If you are stuck in such a situation, here is what to do.
We received a query from a young professional, Mr. Alok, who finds himself in a distressing situation involving an Income Share Agreement (ISA) with a coding bootcamp, "TechElevate Institute." Alok joined the institute a couple of years ago and completed the course last year. He subsequently found an internship on his own through a professional networking site, with a promised CTC of ₹4 Lakhs per annum upon conversion to a full-time role.
Alok informed TechElevate about this offer. The institute, deeming it a valid placement under their ISA terms, allegedly pressured him to sign the loan and agreement documents late one evening during a power outage at his residence. He felt he did not fully grasp the terms, especially those concerning a "Performance Agreement Plan" (PAP), which was not clearly explained to him.
The institute started the loan repayment process based on this internship. Unfortunately, Alok's internship was extended, and he eventually lost this job after about eight months without being confirmed as a full-time employee. During this period, he had already paid approximately ₹60,000 towards the loan.
After a period of unemployment, during which TechElevate provided some monthly contingency support, Alok secured another job in Pune with a modest salary. However, this role also ended after a few months. He has now been unemployed for several months, and the institute has stopped the contingency payments.
Currently, Alok is facing demands to repay the loan balance. The institute holds six post-dated cheques from him, which he was asked to provide. Coming from a financially strained background, Alok feels trapped and is seeking to understand his legal rights regarding the cancellation of the loan and the validity of the agreements he was pressured into signing.
Advice in such cases
Navigating disputes over Income Share Agreements can be complex. These agreements are essentially contracts, and their enforceability depends on the fairness of their terms and the circumstances under which they were signed.
- Document Everything: Preserve all communication with the institute, including emails, text messages, and any recorded conversations. Keep copies of the ISA, loan agreement, and any other documents you signed.
- Review the Agreement Carefully: Scrutinise the terms of the ISA. Look for clauses related to job loss, minimum income threshold, repayment obligations, and the institute's placement responsibilities.
- Do Not Make Hasty Decisions: Avoid making any further payments or commitments under pressure until you have a clear legal strategy.
- Communicate in Writing: Send a formal letter or email to the institute detailing your situation, your job losses, and your inability to pay. Propose a fair settlement if you are willing to, but do so after seeking legal advice.
- **Consult with Lawyer**: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
Applicable Sections of Law
Such cases primarily fall under contract law, but can also involve aspects of consumer protection and, in some cases, criminal law.
- The Indian Contract Act, 1872: This is the primary law governing the agreement. Your case may involve:
- Section 16 (Undue Influence): If it can be proven that the institute was in a dominant position and used that position to pressure you into signing an unfair agreement. The late-night signing during a power cut could be a relevant factor.
- Section 17 (Fraud): If the institute made false promises about placements or did not disclose crucial terms of the agreement with the intent to deceive you.
- Section 19: This section makes a contract voidable at the option of the party whose consent was obtained through coercion, fraud, or misrepresentation.
- The Negotiable Instruments Act, 1881:
- Section 138: This section deals with the dishonour of cheques. If the institute presents your post-dated cheques and they bounce, they can initiate criminal proceedings against you. However, a valid defence can be that the cheque was issued for a debt or liability which is not legally enforceable, for instance, if the underlying contract (the ISA) is proven to be voidable.
- Bharatiya Nyaya Sanhita, 2023 (BNS):
- Section 316 (Cheating): If it can be established that the institute had a dishonest intention from the outset to induce you to pay money by making false promises, it could amount to cheating. Proving this requires a high standard of evidence.
- Consumer Protection Act, 2019: Educational institutions providing services for a fee can be held accountable for "deficiency in service." If the institute failed to provide the promised placement support or engaged in unfair trade practices, you can file a complaint with the Consumer Dispute Redressal Commission.
If you are the complainant
If you decide to take legal action against the institute, here are the steps you can take:
- Send a Legal Notice: The first step is to have a lawyer send a detailed legal notice to the institute. This notice will outline your grievances, state the legal grounds for your claims (like undue influence or deficiency in service), and demand relief, such as the cancellation of the agreement and the return of your post-dated cheques.
