Cash loan and cheque dishonour
Alok Agarwal
(Querist) 27 June 2014
This query is : Resolved
Dear Sir/Mam,
Thanks for having such a legal advise platform!
In August 2013 I gave loan of Rs. 2 lacs to a known friend through NEFT from my personal account. Than in November I gave him cash loan of Rs. 120000 out of my income received in cash, which I showed in Balance Sheet and paid income tax on it. Than again in May I gave him cash loan of Rs. 50000 by withdrawing it from my account. Now he issued cheques with June 2014 date for all the above amounts separately in my name. Except for Rs. 50000 he has issued cheque in Self (no name on cheque accept Self) with signature also on back of the cheque. Now he has become defaulter and said that he won't return my money. I asked him to issue cheque of Rs. 50000 in my name, but he refused.
My question is that Cash loan is recoverable or not. Also whether the self cheque he has given is liable to get paid under section 138?
I have no worry for loan given through NEFT.
Cash loan given to him had been given out of my taxable income and as of now my personal balance sheet shows Rs. 170000 cash in hand, which I gave as cash loan.
I have already paid tax on such amount.
Or I have to show this amount of 170000 in my balance sheet as Cash Loan to XYZ instead of showing it cash in hand. Please advise!
Would appreciate your advise!
T. Kalaiselvan, Advocate 
(Expert) 28 June 2014
Have you obtained acknowledgement for the loans given to him, i.e., either a pro-note or do you any witness other than the bank transaction and IT returns for that Rs. 50,000/- cash loan? What is his reaction to it when you demanded to repay?, better issue him a legal notice and make him to commit and then you can file a money recovery suit.
Alok Agarwal
(Querist) 28 June 2014
Thanks for your reply!
I have his emails asking for money! In email cheque amount is mentioned clearly. For cash loan I do not have emails or written proof. One of my friends always accompanied me when I gave him cash! Would it be counted? For Cash Loan of 50000 thousand, I have shown it in Balance Sheet for IT returns but not yet finalized the return for the financial year ending 2014. I was wondering, how I should show 50000 as cash in hand or cash loan to Mr. XYZ in my balance sheet, because cash loan above 20000 is penalized by Income Tax. When I demand him money, he lingers on.
Alok Agarwal
(Querist) 28 June 2014
Would appreciate your further advise?
T. Kalaiselvan, Advocate
(Expert) 28 June 2014
You have done a good job of creating an evidence all the time when you have lent him the loan amount. Your emails will certainly be an evidence provided he he acknowledged the same through his reply mail. Your friend who had accompanied you while he availed loan should stand as a witness, besides another witness can be arranged to depose evidence as an independent witness knowing both the lender and the borrower. Further, the income tax returns will come handy as a substantial evidence. You may proceed taking the help of a local prudent lawyer.
ajay sethi
(Expert) 28 June 2014
contact a local lawyer . file summary suit for recovery of the amount given as loan . your books of accounts should reflect the total amount of loan given to your friend whether by cash or cheque
R.K Nanda
(Expert) 28 June 2014
no more to add.
Alok Agarwal
(Querist) 28 June 2014
I would like to thanks all experts for giving me their valuable advise!
I have just 2 questions more!
1. If my books of accounts reflect the amount of loan given in cash to my friend, would it not attract income Tax penalty, although I have paid all the taxes on the amount I am showing.
2. if I appoint a good lawyer, how much time would it take to complete the case.
I have not yet got reply for my Self Cheque of Rs. 50000, whether I would get this amount or not as it is a self cheque.
Regards
J K Agrawal
(Expert) 28 June 2014
Mr Alok
1. Showing of cash loan more than 20000/- is no problem if shown in IT return.
2. 6 month as per statute and 6 year as per practice.
3. Cheque of 'self' is good in all respect if it is in your hand. Cheque is Negotiable Instrument. You will get this amount also.
Alok Agarwal
(Querist) 28 June 2014
Thanks for the advise!
Respected Mr. Agrawal, Your statement 6 years as per practice is really discouraging.
After SC guidelines for fast track of Cheque bounce cases, I won't think it will take 6 years for cheque bounce case.
I would appreciate if other experts also could throw light on the duration of the trial.
Thanks!
T. Kalaiselvan, Advocate
(Expert) 28 June 2014
As per the present trend there are separate and exclusive courts ( atleast in the district headquarters) to try the cheque bounce cases alone and in such courts the cases get disposed in a matter of 6 months and sometimes it may take as long as one year. Era of 6 years for disposal of cheque bounce cases were in bygone days.
