Non refund of loan paid

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You lent a friend a significant sum of money five years ago without a formal promissory note, and they are now refusing to repay it or pay interest. While you have proof of payment via bank cheque, the lack of a signed document makes recovery challenging. Consider asking your friend to sign a promissory note for repayment within six months to enable legal action. Alternatively, threatening to report the non-repayment to tax authorities as a potential undeclared gift could encourage them to settle the debt.

Mahabir Prasad Agarwal

Mahabir Prasad Agarwal (Querist)

06 April 2021 I had paid Rs. 10.00 lac as unsecured loan (as you know) to one of my friend before 5 years. Inspite of my many requests and reminders, he neither pays me any interest nor he agrees to refund my my loan. What is the alternative now for me ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 April 2021 Do you have any valid signed documents like promissory note. Is it paid through bank.

Mahabir Prasad Agarwal

Mahabir Prasad Agarwal (Querist)

06 April 2021 Of course, the said loan was paid vide bank cheque, but I do not have any promissory note.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 April 2021 Ask him to sign a promissory note to repay the loan in next six months to legally proceed against him. If he is not signing the documents, you have evidence of payment you can threaten him that you will report the matter to income tax authorities that non repayment will attract income tax and penalty treating it as gift.

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