now my friend is not able to complete the apartment or repay the loan and I am in need of money. Proofs : 14L undated cheque & the above sale agreement(which was created for the sake of proof of money paid & not for the actual buying of the apartment)



1. If I plan to file a money recovery suit, which date would be considered for barring  - Is it he first date on which i gave the loan (dec-2014) or the date on which I submit the cheques or the date on the sale agreement(apr-2016)?

2. Since I have the agreement & cheque, can I directly file a case based on the agreement or is it suggested to deposit the cheque and then proceed with bounced cheque?

3. what are the chances of recovery with the above proofs in hand? 

Thanks in advance for the help!

Advocate and IPR Attorney

Present the cheque by entering a date and present the same within 3 months ..Next take due coursework action.?


hi call me for your query at cell no 8686159292


Thank you for the reply. Kindly clarify the below-

1. If I plan to file a money recovery suit, which date would be considered for barring  - Is it he first date on which i gave the loan (dec-2014) or the date on which I submit the cheques or the date on the sale agreement(apr-2016)?



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




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