Lent money to a friend.

Q 1) I have heard , that a loan given by an INDIVIDUAL without LICENSE to lend money is not recoverable.

Ans: It is correct.

Q 1 (b) So , if we make a written agreement,  should we add a word FRIENDLY LOAN in the agreement.

Ans: It is recoverable if admitted by borrower and there is unclinching evidence to prove the loan (such as transfer by bank transaction) even if you may or may not make any agreement.

Q 2) Will the period of limitation ( 3 years )Start from the last instalment given by me in 2022.

Ans:  Yes it will be  3 years from the last instalment given by me in 2022 or admission of loan.

Or

will it be for each individual installment.????

Ans No

Mr Vashist ,

1) Your 1st answer is ,that loan given by an INDIVIDUAL without LICENSE to lend money is not recoverable. 

So, do you mean that I cannot recover the money in the court of law ????

2) The entire 25 lacs were transferred by bank transfer.  And the borrower has also given me POST DATED CHEQUES dated May 2025 for the entire amount.

3) Sir , the greatest unclarity is regarding the 3rd answer. Please clarify wheather the period of limitation will be different  for each individual installment given by me . Or will it start from the LAST instalment given by me jn 2022 .

Sir , please clarify. Thanks a lot !!!!

I had lent around Rs 25 lacs to a friend in four installments from year 2021 to 22 , for his investment in his business. He assured me of good returns. At present he is not easily returning even the principle amount. The last instalments was given by me in 2022. He is ready to sign an agreement regarding the loan and has given me PDCs for March 25.

Dear Rajiv, The basic aspect to recover money is the legal and justifiable transaction that in applicable in case of bank trannsactions, hence money is recoverable 

I want to know two things.

1) I have heard , that a loan given by an INDIVIDUAL without LICENSE to lend money is not recoverable. So , if we make a written agreement,  should we add a word FRIENDLY LOAN in the agreement. 

You should should take undertaking from the borrower rather than an agreement in which you should mention the following :-

Details of borrower and lender 

Transaction details of all transactions with amount and date 

Details of Post dated cheques (the cheques must be filled in borrowers handwriting including date, amount and amount in words) It should not get declared as Security deposit cheques. 

Last Undertaking clause.  

2) Will the period of limitation ( 3 years )Start from the last instalment given by me in 2022.Or will it be for each individual installment.???? If we sign a written agreement,  can the period of limitation be increased. I will be grateful if any learned professional  , gives his expert opinion. Thanks.

Though the limitation period is of three years, but on same transaction if any series of action i.e agreement / undertaking is in continuation the limitation will apply according to the mentioned dates

Hope it will help

Thanks 

Advocate Hemlata JaiminiRead more at: https://www.lawyersclubindia.com/forum/lent-money-to-a-friend--236421.asp#reply

Hi,

I understand your situation. Here’s a quick overview:

1. Friendly Loan and Written Agreement: A written agreement can make the loan enforceable, even if it's a friendly loan. It’s important to clearly state the terms and repayment schedule. Adding "friendly loan" can help, but the key is having a proper agreement.

2. Limitation Period: The 3-year period usually starts from the last installment or acknowledgment. So, it will likely start from 2022, not each installment separately. A new agreement or acknowledgment can extend the limitation period.

For more detailed advice, I can connect you with legal experts who can guide you further. Feel free to reach out if you need help.

The money given as loan and there are documentary evidences to prove that then you can very well recover the same either by legal way or by compromise mode 

The limitation will start from the date of last transaction.

"I had lent around Rs 25 lacs to a friend in four installments from year 2021 to 22 , for his investment in his business. He assured me of good returns."! Prima facie, the money was invested in business managed by him than as a loan.

If so, you are entitled for share of the profit in his business as a silent partner. Is there any written agreement with terms and conditions?