Lakshmi (Manager) 21 April 2010

Question about Money lending license/collecting on debt owed

Good afternoon everyone,

I have a question about money lending license. I had given a handloan of about 4 lacs to a person 2 years ago. They have not returned the entire amount so far and there is still an amount of 2.5 lacs pending which they have provided a cheque as security. I have tried to call them many times but they do not answer their phone or return phone calls.

After sending a notice to them for cheque bounce and intimating that I will file a complain in court, they called me. They started threatening me saying I will lose my case because I dont have a money lending license and asked me to settle for 50% of the amount, that too will be paid after 6 months.

I wanted to check what the requirement is to be called a "money lender". I lent the money in good faith, as a hand loan and I have never lent money to anyone else before, or after this. I have not filed any case under NI 138 on anyone in the past, and I have my pay slips/IT returns to show that I have the capacity to earn and save the said amount from my own salary. This particular case was the only time I lent money to anyone.

Also they claim they will be able to produce medical certificates to show he is terminally ill (which is a lie) and get the case dismissed. They are pressurizing me for settling for about 50% of the outstanding (and no interest has been charged till date, the entire outstanding amount is the principal only).

So after two years of waiting for my money, they are trying to do this. I would appreciate if someone can give me their opinion about my questions. I am worried about losing my hard earned money.

Thanks and regards,

Lakshmi

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14 Replies

kranthi kiran (Works In Judicial Department) 21 April 2010

No need to worry, if they take the plea that you are a money lender with out a valid licence, burden lies on them to prove that conntention. As you never lent money to any body, no need to worry. Just out of acquaintance you have lent the money. There is no need to obtain money lending licence to lend the moeny to the people acquainated with or to relatives. If the persons are in the business of money lending, then it is mandatory to obain money lending licence. In your case there is no need to possess moeny lending licence. File the NI ACT case immediately and drag them to court, there is no need to forego 50% amount. Just take legal action, on receipt of summons from court they will definetly appraoch you for the settlement and if you desire so you can settle the matter at that time.

1 Like

Lakshmi (Manager) 21 April 2010

Thank you for your response, Kiran. Since the amount is about 4 lacs, is there a limit on how much can be given as hand loan? is an agreement required for the same? They also mentioned that since the amount is greater than 50,000 and I dont have an agreement, the debt cannot be collected through court. I know they are trying to pressurize me but I want to know the law about these particular circumstances.

I will appreciate any help or direction in this matter.

Regards,

Lakshmi

1 Like

Dharmesh Manjeshwar (Advocate/Lawyer) 21 April 2010

Yes ... a money lending license is necessary in case one does the business of money lending on interest .....

But in your case you say that have given a hand/friendly loan ( without interest )

you do not engage in the business of money lending and this is just the first time that u have lent money to someone .... these points should come before the court ins evidence in ur 138 complaint .... and if this is true then there is no need to worry .... but if the opposition proves that u regularly lend money .... then it could be fatal to ur case ....

And yes ... a written proof of you giving the hand/friendly loan would definitely be helpful for ur case ....

in the event uf there is no writing/agreement ... then u would need witnesses ....

1 Like

Lakshmi (Manager) 22 April 2010

Thank you for your response. I have clearly not lent money to anyone in the past (and after this experience, will never do so in future as well).

The only eye witness from my end was a friend of mine who coaxed me to lend this money. Now she has gone silent and will not answer her phone calls and said she wont interfere on this on my behalf. I sometimes get the feeling they were all in collusion from the start but ofcourse, thats just a feeling I have based on the turn of events AFTER I gave the hand-loan.

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Lakshmi (Manager) 09 August 2010

Hello SKJ - Advocate,

As to why he is threatening, it seems clear he wants to keep the money and not pay back if he can. The amount was withdrawn from bank. Part payment was done through the same account, as the cheques in question that bounced

All other questions have been answered in my previous 3 posts. Thank you for your valuable inputs.

An update:

I have gone ahead with the case despite everything they tried to do. The summons were served recently but the police personnel who served the summons has refused to give the "shara" (acknowlegement) to my lawyer. He said he will give it in court.

A friend of mine said this "dont be surprised if the police dont turn up to court on the said day. Even the other party will not turn up saying he never got any summons etc."

