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

surya gaurav (consultant) (70 Points)

28 April 2011

sir,

can legal fee paid to advocate for contesting matter of s.138 case(cheque bounce matter) be receivable from the person whose cheque was bounced and

can it be shown as legal enforceable liability in a cooperative socities books.

what are the legal position of co.

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3 Replies

Jag Bhushan Sharma (Faculty in a B-School) (633 Points)
Replied 04 May 2011

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.

surya gaurav (consultant) (70 Points)
Replied 10 May 2011

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.

Jag Bhushan Sharma (Faculty in a B-School) (633 Points)
Replied 11 May 2011

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.