Cheque Bounce

I had given a money against promissory note to a known family friend and his partner, however the family friend defaulted on paying the interest and principal. Promissory note was signed by friends business partner and the cheques against the promissory note were issued by the family friend. Now even the cheques have bounced. I have approached a couple lawyers; and I have advised multiple things as below:- a) Did I reflect this lending in my IT form, (no I did not as I am a salaried person and I have tax deduction at source and under my employment terms are full time employment barring me from having any other business, hence I dont report a balance sheet account of profits and losses). I have a home loan and some tax saving bonds, b) One advocate advised that we cannot claim interest from the defaulter as its not accepted in the court I should have license to claim interest.Please clarify if I can claim interest and also if yes is there a an act which says so and what is the interest claim pattern permitted. Is it compound interest or simple interest. I lent on compound interest pattern stated in the note.