Section 138 application to guarantor cheque
Querist :
Anonymous
(Querist) 26 September 2018
This query is : Resolved
Dear sir one of my friend is co applicant / guarantor to loan taken by main applicant for rs 200000. Main appicant collected 5 blank cheques of co applicant along with K.Y.Cs of co appilcant and signatures on empty and blank loan agreement papers submitted them in finance company along with his own papers and loan was granted and amount was transfered to main applicant bank account. Now main applicant where abouts are not known . It seems He has incured heavy loses .fiance company which gave loan filed a compliant under section 138 of N.i act on co applicant after depositing co applicant cheque with own filling of blank cheque . Is 138 of n.i is applicable in above case . What is way for co applicant how to get discharged from case. Any case law. Please suggest
NANDKUMAR B SAWANT
(Expert) 27 September 2018
Case must have been filed against borriwer and coapplicant.you have given blank cheques so you have to defend case strongly as cheques are yours .so take defence that there is no legaly enforceable debt as no consideration of cheques was paid to you ..and borrower be made responsible.blank cheques were misused by filling name date and amount...these are general defences but you may send copies of actual case filed so that detailed reply can be given.good luck
Sudhir Kumar, Advocate
(Expert) 27 September 2018
Not agreed.
You are guarantor.
So you can never say that you have no liability to pay.
If the borrower does not pay the loan then your liability is 100%. It is the choice and discretion of the lender from whom to recover.
They have dedcided to recover from you and nothing can stop them.
They may decide to file civil suit on you or choose faster mode of putting cheques in bank. Inf cheque bounces then s/138 is a long procedure and bailable as well. In case your account did not have sufficient fund and still you issued cheque the action under S 415/420 can be taken against you and borrower as you have caused the loan as guarantor knowing that you have no capacity to refund did not show this to bank.
So you wanted to know how to get out of this.
You can get out of this by two ways:-
(I) Ensure borrower to refund the loan forthwith.
or
(II) Pay the loan from your pocket now and recover ti from borrower by civil suit.
Guest
(Expert) 27 September 2018
Is there any specific reason that compelled you to keep yourself anonymous?
Evenbeing anonymous, you have raised a very vague query!
You raised question about guarantor cheques, but discussed about co-applicant and his cheques, not the guarantor's cheques. Not only that, you have asked about application of section 138 on the co-applicant's cheques, while you have not discussed anything about dishonour of any of the 5 cheques.
Not only that, the finance company also seems to be headed by idiots, who accepted the cheques of the guarantor or co-applicant, as the case may be, instead of asking for the post dated cheques of the main applicant.
However, as a guarantor, if your friend was such an idiot person to give 5 cheques with KYC, in addition to his guarantee, why he is afraid of any legal action for both the issues of recovery on account of guarantee as well as criminal action about cheating the finance company in alliance with the main applicant?
Querist :
Anonymous
(Querist) 27 September 2018
Still any other solution sir
Sudhir Kumar, Advocate
(Expert) 13 January 2019
what solution you could expect.
you are guarantor and you have to refund the loan. No escape.
The experts of this forum cannot make any false promise to please you.
you have already been given solution.
either pay the loan or prevail upon borrower to pay.
