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138 n.i. act

(Querist) 15 April 2012 This query is : Resolved 
Dear colleagues, i have filed a complaint on behalf of a private limited company against another private limited company and its directors.
the facts in nutshell:complainant (not being a financial institution) granted a short term loan of 15,00,000/- charging 24% interest p.a. to accused company. Accused executed a loan agreement on 100Rs. stamp paper,executed gurantee and promissory notes in favour of complaint.
i have following query:
can company (NOT BEING FINANCIAL INSTITUTE) borrow to another co.(any bar of money lending act)?
technical objection of insufficiency of stamps and nonregistration in criminal proceeding?
i can prove transfer of money through bank to accused company.
I have read somewhere in some judgement that it is for the accused to explain how cheque came to be issued .
pl.enlighten me on above points with additional tips in order to succeed the case of complainant.
Shonee Kapoor (Expert) 15 April 2012

yes, any company can lend money for short term.

Yes, these are valid objections

You fight the case on its merits.


Shonee Kapoor
prabhakar singh (Expert) 15 April 2012
आप का प्रश्न वाणिज्यिक है .उत्तम होगा आप इसका हल किसी वकील से व्यक्तिसः मुलाकात कर करें .
धन्यवाद् ,
प्रभाकर सिंह
Raj Kumar Makkad (Expert) 15 April 2012
There is no need to prove the proper stamp duty on the loan agreement etc. The basic point is the complainant has to prove a lawful debt towards the accused.
DEFENSE ADVOCATE.-firmaction@g (Expert) 15 April 2012
If not a theory problem it is a serious case of facts and law.

Apart from proper stamps how and why such huge loan was given, mere bank transection will not make it legal.
Jithendra.H.J (Expert) 15 April 2012
Go ahead, as you said it is true that it if for the accused to explain how cheque came to be issued
prabhakar singh (Expert) 15 April 2012
Many have joined to answer hence i review and prefer to join.

YOU have RIGHTLY read somewhere in some judgement that it is for the accused to explain how cheque came to be issued SINCE LAW PRESUMES THAT IF CHEQUE WAS ISSUED IT MUST HAVE BEEN ISSUED FOR CONSIDERATION.

You should not go to prove or file any loan agreement,or to allege any loan advance on interest since cheque is for consideration and on any denial you can prove the transfer of money from your company bank a/c to accused company a/c.
Raj Kumar Makkad (Expert) 15 April 2012
I differ with the opinion of JSDN to the extent to explain and prove the proper loan agreement with stamp duty etc. Though as per Law, the stamp duty is required to be complated so that tax evasion may not be made by any party but still if loan is proved by way of other relevant evidence like agreement, bank transfer, oral evidence then it is sufficient for the complainant to discharge his onus and it is the turn of the accused to explain how and under which circumstances he issued cheque in favour of the complainant which got bounced and he failed to make payment within the prescribed period of 15 days of receipt.

There is no scope for the accused to move here and there in the given facts of the case.
V R SHROFF (Expert) 15 April 2012
Amt was paid, Liability is accepted under PN.

Accuse ids bound to pay compensasion, and punishment, under 138 ni/

It is also a perfect civil suit for recovery
DEFENSE ADVOCATE.-firmaction@g (Expert) 15 April 2012
1) I said apart from proper stamp duty . Here also not properly stamped documents has no value in law unless proper penalty is paid other wise it is liable to be impounded by the collector of stamps of the state.

2) I still feel this is not real problem but a question of theory.

Presuming to be real no Pvt Ld co can give loan on interest without permission from RBI UNDER THE RULES FOR NBFC.


Please throw light if there is exception.

C. P. CHUGH (Expert) 15 April 2012
A private limited company is barred from excepting any loan in excess of its paid capital from persons other than its directors or their relatives. But this deficiency does not maake the transaction void ab initio. Lender, having advanced in good faith has all his rights secured to recover the debts. I am still confused why and how the company, which is not into financing business, advanced loan to another company, that too on interest payment obligation which is too high 24%, and against DPN. Generally this does not happen in routine transaction. Hence the querry is twisted of actual facts.

Deficiency in stamps, however should not have any adverse implication of criminal proceedings against the accused. In civil matters also, such deficiency is curable by affixing additional stamps with the permission of the courts.

Without approval of the Board of Directors, or in case directors having exceeded their powers while granting such huge loan may itself render the loan bad and not legally enforceable liability. Accused and complainants both need to work hard to win the battle.
prabhakar singh (Expert) 16 April 2012
"Deficiency in stamps, however should not have any adverse implication of criminal proceedings against the accused. "


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