Alok Agarwal
(Querist) 28 June 2014
Thanks Mr. Kalaiselvan for your comments! I agree with you!
I would appreciate if you could answer my further 2 queries.
1. As I mentioned earlier that I have email evidences of the debtor. What if, if the debtor says that this email address doesn't belong to him. And I have made fake Email Id in his name.
2. I met a good lawyer today in my city. He said to complete the case between 6 to 8 months. As fees he is asking initially INR 2500 and after winning the case, 7.5% of the value of the loan amount. To ask such percentage as fees is in normal practice?? Please advise!
ajay sethi
(Expert) 29 June 2014
in Mumbai it takes 5 years for cheque bouncing cases to be disposed of . hence advised querist to file summary suit
Biswanath Roy
(Expert) 29 June 2014
Summery Suit is the appropriate measure for recovery of loan amount.
Alok Agarwal
(Querist) 29 June 2014
Would appreciate if any expert can answer my below query!
I met a good lawyer today in my city. He said to complete the case between 6 to 8 months. As fees he is asking initially INR 2500 and after winning the case, 7.5% of the value of the loan amount. To ask such percentage as fees is in normal practice?? Please advise!
Biswanath Roy
(Expert) 30 June 2014
This proposal cannot be said as professional fees for normal practice but it is simply a terms for recovery of your money. You are requested not to place such a peculier question before the legal Experts because it does not conform with the object of this forum.
Alok Agarwal
(Querist) 30 June 2014
Thanks all for the expert advises!
As I mentioned I have 3 account payee cheques and 1 self cheque. For dishonor of account payee cheques, I will go for Sec. 138 NIA but how I proceed for self cheque. I mean to say how I present the self cheque in court, as being self cheque, it can't be dishonored. Is there any provision of self cheque in Section 138.
Request your advise!
J K Agrawal
(Expert) 30 June 2014
Dear Mr Alok
We can suggest some laws and practice but we can not make you a lawyer or law expert at this forum.
Please consult your counsel and he knows the way out.
However if your advocate want to know the same, It will be our pleasure to guide him.
Alok Agarwal
(Querist) 30 June 2014
Thanks all once again for the support and advises!
Yes my lawyer is somewhat confused regarding the self cheque, thats why I asked it here!
Anyway Thanks!
T. Kalaiselvan, Advocate
(Expert) 30 June 2014
You have been very properly answered for all your queries, despite that you come out with more sundry questions which can be dealt with by your lawyer, if he feels confused, it appears he is not knowing the proper provision of law in this regard but you keep certifying him to be a very good lawyer (?), ask him to raise the query among his local colleagues and find an answer to it.
As far as the email and its genuineness, it is your burden to prove its authenticity.
Alok Agarwal
(Querist) 30 June 2014
Thanks to all! I have got reply for all my queries!
Alok Agarwal
(Querist) 01 July 2014
Sir, I am here to get the advise from Experts. I do have engaged a good local lawyer but I thought this platform will serve my curiosity for any query regarding law, which my lawyer might not be able to satisfy. Above all I have my right to knowledge and information.
When I ask repeatedly about Self cheque, I was advised by the experts to consult my local lawyer. My lawyer said that Sec. 138 is not attracted towards self drawn cheque.
But here some experts mentioned that self drawn cheques attract sec. 138
But on the same forum I went through the given link, where all experts says that self drawn cheque does not attract Sec. 138. It attracts only Sec. 420 IPC, when there is sufficient evidences.
http://www.lawyersclubindia.com/experts/details.asp?mod_id=235376
So why the advise of experts so different for 2 different queries! I am confused!
Sorry to bother all again! This would be my last query!
Nadeem Qureshi
(Expert) 01 July 2014
there is two side of every coin and can not be same or similar, so the opinion may be differ as per the interpretation of the law as per experts
Guest
(Expert) 01 July 2014
There being no solid evidence, your cash loan does not have any legal recognition for the purpose of recovery through legal means. Self cheques in favour of your friend also do not hold any legal value for you. He can even allege that you have stolen her self cheques to dishonestly encash them. In that case, what would be your defence?
So, better pursue humbly to convince your friend to return your money without any hitch.
V R SHROFF
(Expert) 01 July 2014
cash loan above 20k attract penal action under I Tax.
Why pay cash loan????
what wa ur bjective?
no action under N I for SELF CHEQUE
