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Dishonour of cheque

(Querist) 22 May 2009 This query is : Resolved 
Dear Experts,

I had granted a loan of Rs 3 Lacs to my one close relative (Brother in law) for meeting out his business needs. I had granted loan to him by issuing cheques in favour of third party (his business client) and in return my brother in law had issued me post dated cheque of Rs 3 lac as a security of the loan. Now this cheque has bounced and i want to initiate legal proceedings against him since he is not ready to pay, my query is :
1. Will the fact that i had issued a cheque to a third party on behalf of the borrower will have any impact on my standing in the court.
2. Since proceedings in indian courts are very slow, and it is quite likely to take 1-2 years at a minimum, Will court take care of the interest cost to be incurred by me from today till the date of final judgement and ask accused to reimburse me the same. What are the grounds for deciding this amount.
3. Will other expenses like advocates fee, legal expenses etc would be imposed on accused and reimbursed to me.
adv. rajeev ( rajoo ) (Expert) 22 May 2009
Dear Nishant,
U have to issue notice to both the persons. In your question u have stated that you have given a loan. Are u running finance corporation?. because u have stated u have granted a loan. When u have given a loan it amounts to money lending business, which requires money lending license. If u r not running money lending business then it will be very difficult for you.
While issuing a notice to both be carefull and issue the notices.
It is the descreationary powers of the court to award the advocates fee and legal expenses.
Compensation will be awarded by the court.
Interest will not be awarded by the court.
But take care while issuing a notice, if u r not running money lending business don't take the word "granted" the loan. U can take accused took a hand loan for his business necessity. U have given a loan to third party, he will be the accused No:1 and surety will be Accused No:2. Surety will also held liable for committing an offence u/s 138of NI Act.
M. PIRAVI PERUMAL (Expert) 22 May 2009
I agree with Mr. Rajeev
A V Vishal (Expert) 22 May 2009
Dear friends,

I beg to differ, the querist has given a loan to his brother in law for which there is absolutely no necessity of holding a lending license and te querist does not lend monies quite frequently. The nexus between the querist and the person to whom the cheque was issued has to be established. The loan was given to the brother in law and payment to the third party was on instruction of the querist brother in law, hence, third party cannot be a party to the suit. Further the usage of the word grant doesnot make any difference since one of the meaning to it is extending monetay aid. The case can solely survive on the presumption that the querist received the cheque from his brother in law in connection with the loan extended to him by the querist, which however, has to be proved to the court.
Manish Singh (Expert) 22 May 2009
firstly issue a legal notice to the third party within 30 days from the date of dishonour. if within 15 days he doesnt pay the money you can take take criminal action under sec 138 og the Negotiable instr. act within a month from that 15 days. it will not take much of your time.
keep in mind that he has issued a cheque to you so the responsibilty of proving that no liablity exists on his part t6o pay you any money solely exists on him and not on you.
for other expenses or damages which is not satisfied by the criminal court you are free to move the civil court for recovery of the same and the action under sec 138 does not bar the same.
A V Vishal (Expert) 22 May 2009
Dear Manish

The third party didnot issue the cheque.......
Dear Nishat plz tell me from where do u belong? Anyways! I do agree with Mr. Rajeev. U should issue legal notice against the bounced cheque. U can contacty me 4 further queries at-09871158578/09711364956
Ravi Arora (Expert) 24 May 2009

I m of the different opinion
First you issue a notice to your brother in law for dishonoue of cheque U/S 138 of N.I. Act
You can file a civil suit against the third party .
Nishant (Querist) 25 May 2009
Dear Experts,

Thanks a lot for your valuable replies, Mr. Vishal rightly said,
Firstly, I does not carry the business of money lending, in the instatnt case I lent the money to a person who is my brother in law (a close relative) and to help him out for his legitimate business needs. He promised me to repay the debt within 2 months with some consideration and issued the cheque as a security.
Secondly, I paid the money to the third party only on the instruction of my brother in law and I did not lend the money to third party, My brother in law took the sole responsibility and issued me the post dated cheque to recognise his sole obligation. Paying money to third party was only a different mode of executing the transaction. How i can issue a notice to the third party when he does not owe any sum to me.
Manish Singh (Expert) 25 May 2009
i agree with mr. vishal.
rectification : issue the notice to your relative.
no need of license or something in your case. just issue the legal notice and follow other procedures as stated. you shall be rightfully compensated.

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