Non return of promisary note

R.S.Muktibodh (Querist) 19 June 2012 This query is : Resolved
Sir,
I have taken a loan of 4 Lakhs from an individual private Financer by issuing 8 Post dated cheques, and also signing a promisary note. Although all the 8 post dated cheques were honoured without any problem whatsoever and the loan being completely repaid,the financer is refusing to return the promisary note. Please let me know as to what risks I have if I let him keep the promisary note. If the P.note is misplaced,as claimed by him, is there any other method to safeguard myself?

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Adv.R.P.Chugh (Expert) 19 June 2012
1. No Since the Promissory Note pertained to that transaction which has already been performed by way of cheques. If at all he brings an action on the basis of PN the cheque payment would nullify that.

2. If he says that he has lost, get it in writing preferably an agreement (MoU) saying no dues on either side, and couple it with a complaint to the police as to it being lost, this should do.

3. You can as a last resort - file a suit for cancellation of the instrument as well.

But 1 & 2 should do.

Good Luck !

Anirudh (Expert) 19 June 2012
Allowing the lender to keep the promissory note even after the entire payment has been made is not a good idea and it will be harmful to you.

Therefore, in case the lender says that he had misplaced the Promissory Note or that he had lost the same, then as suggested by Adv. Bharat Chugh, better get a letter from in writing to the following effect.

That I..... had given a loan of Rs. ...... to Mr. .........against Promissory Note dated ...... The said Mr. ........ (your name) has since repaid the loan amount with interest vide the following cheques and the promissory note stands fully discharged. However, since I have misplaced / lost the promissory note in question, I am unable to return the same to the borrower. I confirm that there is nothing due against the promissory note and I treat the promissory note as cancelled for all purposes and effect.

Signature
Name
Date:

If the lender does not give such a confirmation in writing, then you have to take steps as suggested by Adv. Bharat (see Sl.No.3)

If you keep quiet without taking any of the actions suggested above, then you will face problem in future.