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My friend had took 9 lakh loan from a private money lender 10 years back.. He was unable to pay monthly interest and the interest getting added to principal amount resulting in 15 L Principle amount.. Now there is a deal to close this by paying 10 L for which lender has also agreed.. Friend says he has given some cheques and not signed any bond/agreement..i want to know since this transaction is getting closed what are the legal steps mu friend should follow so that the lender will not harras Or ask for money after taking 10 L?
Asked 10 months ago in Criminal Law
Religion: Hindu

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8 Answers

- As per law, money lending without a Money lending licence is an offence , and the person doing this without having a licence can go behind the Bar , and fine up to Rs. 30,000/- .

- Further, the Money Lending Act prohibits from charging interest rate more than 21% for unsecured loans for non-agriculture people and 18% for secured loans for non-agriculture people, The loan rate as per Money lending is simple interest per year.

- Further, the limitation period of recovery of the loan amount is limited to 3 years from the date of last payment. 

- Maximum a money lender can charge 2 percent more than the commercial bank rate of interest , and nothing more

- Since, your friend wanted to pay the remaining loan amount and given the cheques for the said payment, then he should ask for the NOC from the said money lender before payment of entire amount , and take all the documents from him if he has given to the lender. 

Mohammed Shahzad
Advocate, Delhi
13377 Answers
199 Consultations

5.0 on 5.0

Hi,

1. Get a Written Agreement : -

it's advisable for your friend and the lender to create a written agreement detailing the terms of the settlement. This agreement should clearly state that the payment of 10 lakh rupees is in full and final settlement of the debt, and that no further amounts will be demanded by the lender.

 

2.Notarization:

Have the agreement witnessed by a third party who can attest to the fact that both parties willingly signed the agreement. 

 

3.Keep Copies of Payment Receipt: 

keep copies of the signed agreement for records.

 

Regards

Prime Legal

Anik Miu
Advocate, Bangalore
9028 Answers
110 Consultations

4.7 on 5.0

Dear sir,

 

How did you borrowed the money? is it cash or through account?  Now in this case you return the money only through bank payment.  No cash is to be given. Thereafter make a settlement agreement quoting all details and those cheque numbers and take the cheques back. Otherwise, no doubt these money lenders will book you in 138 case. As you are ready to pay the amount, be adamant for agreement and to return the cheque. Please bear in mind, as it is you are ready to pay the amount you can settle it before the court also incase, he files the case. 

Ajeesh Kalathil Gopi
Advocate, New Delhi
10 Answers

Not rated

You need to get the original cheques from him and get a deed signed for payment of loan 

Prashant Nayak
Advocate, Mumbai
32093 Answers
183 Consultations

4.1 on 5.0

Ask lender to give in writing that Rs 10 lakhs is accepted in full and final settlement and there are no dues pending 

 

to return all cheques in possession of lender 

Ajay Sethi
Advocate, Mumbai
94965 Answers
7576 Consultations

5.0 on 5.0

An agreement or MOU can be entered between the lender and the borrower stating that the loan amount has been settled on so and so date by the borrower paid an amount of Rs.....which has been acknowledged by the lender and the lender hereby states that this outstanding loan amount has been settled since and that the lender will return all unutilised blank cheques and pro notes, if any to the borrower and that he will not claim any amount in this regard anytime in future. 

T Kalaiselvan
Advocate, Vellore
85166 Answers
2222 Consultations

5.0 on 5.0

Get executed a proper settlement deed with receipt of full and final payment with no dues certificate from company stating that all payment received in terms of settlement and nothing remain due to be paid. 

Siddharth Srivastava
Advocate, Delhi
1256 Answers

5.0 on 5.0

Execute settlement agreement. 

Yogendra Singh Rajawat
Advocate, Jaipur
22671 Answers
31 Consultations

4.4 on 5.0

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