can legal fee paid to advocate be charged as leg enfoc liab

I think in such a case Court can impose fine on the defaulter and direct that fine to be paid to the petitioner.  I think the defaulter should show this as a contingent liability in his books.  This means that the defaulter is informing all concerned that in case the judgement goes against them, what amount they will have to pay.

Originally posted by : Jag Bhushan Sharma
	I think in such a case Court can impose fine on the defaulter and direct that fine to be paid to the petitioner.  I think the defaulter should show this as a contingent liability in his books.  This means that the defaulter is informing all concerned that in case the judgement goes against them, what amount they will have to pay.

sir,

the compensation/fine  chapter is right as you guided. but I am concerned by the legal fee paid to advocate already and when it is for recovery of defaulter persons' cheque amount, the payment made by society is recoverable from member as it is informed to defaulter through regd. ad..

now what  should be the entry and where it is reflected in balance sheet/accounts of society so that no loss occur due to it.

On making payment to lawyer entry should be legal charges a/c dr. bank a/c cr.  Treat this as an expense in the current year.  Secondly to keep the legal charges to be recovered from the defaulter, you can make another entry - legar charges recoverable dr. legal suspense a/c cr.  This entry should be reversed in the year in which you actually recover these charges.   Now legal charges recoverable a/c will be shown on the asset side of balance sheet and legal charges suspense a/c will be shown on the liability side.  In case these charges are recovered from the defaulter in future, entry shall be bank a/c dr. legal charges recovered a/c.