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Rituraj Chat (system analyst)     19 July 2010

Help U/S 138

I took a Personal Loan of Rs 3 Lacs when I was working, The bank took took security checks from me at the time of the grant. I pad the EMI's regularly for more than a year, but then I came to know that I had blood cancer and I had to quit my job and was unable to pay the emi's, now the bank has filed a case against me under section 138, I have spoken to the bankers for the settlement but the amount they are asking is beyond my reach, they have given me time till 25th July, and if I am unable to pay then they will proceed to court and will issue a summon against me, they also said that a non bailable warrant will be issued against me and I will be arrested. 

 I have no intentions of not paying, but only due to my health conditions I was unable to pay, I would still wish to pay and settle this for ever but for that I need time of at least 6 to 7 months. 

please help 



 4 Replies

Latha chennai (Advocate/Trade Mark Attorney)     20 July 2010

Please consult an Advocate and send them a reply notice. since you have intention of repaying ,explain them , and ask for waiving of the interest amount .They will not threaten you ,once  an advocate comes to scene. 

1 Like

Siva (Consultant)     21 July 2010

Dear Mr. Rituraj,


Pls don’t be panic. Issues pertaining to Credit Cards, Personal Loan, Housing Loan are CIVIL nature and NOT CRIMINAL cases. So, Police Investigation or Warrant cannot be issued in this case. If anyone says about arrest warrant or something, it may be to threaten you. If any threatens you or your family members, then you have all the rights to approach your local POLICE and file a case against them.

Chennai High Court Ordered NOT to refer matters of Civil Nature (Non-Cognizable) cases for any Police Investigation or to issue any Arrest Warrant. So, NO Worries. However, try to settle your loan amount after negotiating with the concerned Banking officials and too ask them for Re-scheduling of Loan Acct (OR) some Moratorium period until you get placed in a job.


The Persons coming to your door step and shouting may be the Recovery-Agents. So kindly report/escalate about their attitude to the top management of the Banking / Financial Institution. Further, if they disturbed again, file a case against them in your local Police Station. Simultaneously, you can report your issues with the Banking Ombudsman.


 Pls find the Judgment passed by MADRAS (CHENNAI) HIGH COURT as follows & hope it can be useful for who are all facing similar kind of issues.


Saturday, August 23, 2008

HC: Don't refer civil nature for police investigation

“Transfer cases of civil disputes to High Court”


CHENNAI: The Madras High Court on Thursday directed the Registry to withdraw cases all over the State involving disputes of civil nature in which magistrates have ordered police investigation, call for the records and transfer them to the High Court.

Passing further orders on two criminal original petitions, Justice R. Regupathi said the Registry should place the entire material and particulars before the Chief Justice for orders for an enquiry in those matters. Further proceedings of all those cases pending with the magistrates concerned were stayed till the disposal of the proceedings by the court.

The judge said all records, including vigilance reports, might be placed before the Chief Justice for taking appropriate departmental action against the magistrates, in particular III, X, XVII and XVIII Metropolitan Magistrates, Chennai, and Judicial Magistrate-III, Coimbatore and Judicial Magistrate, Paramakudi.

The DGP was directed to instruct police officers who had received orders from the magistrates in such cases under section 156 (3) of the Cr.P.C and the Station House Officers (SHOs) who had entertained similar complaints in the name of “petition enquiry” to obtain opinion from the Director-General/Additional Director-General of Prosecution/Assistant Public Prosecutors and to file interim/final reports before the jurisdiction magistrates within two weeks. The DGP should file compliance report in three weeks.

Earlier, Justice Regupathi had directed the Registrar (Vigilance), High Court, to collect statistics of private complaints relating to credit cards, personal loans, housing loans, hire-purchase loans and default in payment of instalments and cases under section 138 of the Negotiable Instruments Act, wherein orders for police investigation were passed by magistrates. Accordingly, the Registrar submitted a report.

The judge said the huge number of cases entertained by the six magistrates was quite alarming.

Mr. Justice Regupathi said some judicial magistrates, in collusion with complainant bankers/financial institutions, were entertaining complaints relating to matters of civil nature and passed orders, under section 156 (3) of the Cr.P.C., for police investigation to the undue benefit of financial institutions. In some instances, they were entertaining similar complaints under section 200 of the Cr.P.C.

Vigilance inquiries were conducted, and the complaints entertained were quashed by the High Court. Despite the High Court’s reaction and repeated directives to judicial magistrates not to refer matters of civil nature for police investigation, it had come to light that such trend was still in vogue.

© Copyright 2000 - 2008 The Hindu

1 Like

Siva (Consultant)     21 July 2010

Also, I presume that the Bankers/Financial Institutions CAN NOT exercise/enact the 138-Act against their customers and it will be separated from NORMAL Cheque-Bounce cases.

Pls find below is one of the order / judgement passed by the Delhi High Court Order u/s 138 of the Negotiable Instrument Act:

Since cheque-bounce cases relating to financial-institutions account for more than 80 per cent of total such cases, these may be separated from normal cheque-bounce cases.

 Complete system is clogged mainly because of cheque-bouncing relating to EMI-instalments. It is not proper that courts may serve as recovery-agents for these financial institutions where cheque-bouncing is normal part of their business. Such cases should be tried in separate courts levying adequate court-fees to ease out pressure on normal functioning of courts.
For rest of cheque-bounce cases, any Delhi-based complainant should have a right to file complaint under section 138 of Negotiable Instrument Act in Delhi also.
1 Like

Rituraj Chat (system analyst)     22 July 2010

Thankyou everyone for guidance, I have spoken to the bankers for settlement, but they are not providing me enough time for repayment (just a week), I have asked them for more time , they denied and said that the legal actions will be taken against me, they have presented the security cheques that they took during the saction of the loan.

I just wanted to know that does this comes under criminal suit or civil, plus what action will be taken if a summon is issued and I wont be able to present myself in the court. As I have mentioned that I am suffering from Blood Cancer and wont be able to travel to New Delhi

please reply

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