One questions comes up. What is the process of serving summons? does the complaintant have to personally take the police with them and serve the summons, then take immediate acknowledgement etc? or do we just leave the summons at the police station, and then hope that the police dont get bribed and end up taking the side of the other party?

I dont mean to say all police are corrupt, but not a single day goes by without hearing various corrpution stories in our country.

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Lakshmi (Manager) 10 August 2010

@ SKJ - Advocate - you have made a universal statement and sorry but it doesnt help answer my question.

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DEFENSE ADVOCATE.-firmaction@g (POWER OF DEFENSE IS IMMENSE ) 10 August 2010

Madam every crditor holding a cheque feels on the top of the world.

No law can be made to cover all the situations and since the laws are made by men so man can find ways to break them.

There are many conditions to be fulffiled before conviction of accused in any NI 138 case. And in most of the cases in over confidence and one sided interpretation of this law the creditor and his / her advocates make mistake.

I conduct NI 138 cases all over the country and I have rarely found a case where it is not so.

The cases of NI 138 are not won by the complainant but lost due to careless ness or lethargy of the accused and his / her advocates.

1 Like

lakshminarayana prathypaty (Techno Legal Politician) 02 March 2011

Dear Sir, i have gone through your very valuable suggestion regarding NIACT. There is a case between two women, broyher of one women happened to be a advocate and misused the blank cheque. in the notice the advocate said you have issued the said mount 1,50,000 cheque to my client. is it not they are saing that she written

DEFENSE ADVOCATE.-firmaction@g (POWER OF DEFENSE IS IMMENSE ) 19 March 2011

Dear sir it looks easy in theory but otherwise it is very difficult to win a NI 138 case.

Nitesh (MANAGER) 19 September 2014

how can i get loan lender license??? and how ,much i hv to pay for it???

Nitesh (MANAGER) 11 October 2014

i want to do a loan business...so i need a loan lending license...can anyone tell me how can i get the license...and what is the eligibility to get the same??? plz help me mail me the details on nitesh.mishra598@hotmail.com

balaji 26 February 2016

Sir, I have one doubt. If i do money lending to outside person via RTGS, Cheque payments without any money lending licence, can i proceed with legal under NI 138 ?

Nitish Banka (lawyer) 13 January 2018

Friendly loan in cash in cheque bounce cases

Sometimes in usual course of business blank cheques are handed over to trusted persons and the cheques are often misused by these persons under the guise a friendly loan is given to the accused.

Now this amount as shown by the complainant is in cash and since its a friendly loan no paper work is done.

But since burden to prove that the cheque was not issued as a legally enforceable debt is on the accused in cheque bouncing case then how he will discharge this burden is the main ground.

Cross examination is an opportunity granted to the accused in such cases as well as his statement under 313 CrPC

Image result for cheque bounce

In cross examination following questions must be put up-:

Have you withdrawn the money from the bank ? if the accused has in fact given a loan to the accused person he must have withdrawn such money from the bank. if the answer is no there will be no record of such transaction.
If the amount is above Rs. 20000/- an dis in cash it is hit by section 269SS of income tax and is a transaction prohibited by law. for this just as have you paid money all in cash?
Have you signed any acknowledgement of debt from the accuse? since its a friendly loan no record was available for this?
Have you shown this amount in ITR? If he produces ITR and balance sheet then ask for the basis on which he has mentioned loan against the accused in balance sheet when no document in support of transaction is there. If the complainant does not produce the ITR then the cash is black money and again rebutting the presumption of legally enforceable debt.

As held in Sanjay Mishra vs Ms.Kanishka Kapoor The learned Judge held that the applicant has failed to establish that the cheque was issued by the 1st respondent in discharge of legal liability of the loan amount. The learned Judge observed that the 1st respondent has denied her signatures on the bill of exchange as well as the cheque subject matter of the complaint. The learned Judge has taken into account various circumstances borne out by the evidence on record and has passed order of acquittal. The learned Judge also considered the admission of the applicant that the amount advanced was an unaccounted amount which was not disclosed to the Income Tax Authority.

Therefor recovery of black money is impermissible in law.

Advocate Nitish Banka

nitish@lexspeak.in