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Hemang (Director)     17 June 2011

Recovery of unsecured loan after 3 years

We are a Pvt. Ltd. company. We had given unsecured loan to of Rs.5 lacs to a friends company about 3 years back. Now they are not returning. Will this get time barred. We have had just given a cheque to them, there is no agreement or anything.


 5 Replies

Imran (propriter)     18 June 2011

I am businessman not an lawyer but as far my knowledge Cheque can also be source of recovery better ask ur civil lawyer for this he may help you.


The limitation to recover the unsecured loan is three years under the law. But the limitation restarts from acknowledgment. Better to see the I.T. returns of the borrower, if the said amounts are shown therein, you can treat the same as his acknowledgment and may sue the borrower.

Shantanu Rastogi (ADVOCATE)     08 July 2011

Kindly see thru your records, the period of three years is very crucial from limitation point of view. There is no condonation of delay in filing the suit. You may serve the legal notice in respect of the same, and see if the reply comes and if at all it comes, then to what effect.

Murali (Advocate and Corporate Consultant)     26 July 2011

Dear Sir,

First of all, there is no direct evidence from your side that you have lent money to a company of your friends. Mere giving of a cheque will not constitute a loan unless, it is acknowledged by the Borrower. How are you accounting for the loan in your books of accounts, you did not make clear. Whether your books of accounts disclose the loan and if so, whether your Balance Sheet discloses loan under the Sub- head “Loans from the Companies” or “Inter-corporate Loans/Deposits” to the major –Head  “Unsecured Loans” . There are lots many issues and onus will be on you to prove the debt in the first instance. In the given circumstances, your case is not strong. Even assuming for a while that you gave loan, it is barred by time. So, the chances are very bleak. Anyways, there is nothing wrong to cause a legal notice issued threatening civil action and action to wind up the company if the loan is not repaid within 21 days and see the reaction from the opposite party before thinking of further action if any.


Murali Krishna W.


Raj   06 October 2015

Hello respected advocates,

I have a situtation, where my uncle gave loan to my father of Rs X amount in di(fferent tranches from 2006 to 2009). No loan agreement, no interest repayment and no confirmation given by my father, wheather oral or written. Loan was given under mututal trust and will not be meant to given back. Now suddently, out of the blue, my uncle files a case in 2015 on my father for loan recovery. My father is showing Loan repayable in his books of accounts til 31 March 2014 in his balance sheet,

Following are the question:-

1. Isn't the loan is time barred? (I read somewhere, not remember,that mere book entries does not mean acknowledgement, as no annaual confirmation given ever and no oral confirmation too).

2. Will the interest be tenable in tha lack of loan agreement.?

I need my father to escape this unwanted liability. As this case was done by malafide intenetions. Would request to provide some case laws or section with reference to your answers.

Thanks in advance,



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