Dear Respected Sirs,
Would like to know your expert legal opinion on the below matter of finances/investments between 2 parties viz. X and Y as outlined below :
X has been running a small-scale shop dealing in boutique & tailoring niche since the past few years. Y invests in X's business a certain amount for monthly returns. During the period when Y invested with X, the business was booming. Getting carried-away by this, X inadvertently & under ignorance committed to pay Y, an exorbitantly high, very unrealistic monthly returns to Y without enlightening Y (unintentionally) about the inherent underlying risks of the business (downfall). This deal was based on 100% verbal communications only & no writing work/legal agreement of any sort was executed between X & Y.
The exorbitantly high payments by X to Y over the months hardened the perception & mindset of Y that regardless of the recession in X's business, Y should always continue to receive the so-called "Profits" from X regularly every month. Y was always under the false impression that she would endlessly continue & entitled to receive the so-called "Profits" from X.
So far, the total installments of money returned by X to Y over the months, far exceeds the capital invested by more than 200%.
X was so over-optimistic & blind with her booming business that she could not realise that she would most certainly face an inevitable downfall period in her business at some stage which would play havoc with her finances. She failed to anticipate that how she would pay Y under these circumstances. And the inevitable happened; the business went into recession. X started defaulting on payments to Y & no longer in a position to further pay Y any more money.
Just to reiterate, X has already returned to Y more than 200% of money invested by Y (which X has regularly maintained a record of; no such record maintained by Y)
X is taking the stand & stressing on the fact that since she has already paid Y more than 200%, X is no longer obliged to pay any more. Also since the X's business has crashed & near shut-down, she (X) is not in any position whatsoever to pay Y any further. Despite recovering 200% more than her actual capital, Y still continues to pressurise X to keep on paying her (Y) knowing well that X has incurred big losses in the business.
Now relations has gone sour between the two & Y threatens to file a civil suit against X for recovery of Y's capital.
Kindly advise how much weightage is there in this threat by Y & how would the law view this deal ? Is this case admissible in the court-of-law as there are no written / legal agreements of this deal between the two ?
Between X & Y, who has the right stand ?
