• Cheque bounce issue

I'd taken loan from a party of RS.5 lacs in Apr 15. Of which I paid interest of 1.75% every quarterly till 2 years after deducting TDS. Due to financial problems I could not pay interest regularly afterwards. Due to much pressure by the lender my father gave RS.1 lac from his personal account to him. Now the party has got the cheque bounced and has sent us a legal notice under section 138.

My questions are:
1. Can the party lend money with out a legal valid licence ; I say so because in the notice he has not mentioned anything about the interest taken.

2. Can we file a case against him for the torture he has given for collection of such huge interest without licence . He is lending to other parties also we know that.

3. What reply should be given

4. If we ask Kanoon to send notice what will be the charges.

5 What are his punishment if he had violated money lendering laws
Asked 2 years ago in Civil Law from DAHOD, Gujarat

Please reply in line to the notice you received.

Please also raise the interest and lending issues by questioning the lending without licence.

Please check the rates for legal notice from this site.

Please consider the 138 instead the punishment for illegal lending that is 2 years and fine equal to the amount of the cheque as well.

Vimlesh Prasad Mishra
Advocate, Lucknow
6380 Answers
20 Consultations

4.9 on 5.0

1. Every state has specific legislation with respect to regulation of money lending and although such an act is in place, still money lending with exorbitant interest is prevalent. In complaints under S.138, employing defence about illegal money lending will not help much.

2. Police may support him and shall harass you to repay. In tamilnadu, one family self immolated before collectorate. Government established toll free, etc., but life gone is gone... money lenders are out on bail and enjoying,,, who suffers,,,,,think....

3. Deny all the allegations specifically and try to establish that the cheque has been given for security and not as a loan. Deny the execution of the promissory note, deny the signature in the cheque.

4. Depends on the advocate whom you contact.

5. Below 6 months, but suffering imprisonment will not absolve you out of liabilities, still you have to pay.

Rajaganapathy Ganesan
Advocate, Chennai
1711 Answers
8 Consultations

4.9 on 5.0

1) if he is carrying out business of money lending hen needs money lending licence

2) you can file police complaint against money lender for criminal intimidation under section 506 of IPC if he threatens you

3) engage local lawyer and file detailed reply to legal notice

4) legal fees vary depending upon Lawyer engaged by you

Ajay Sethi
Advocate, Mumbai
74627 Answers
4464 Consultations

5.0 on 5.0

1) Money lender license is required to deal in the business of lending the money on interest. So far limitation to recover the money is concerned, it is 3 years from last confirmation of debt.

2)Yes, you can file complaint against him for torture.Money lending without licence is illegal. IF THREATENED TO PAY 8-10% PM, LODGE POLICE COMPLAINT.

3)you send him notice, that how much you have paid till date along with interest calculate it and ask him for balance amount a few more days to return.

4) Yes you have to hire lawyer as you wish.

5) Fine upto 30K or some prison time in rarest to rare cases.

Ganesh Kadam
Advocate, Pune
9724 Answers
80 Consultations

4.9 on 5.0

1.) Ideally he should have licence to lend money, this is the strong contention you have.

2.) Yes all of them jointly can file the criminal as well as civil case against him.

3.) Reply will be according to the legal notice.

Laksheyender Kumar
Advocate, Delhi
734 Answers
2 Consultations

4.8 on 5.0

1. Without license no lending is legal.

2. Yes u can.

3. Send him reply to his notice.

4. Yes it will be.

Subhendu Ghosh
Advocate, Barrackpore
234 Answers

4.0 on 5.0

1. Wel, for accommodation loan no license is required.SO he can prove that you sought financial assistance out of your personal relationship without any interest.

2. If he has resorted to extra judicial means like threats, force or assault you can lodge complaint with police of allegations of blackmail or extortion.

3.Reply alleging taking a blank cheque under force and putting the figure on their own if your father did not write on the cheque leaf.

4.Asl your advocate of choice for the fees.

5. First think of your defence and then offence.

Devajyoti Barman
Advocate, Kolkata
19622 Answers
278 Consultations

5.0 on 5.0

Dear Client,

Lending above 20,000 on interest requires lending license, and without license, borrowed amount do not comes under the definition of `Legally Enforceable Debt.

No case made out against him, U asked him money not he.

Provide copy of notice for reply. Fees payable.

Yogendra Singh Rajawat
Advocate, Jaipur
18592 Answers
22 Consultations

4.6 on 5.0

1. A party cannot engage in the business of money lending without a valid license and that would be an offence. Since you have stated that the person is lending money to other parties also, it could be proved in trial as a matter of evidence that the person was engaged in the business of money lending.

The Punjab & Haryana High Court, deciding a case under the Punjab Registration of Money-Lender’s Act, 1938, Narsi Dass v. Surender, 2015 (1) RCR (Civil) 108, held that a complainant money-lender could not initiate prosecution under Section 138 of the Negotiable Instruments Act if he did not possess a valid money-lender’s license.

