• Drafting loan agreement midway

Hi,

I have been in an oral borrowing-lending arrangement with my friend for more than 5 years now. I being the lender and my friend being the borrower. The terms of this arrangement weren't fixed and changed year to year. Like in some years my friend would pay me back Rs 20,000 per month from the principal amount of the loan and pay me an interest of 8% per annum at the end of year as interest on the outstanding amount left with him. 

And in some other years he would pay me back Rs 30,000 per month from the principal amount of loan and give interest of 10% per annum at the end of the year on outstanding amount with him. 

Also in between there have been many occasions when I have lent some more money to my friend.

All these payments and receipts were done through cheques or net banking and interest income have been disclosed by me in Income Tax Return for each year. Now I want to end this arrangement. As of today my friend has Rs 10 lakhs of mine with him but he is asking for some more time to pay this money back (he wants to pay in Apr 2023). I suspect that he might default from this payment so I have asked him to give a post dated cheque of this amount as security. I also want some documentation to support this cheque, in case it bounces. 

Following are my queries:

1) My friend is willing to sign an agreement at this stage. But given the randomness of payments/receipts it would be difficult for me to explain the past terms of our oral arrangement. Can I just state that there has been an oral borrowing-lending arrangement between my friend and me and as of today Rs 10 lakhs of mine remains pending with my friend, further he has agreed to pay me this amount on 1 Apr 2023 and has issued a post dated cheque as security? Would these details be sufficient to draft this agreement? 

2) What would this agreement be called just agreement or loan extension agreement? Because there was no written agreement to begin with.

3) My friend stays in Ghaziabad and I stay in Delhi. Can I mention the place of execution as Delhi in this agreement and get it notarized in Ghaziabad (as this would save the travel on part of my friend)?

4) Do I need to get this agreement registered?

5) What would be the stamp duty for this agreement? Should I buy a non judicial stamp paper of Rs 100 or would it be a percentage of Rs 10 lakhs?
Asked 1 year ago in Civil Law

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6 Answers

The details would be sufficient to draft the agreement 

 

2) it would be called loan agreement 

 

3) it need not be registered 

 

4) it can be on Rs 500 stamp paper 

 

5)place of execution can be mentioned as Delhi 

Ajay Sethi
Advocate, Mumbai
94523 Answers
7486 Consultations

5.0 on 5.0

The agreement should mention all the transactions that have been made between you and your friend.

That would help you in case this issue goes to court.

Agreement should be made and registered in Delhi.

You may call it loan repayment agreement.

In case you register it a percentage of the amount involved has to be paid to the registrar office.

Rahul Mishra
Advocate, Lucknow
14083 Answers
65 Consultations

5.0 on 5.0

1. You can get a loan agreement executed with the given details about money transactions on different dates, and the latest date as the final advance given to him and also he should acknowledge the same properly in the agreement.

2. It would be titled as 'Loan Agreement '

3. Delhi would be ideal.

4. Not necessary.

5. It can be executed on a Rs. 100/- non judicial stamp paper itself.

T Kalaiselvan
Advocate, Vellore
84724 Answers
2172 Consultations

5.0 on 5.0

Yes you cam state that along with an assurance to repay the same. Also state that for the said payment he is issuing a post dated cheque. 

You can take a promissory note ot even an email acknowledgment to repay the same will do. You can execute an affidavit also with him with the assurance to repay. 

Yes you can state as delhi

Yes it will be good if you register it

You can execute both promissory note and loan. Agreement on 100 rs stamp paper and notarize or register it both not compulsory

Prashant Nayak
Advocate, Mumbai
31807 Answers
176 Consultations

4.1 on 5.0

Dear Sir,

     You must be not knowing the Civil Court procedure. if you go to any Civil Court the Trial Court take 3 to 5 years time to dispose. Then the first Appellate Court and second appellate Court may take 2 years each. Better you take an undated or postdated cheque/s and you can easily recover the amount. 

Kishan Dutt Kalaskar
Advocate, Bangalore
6135 Answers
483 Consultations

4.8 on 5.0

Dear client I am sorry to hear that but in this case you may proceed to form a contract or agreement where in your state that you have lended these amount of money to your friend and he will pay you back on this particular date with certain interest rate. It will be good in case he default.

Anik Miu
Advocate, Bangalore
8742 Answers
109 Consultations

4.7 on 5.0

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