Negotiable instruments act - cheque bounce
Pavani Bayyana
(Querist) 26 May 2014
This query is : Resolved
Dear Members, I have taken loan of 150k from one of my colleague in 2011. My colleague used to give these kind of hand loans to many other colleagues who are needy, however the rate of interest is little abnormal, which is around 3% per month compounding monthly. As I need funds in emergency, I don’t have any other option except to take loan at that rate. We have even exchanged emails wherein I have even acknowledged the rate of interest and the interest calculations thereon. I have repaid part of the amounts which of course he set-off against the amounts due and I am still left with a big chunk of these amounts approximating to 200k. I have also given undated cheques for repayment of principal and estimated interest component thereon.
Things have changed now and I was in deep financial troubles, wherein I could not repay these amounts and recently my colleague (of course now become ex-colleague as he resigned from this company) deposited the cheque and sent me a cheque bounce notice under Negotiable Instruments Act.
I don’t have enough money to repay this debt, and I have already taken enough extensions so that my colleague is not granting any other extensions for repayment any more. He is also not agreeing for any waiver in the amounts payable to him and I am helpless.
Do I have any way out or any possibility where I can challenge hefty interest rate or amount payable to him ?
Members, please help me out..
Sankaranarayanan
(Expert) 26 May 2014
What are you doing now, What reason you have given that cheque to him? (for security)
Pavani Bayyana
(Querist) 26 May 2014
I am working as an accounts assistant in a small private company. When I gave the cheque there was no such discussion about the intention of the cheque, but our intention of cheque was for repayment only.
I remember reading some case laws over lawyersclub india long back wherein they said that the cheques given for security might not be valid/tenable under NI Act. But if a third party is giving a cheque for my debt, it might be called as security. But in this case, would giving a cheque by myself to the Lender would amount to giving it for security ?
As the intentions are not documented, would there be any way out if I say that this has been given for security?
ajay sethi
(Expert) 26 May 2014
if you have been issue legal notice reply to the notice . if date , amounts have been filled in by your friend then you can take the plea that material alterations have been done in cheque without your consent . fight case on merits
Rajendra K Goyal
(Expert) 26 May 2014
Consult a local lawyer and reply the notice after discussing the best suitable defense in your case.
Pavani Bayyana
(Querist) 26 May 2014
With respect to principal the amount and the name have been filled in by me. With respect to the interest amount, a blank cheque has been given by me, wherein he filled with correct interest amount.
But, if I gave an undated cheque giving the option to him to fill in the date, Can I now, claim that as material alteration?
Also, as the interest rate is abnormal, can I claim that the lender is charging abnormal interest rates ?
Guest
(Expert) 26 May 2014
You may or may not reply the notice, but you should be ready to fight the court case with strong defence points, as based on merit of the case.
So, in your own interest, it is better to discuss the merits with some capable local lawyer for deciding future course of action on your part.
Pavani Bayyana
(Querist) 26 May 2014
I approached a couple of lawyers and discussed my case, but all are showing a tone that I might lose the case.
I am searching for any avenues/loopholes where I can win the case ?
Guest
(Expert) 26 May 2014
Depends on proof of loan, existence of written agreement and the proof about how much amount you have paid so far, as principal as well interest separately, if you have any.
Guest
(Expert) 26 May 2014
So, state clearly, what actually you have in your possession?
Biswanath Roy
(Expert) 26 May 2014
Without going through the documents and other proofs related to, finding out loopholes to avoid the debts or to create debatable issues for lingering the case are not possible. If the lender is not licensed money lender in that event levying rate of interest more than usual rate of simple bank interest will be illegal and shall not come under the purview of Interest Act.
You may write a letter to the lender requesting him that whatever signed cheques (giving cheque nos. and Bank's name) you have issued and handed over to him in advance at the time of taking loan guaranteeing payment of the loan amount month by month not to be present before your Banker as you are facing pecuniary hardship to deposit money in the Bank and also request him to waive high rated interest(mentioning percentage) levied thereon. This is required to create a valid legal dispute that shall linger the case.
Dr J C Vashista
(Expert) 27 May 2014
Contest the case and face the consequence of signing and giving the cheque, you do not have any alternative.
Engage a local lawyer
T. Kalaiselvan, Advocate
(Expert) 29 May 2014
Engage a prudent lawyer and contest the case, your lawyer will take care of the loop holes.
