Money taken from money Lender
K.Saikumar
(Querist) 20 October 2015
This query is : Resolved
Dear Sirs,
My brother is guarantor for loan taken by his business collegues, willingly they were defaulting repayment of interest and principle. The money lender is forcing my brother to repay the money with pending interest payments. Loan amount Rs.5lakhs total due interest is 3lakhs. Interest @4% PM. What is the legal option to recover the money from borrower.
My brother is real estate agent his monthly income is around 12000pm, he doesnt have any assets on his name.
Anirudh
(Expert) 21 October 2015
Your brother ought to have been responsible and not to have stood guarantee for anybody, especially when his own earning is not of such a level.
In any case, when you say that your brother stood guarantor, what is the asset that he tied with the guarantee given by him.
If he has not tied any asset towards the guarantee (especially when you say that your brother does not have any asset in his name), then it will be difficult for the lender to get his money back. But, the lender will create nuisance by coming to your brother very often and even at his work place/residence etc. and pressurise for repayment. At that time, your brother has to simply say that he does not have money to repay.
Except by persuading, you will not be able to make the borrowers to repay the loan.
You should ensure that your brother should not give any cheque towards payment of loan to the lender. If any such cheque is given by him, then he will face criminal case before the Court under Sec 138 of the Negotiable Instruments Act.
P. Venu
(Expert) 21 October 2015
The action of the money lender amounts to a criminal offence. The fact that he is charging interest @4% per month makes him liable.
Your guarantee is legally enforceable only if he obtains a decree from a Competent Court of Law.
Guest
(Expert) 21 October 2015
Shri Anirudh has rightly advised you. However, your brother can raise dispute only on the rate of interest 4% pm, which is qite exorbitant, as not justified against the prevalent market rate of interest.
SAINATH DEVALLA
(Expert) 21 October 2015
The lesson one has to learn is that"one should not help the other beyond his limits and reach".
UR brother's friend's have taken the loan with an ulterior motive only.
Its better if there is some mediation and a settlement reached instead of facing legal consequences.
Other aspects as adviced by Mr.Anirudh
K.Saikumar
(Querist) 21 October 2015
Thank you Sirs,
For all your valuable advices, my brother is real estate agent, some plot registration documents kept as collaterals with money lender, presently no market to sale the plots. It seems to be planned cheating by his business collegues, all these issues I don't know till yesterday. Borrower is available in Hyderabad itself, kindly advice. Is there any way out and action. My brother is going through full of pressure from money lendor. Regards... Saikumar
Guest
(Expert) 21 October 2015
Mr. Saikumar,
Is there any hitch for you or your mother to make the borrower ready to repay his loan for whom she stood guarantor?
Rajendra K Goyal
(Expert) 21 October 2015
Guarantor is liable to pay in case of default of the borrower.
He is entitled to recover money from the borrower and has same rights as the original lender had.
Hemant Agarwal
(Expert) 21 October 2015
1. From the face of the query, I conclude that the "Money Lender" is functioning in gross violation of law, without a Money Lending license or Certificate from RBI, for doing Money Lending business.
2. Guarantors Documents (whichsoever) shall not be enforceable by the Lender, IF "FIRST" due procedure of law is not conducted & exhausted against the principal borrower.
3. A private criminal complaint filed in the local Magistrates Court, against the "so called" Money Lender, duly handled by a shrewed lawyer, would settle the matter permanently.
Keep Smiling .... Hemant Agarwal
Read Articles: http://hemantagarwal21.blogspot.in/?view=sidebar
K.S.Srinivas
(Expert) 21 October 2015
Charging interest @4% per month is against the RBI guidelines. Resit I agree with Sri Hemand Agarwal.
