Dip 16 March 2016

Legal procedure to lending interest free loan

Hi,

My driver has worked for me since 2010. He recently wants to build a house and is requesting for an interest free loan of 60,000 to 80,000 INR

Please let me know what is the recommended legal procedure for it , so that in worst case I am not easily cheated.

Thanks

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1 Replies

Env Coord (.) 12 June 2016

Take help of a Lawyer to draft a contract between you and your driver.
Mention the terms & conditions at which you are giving loan to your driver. These terms & conditions must be cross-verified by a Attorney/Lawyer in order to ascertain whether terms & conditions are in sync with the law.
Also, mention the terms of re-payment & consequences in event your driver fails to repay the loan as per agreement.
You can put a clause that if your driver fails to pay the principal amount lent by you, then he will have to pay the Outstanding Amount with Interest.

FYI : As per Section 34 of Civil Procedure Code(CPC), courts are empowered to award interest on the outstanding principal sum due.