Similar provision is contained in Section 10(1) of the Bombay Money-Lenders Act, 1946 which provides that a suit for recovery of a loan shall be dismissed if, at the time of advancing the loan, the money lender did not hold a valid money-lending license.

However, this leads me to a question from you. What was the mode of payment of loan in your case? If the loan was paid through a negotiable instrument (i.e. the loan was paid through a cheque) then in terms of Section 2(9)(f) of the Bombay Act the same is not considered as a loan for the purposes of that Act and the provisions of the Act shall not apply. What this means is that if the ‘loan’ amount was paid by cheque, prosecution under Section 138 shall not be barred (stopped) merely because the person did not have a money lending license since the restrictions of the Act do not apply in case of payment of loan amount by cheque. In Manishbhai Bharatbhai Shah v. State of Gujarat, (2008) 1 GLR 392, the Gujarat High Court has held that prosecution under Section 138 of NIA shall not be barred merely because the money lender was unable to produce a money-lender’s license.

So far as the fact of cheque being drawn by your father from his personal account is concerned, that will not be of much help to you because the drawer of the cheque is responsible under section 138 of NIA even if he has issued the same in discharge of the liability of some third person as held by the Supreme Court in Jammu & Kashmir Bank v. Abhishek Mittal, (2011) SC. This Section provides for discharge of debt or other liability by a person even if it is a debt or other liability of another.

2. As far as the rate of interest is concerned, that may come into picture if the money lender files a Suit for recovery of the amount and then you can resort to the Usurious Loans Act. But this cannot be a defence for the purpose of proceedings under the NIA.

3. In your reply, you should state that since the person is lending money without a valid money lender’s license not only has he committed offence under the Bombay Money-Lenders Act, 1946 but also, in terms of that Act, he is restricted from initiating any action under the NIA. For a valid demand under the NIA, there needs to exist a legally enforceable debt or liability and the notice has no force in the eyes of law because the debt is not legally enforceable in view of the restriction contained in the Money-Lenders Act against money-lending without license. In prudence, however, I’d suggest making the payment of the debt due.

4. https://www.kaanoon.com/send-legal-notice

5. Under the Bombay Money-Lenders Act, 1946, carrying on the business of money-lending without holding a valid licence can lead to imprisonment which may extend to one year or with fine which may extend to Rs.1500 or with both, for the first offence.

Atul Singh
Advocate, New Delhi
5 Answers

4.0 on 5.0

A person who does not have lending license does not have the right to collect interest, however under the cheque your liability remains. he is punishable for violating the provisions under the Money Lenders Act. under 138 what is required to be proved is that as on the date of the dishonour of the cheque there was an enforceable debt towards the cheque. hence you will have to initiate complain against him for violating the provisions of Money Lenders Act, this would build pressure upon him. if the lender is creating nuisance and threats, muscle power, you can lodge a criminal complaint against him, mere demand would not tantamount to offence.

Devendra Singh
Advocate, Mumbai
29 Answers

4.0 on 5.0

1. Please share the copy of the legal notice, to enable us to tell you the probable reply

2. At this stage I would not advise you to file a case as the same will be nothing but an outburst.

3. Personal loan can be given but not on interest and not as a business, therefore this should be written that you have been taking interest.

4. If you want me to send the reply then my fees here is 3500/-, you may take the service of send legal notice and I shall accordingly draft the reply for you.

Regards

Anilesh Tewari
Advocate, New Delhi
17615 Answers
288 Consultations

5.0 on 5.0

1. There is nothing wrong in lending money without money lender licence, however the authorities concerned will take care of those issues.

Did you not know that the lender was not having licence at the time of advancing this loan? Why did you keep quite then and now demand the legal validity at the present stage?

2. You cannot file a case on this but you can give a complaint that he is doing money lending business without licence to do so, however the next question would be that what did you do on this for so many years.

3. You can take precaution that you never advanced loan, the burden to prove will lie on his shoulders.

4. It depends on the lawyer's terms who you would choose.

5. Anti money laundering rules may be read which will explain the valid proof.

T Kalaiselvan
Advocate, Vellore
64580 Answers
836 Consultations

5.0 on 5.0

The maximum punishment is two yrs and fine double of the amount of cheque bounced.my advise is to settle mutually because you may have given blank cheque.

Parkash Chand Bhardwaj
Advocate, Hamirpur
120 Answers

4.8 on 5.0

I can't say the reply without going through the notice. Yes they cannot lend money without licence. We need to prove in court that the said person is illegal money lender and not covered in the purview of 138 NI Act. You can file case against him only after conclusion of the trial and your acquittal. Charges of reply can be discussed after personal interaction and study of case. There are several punishments for violation of provisions of the said Act depending upon what is the specific violation committed.

Prashant Nayak
Advocate, Mumbai
18708 Answers
34 Consultations

4.6 on 5.0

You can file case against him only after conclusion of the trial and your acquittal. Charges of reply can be discussed after personal interaction and study of case. There are several punishments for violation of provisions of the said Act depending upon what is the specific violation committed.

Prashant Nayak
Advocate, Mumbai
18708 Answers
34 Consultations

4.6 on 5.0

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