- File a Consumer Complaint: This is often a more time-efficient and cost-effective option. You can file a complaint before the appropriate Consumer Commission alleging deficiency in service and unfair trade practices.
- File a Civil Suit: You can file a suit in a civil court seeking a declaration that the ISA is voidable and not binding on you. You can also request an injunction to prevent the institute from presenting your cheques or taking other recovery actions.
- **Consult with Lawyer**: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
If you are the victim
If the institute initiates legal action against you (for example, a cheque bounce case), you are the defendant or accused. Your defence would be crucial.
- Contest the Cheque Bounce Case: If a case is filed under Section 138 of the NI Act, your primary defence will be that there was no "legally enforceable debt." You will need to prove to the court that the ISA, which forms the basis of the liability, is invalid due to undue influence, fraud, or other factors.
- Reply to Legal Notices: If you receive a legal notice for recovery of money, do not ignore it. Engage a lawyer to send a robust reply, denying the liability and stating your side of the story.
- Gather Evidence for Your Defence: Collect all evidence that supports your claim of being pressured or misled. This will be vital in court.
- **Consult with Lawyer**: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
How the police behave in such cases
Police involvement in such matters is limited. Since the dispute is primarily contractual (a civil matter), the police will likely advise both parties to approach the civil courts. They are generally reluctant to register a First Information Report (FIR) for cheating (Section 316 BNS) unless there is clear, prima facie evidence of a criminal act, such as systematic fraud affecting multiple students, rather than a simple breach of contract. If you allege criminal intimidation or threats, the police may take action, but the core issue of the ISA will remain a civil dispute.
FAQs people normally have
- Can I legally cancel an ISA if I was pressured into signing it?
Yes, under Section 19 of the Indian Contract Act, 1872, a contract signed under undue influence or fraud is voidable. You would need to prove the existence of these elements in a court of law to get the contract cancelled. - What happens if my post-dated cheques bounce?
The institute can file a criminal complaint against you under Section 138 of the Negotiable Instruments Act. This is a serious matter that can lead to a penalty of up to twice the cheque amount or imprisonment. However, you can defend yourself by proving the contract was not valid. - Does finding a job on my own relieve me of my ISA obligations?
This depends entirely on the specific wording of your ISA. Many agreements are drafted to trigger repayment obligations if you secure any job above a certain income threshold, regardless of whether the institute placed you. You must review your contract's terms to be certain. - Is it better to file a consumer complaint or a civil suit?
Consumer commissions are generally faster and less formal than civil courts. If your primary grievance is the poor quality of service or unfair terms, a consumer complaint is a good option. A civil suit is more appropriate for complex contractual declarations and injunctions. Your lawyer can advise the best course of action.
What evidence is required?
To build a strong case, you should gather the following evidence:
- The signed Income Share Agreement (ISA) and all related loan documents.
- All email and WhatsApp correspondence with the institute.
- Offer letters, internship extension letters, and termination letters from your jobs.
- Bank statements showing payments made to the institute or the loan provider.
- Any prospectus, brochure, or advertisement from the institute making promises about placements.
- A written record of all events, including the circumstances of the signing of the agreement.
How long will the investigation take?
The timeline varies depending on the legal path you choose:
- Police Investigation: If an FIR is registered (which is rare), the investigation timeline is guided by the Bharatiya Nagarik Suraksha Sanhita (BNSS). However, these cases are often complex and can take several months.
- Consumer Complaint: The Consumer Protection Act, 2019, aims for speedy disposal, ideally within 3-5 months if there is no major complexity. However, delays can occur.
- Civil Suit: This is the longest route. A civil suit for declaration and injunction can take several years to be finally decided due to the procedural stages involved, such as pleadings, evidence, and arguments.
Advocate Sudhir Rao, Supreme Court of India