Bankrupt

NARESH (Querist) 29 October 2013 This query is : Resolved
Hi,

I have taken friendly loans from several friends to trade in Forex Market is about 50 Lac Rupees and issued them some emptry Pro Notes and some Blank Cheques, with interest of 10% per month, I paid regular interest for few months...but all of sudden I have lost all capital bit by bit in Forex Trading... and I m not able to pay the lent money now..

I have a small house which costs around 25 Lac Ruppes and It has a Bank Loan of 10 Lacs on it still, My lenders want me to sell that house and settle them some amount and rest should be paid afterwards, but If I sell that house and I am jobless now I can not regain that much of amount in Forex Market so easy, it needs around 4 - 5 years for me to recover the loss with small investment of 1 Lac or so,

I am completely helpless, what shall I do? I did not issue them any receipts or Bonds, can they file Criminal Cases like 420 etc... on me?? what If I file Insolvency in the Local Court? Can I save my House?? I can try to pay the bank loan of house, and I can pay my lenders also if they give me time of atleast 3 years...so, please advise me how to proceed...
Regards

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Advocate M.Bhadra (Expert) 29 October 2013
You can try to settle with the Creditors,failing which you can wait to let them file case/suit against you then you may defend.

Section 10 in The Provincial Insolvency Act, 1920
10. Conditions on which debtor may petition.-
(1) A debtor shall not be entitled to present an insolvency petition, unless he is unable to pay his debts and--
(a) his debts amount to 1[ five hundred rupees; or 2[
(b) he is under arrest or imprisonment in execution of the decree of any Court for the payment of money; or
(c) an order of attachment in execution of such a decree has been made, and is subsisting, against his property.
(2) A debtor in respect of whom an order of adjudication 3[ whether made under the Presidency- towns Insolvency Act, 1909 (3 of 1909 ), or under this Act] has been annulled, owing to his failure to apply, or to prosecute an application for his discharge, shall not be entitled to present an insolvency petition without the leave of the Court by which the order of adjudication was annulled. Such Court shall not grant leave unless it is satisfied either that the debtor was prevented by any reasonable cause from presenting or prosecuting his application, as the case may be, or that the petition is founded on facts substantially different from those contained in the petition on which the order of adjudication was made.

The term insolvent refers to a “person who cannot or does not pay his debts in full or has committed an ‘act of insolvency’ and has been adjudged an insolvent by an Insolvency Court.” The following acts are regarded as ‘acts of insolvency:
If the debtor makes a transfer of all or substantially all his property to a third person for the benefit of his creditors generally.
If the debtor makes a transfer of his property or any part thereof with intent to defeat or delay his creditors.
If the debtor makes any transfer of his property, or any part thereof, which would, under this or any other enactment for the time being in force, be void as a fraudulent preference if he were adjudged an insolvent.
If with intent to defeat or delay his creditors, the debtor departs or remains out of the territories to which the respective Act extends; or if the debtor departs from his dwelling house or usual place of business or otherwise absents himself; or if the debtor secludes himself so as to deprive his creditors of the means of communicating with him.
If any of the property of the debtor has been sold or attached for a period of not less than 21 days in execution of the decree of any court for the payment of money (Presidency Towns Insolvency Act). Under the Provincial Insolvency Act, it is only sale of property in execution of a decree of any court for the payment of money that can operate as an act of insolvency. Attachment of debtor’s property for however long a time, is no ground for founding an insolvency petition.
If the debtor himself makes a petition in the court to declare him as a insolvent.
If the debtor gives notice to any of his creditors that he has suspended, or that he is about to suspend, payment of his debts.
If the debtor is imprisoned in execution of the decree of any court for the payment of money.

Rajendra K Goyal (Expert) 29 October 2013
If the lenders does not agree to wait, filing insolvency petition is the solution left specially when they are in possession of blank signed pro-notes and blank signed cheques.

prabhakar singh (Expert) 29 October 2013
Q.what If I file Insolvency in the Local Court? Can I save my House??

Answer IS NO!

" I can try to pay the bank loan of house, and I can pay my lenders also if they give me time of at least 3 years..."

THEN TRY TO TAKE THEM IN CONFIDENCE BY RENEWING PRO NOTES AND ISSUING CHEQUE A
FRESH.

THERE IS NO CRIMINAL LIABILITY ABOUT PRO NOTES BUT ABOUT CHEQUES THERE WOULD BE U/S 138 OF N.I.Act.
One should never do trading by borrowed capital that too raised as such an exorbitant rate of interest.
You failed to maintain equilibrium between
greed and fear and the bias towards greed has created the present problem before you.

Raj Kumar Makkad (Expert) 29 October 2013
The interest rate of 10% per month means more than double in a single year.........

None can be mad like you and your well wishers. Greed results in the same way. The house cannot be sold by you till the same is mortgaged with the banker. You have nothing to repay the bank loan so the question of its sale do not arise.

Insolvency petition is the sole way before you.

V R SHROFF (Expert) 29 October 2013
First issue notice to return your cheques and not to deposit in Bank.
Second, Issue Letters to your bank for stop payment of cheques and close a/c next day.

Third, Let them file civil suit, and u defend, It will take years to execute Decree , even if they win the cases.
FORTH: NEVER PLAY WITH MONEY.
GODDESS LAXMI IS VERY POWERFUL, it's misuse AND GAMBLERS ARE PUNISHED. And interest above 2% p.m. is SIN. DON'T GIVE, DON'T TAKE. BOTH WILL HARM.
USE IT AS LORD KRISHNA GUIDE YOU, FOR THE BENEFIT OF OTHER PEOPLE NOT FOR Personal GREED.

R.K Nanda (Expert) 29 October 2013
file insolvency petition in court.

malipeddi jaggarao (Expert) 31 October 2013
It appears even after loss of such a huge money still you are harping upon making money in forex trading. Forex trading is not simple gambling, it requires lot of expertise and capacity to analyse the world economy with update knowledge, the political scenerio of major countries, the local country economic strengths and political pitfalls.
If you wish to come out of these debts, you may opt for filing insolvency declaring to the court all your assets and liabilities. You can not save your house for yourself if you file insolvency petition.
If you have earning capacity apart from playing in forex market, if the creditors are your well-wishers,l take some time.