Money lender threatening to file false cheque bounce case? What to do?

734 votes

Yes you can defend. You will have to prove that the cheque was given as a security only not for repayment. Also to show the details of repayment. In such case onus is upon the accused to prove that there is no debt or liability.

Advocate Vijay Kumar Teotia LawRato

649 votes

Money Lending and Cheque Bounce: A Cheque bounce case depends on purely technical aspects such as; legally enforced debt, issue of cheque towards part or full discharge of debt, whether debt is legally enforceable , deposit of cheque within limitation under NI act, filing of complaint within stipulated time, sending of statutory legal notice within stipulated time to correct address of accused etc. In Cheque bounce case under NI act , NBW can be issued against you after which it becomes duty of complainant to execute it which is not easy if police is overburdened. Cheque bounce cases may take upto six years to be disposed off. All this will weigh on your money lender and it will not be easy decision for him to go to court so you may work out some compromise with this knowledge given above and also below or you can accordingly face him in court….
According to the Indian Contract Act 1872, an agreement between two persons which is accepted by both the parties and enforceable in the court is valid. Therefore, any interest rates that are mutually agreed, irrespective of the %age of interest, is valid in the eye of law. [However there are laws regarding interest rate one can charge] Conditions:

a. Party to the contract should not be a Minor ( i.e. below 18 years of age or 21 year of age unless specified by court)

b. The conditions in the contract should not be against the law.

c. The conditions in the contract should not be against the Constitution.

d. The money (read as the Principal amount) or the interest thereon should not be used as in illegal purpose such as in speculative activities , smuggling , etc.

e. The contract should not be under any influence or threat to any of the parties.
above are some major cautions to be taken into notice while executing such contracts.

f. It is legal for people to lend money to another person. But if you do it on a regular basis to make money then you need a license, else fine upto 30K or some prison time can be imposed in rare cases.

g. However there are separate laws handling interest rate one can charge etc , what is a usurious interest rate ? It differs from State to State. You can consult UP Regulation of Money Lending Act 1976 or similar act for your state. The Money Lending Act prohibits from charging interest rate more than 21% for unsecure loans for non-agri people and 18% for secured loans for non-agri people the % for agri is 12% and 15% respectively. The loan rate as per Money lending is simple interest.

You state ‘I repay his loan sometime cash, sometime by cheque and sometime by NEFT‘ so maintain a record of this and you should produce this record in any proceedings against you.

The above shows you have points in your favour and can mount a suitable defence based on your repayments and Money Lending Act .

Advocate Kundan Singh Pathania LawRato

794 votes

If you have appropriate evidence in your favour you may surely relief from.court. one thing i would like to inform you that sec 138 object is just to decide that cheque was bounce or not, and related court never blame on license validity.

Advocate Saurabh Narain LawRato