Demand notice u/s 138
Sir, I am a government employee. I took a friendly loan of Rs. 4,50,000 in cash from my friend's uncle for a period of 3 months on interest. I issued two cheques amounting 2,00,000 and 2,50,000 as security (leaving the date column blank). I repaid the said amount within two months in cash itself and asked for those cheques to which my friend said that as of now, the cheques are missing and he'll return them as & when he finds them. He also assured me that no dues are left. As a friend, I trusted him in good faith. Due to some personal issues, I ordered my bank to cancel my whole cheque-book including the above mentioned cheques. After all this, there occurred some financial chaos between me & my friend and he threatened me by showing the cheques that he will use these cheques to harm me. Having no knowledge of law, I didn't take any action as I already had cancelled the cheques. After the expiry of three months, his uncle presented one of the cheque amounting 2,00,000 which, due to obvious reasons, got bounced and returned to him referring "Stopped Payment". He again presented the same cheque and again the payment was cancelled. Now he has summoned me for defrauding him stating I issued those cheques with malafide intention of not repaying the loan. He also stated that after cancelling of the cheque for first time he met me in personal and asked me for the payment to which i assured him that the cheque would be encashed the next time it is presented to bank. But nothing happened as such. Neither he met me in personal or through any of his representative nor he intimated me about any such occurrence. Infact two days prior to the notice, he messaged me on my social account asking my contact number as he wanted to talk to me. That friend (i.e., his nephew) is asking me to pay him money and then only he'll return those cheques. Also, he is threating me that my job would be in trouble too. This friend is already an accuse in some other fraudulent cases. What should I do?? What are the legal consequences?? Should I opt for settlement or fight the case?? Please help.