Cheque Given for Friendly Loan – What If Your Friend Misused It?

In many cheque bounce cases, people give cheques to friends out of trust – sometimes as a friendly loan or just as a safety measure. Later, when the friendship turns sour, the same cheque is misused. This article explains how to defend yourself if you’re accused of giving a cheque for a loan that never really happened.

Scenario: Cheque Given as a Friendly Loan – Misused by Friend

Let’s say you gave a cheque to your friend — not as payment for any loan, but simply out of trust. Your friend may now claim that you owed them money, and they deposited that cheque. Now you are facing a legal case under Section 138 of the Negotiable Instruments Act (cheque bounce).

Your Defense

Your main defense is that:

• You never took any loan from your friend.

• The cheque was given in trust and has now been misused.

• There was no legal liability at the time the cheque was presented.

Step 1: Explain the Purpose of the Cheque

You must clearly explain why and when you gave the cheque.
For example:

• Was it given as a blank cheque?

• Was it given as security or just for friendship?

• Was there any agreement or writing when it was given?

Your explanation should show that there was no loan.

Step 2: Cross-Examine the Complainant (Your Friend)

To prove your defense, your lawyer can ask the following questions in court:

 Questions to Ask:

1. What was the mode of payment for the loan?

   • Was it given in cash or by bank transfer?

2. If it was cash, can you show any bank withdrawal slips?

   • This helps check if they actually withdrew the money they claim to have loaned.

3. If the amount was large, where did the money come from?

   • Did they have savings, salary, or other sources?

4. Did they file an ITR (Income Tax Return)?

   • If yes, did they show this loan in it?

5. Is this loan mentioned in their Balance Sheet or financial records?

6. Do they have any written proof, voucher, or signed acknowledgment from you?

7. Is the Balance Sheet audited by a chartered accountant?

These questions help show that no actual loan was ever given.

 Suggestion for the Accused (You)

• Always explain that no loan was ever taken.

• State clearly that the cheque was misused by your friend.

• Highlight the lack of any written agreement or financial proof.

• Prove that there was no liability at the time the cheque was deposited.

 Final Words

Friendly loans often happen without any paperwork. But if a cheque is misused, it becomes important to present a clear, honest explanation and question the complainant properly. The goal is to create reasonable doubt that the cheque was issued for any real debt.

If you are facing such a case, always consult a qualified legal expert.

Contact Legal Light Consulting – LLC Lawyer
Trusted Law Firm in India for NRI Legal Services & Cheque Bounce Cases
📩 Email: contact@canada.legallightconsulting.com
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Disclaimer: This article is for educational purposes only and does not constitute legal advice. For professional guidance, please consult a licensed attorney. Reading this article does not create an attorney-client relationship.