If you are stuck in such a situation, here is what to do.

Mr. Alok Sharma, a self-employed accountant from the city of Rampur, found himself in a dire situation. He had taken two substantial unsecured loans from financial companies, “SwiftLoan Finance” and “QuickCash Lenders,” to invest in a partnership. He entrusted the entire amount to his business partner, Mr. Brijesh Kumar, who was involved in the construction business. For several months, Mr. Sharma transferred funds to Mr. Kumar as required for their joint venture. They even had a signed partnership agreement, though it was not notarized.

Suddenly, Mr. Kumar stopped responding to calls and messages. When Mr. Sharma finally managed to confront him, Mr. Kumar claimed that all the money was lost in business failures and flatly refused to repay any amount, stating he was bankrupt. Compounding Mr. Sharma’s problems, the recovery agents from SwiftLoan Finance and QuickCash Lenders began a campaign of harassment. They called him incessantly and recently visited his home, intimidating his wife for over two hours and threatening further action if the money wasn’t paid. Having exhausted his savings by paying the EMIs for the last few months, Mr. Sharma is now left with no funds and immense pressure from the lenders.

Advice in such cases

This situation involves two distinct legal issues: the fraud committed by the business partner and the illegal harassment by the loan recovery agents. Here’s a strategic approach:

• File a Criminal Complaint Against the Partner: The actions of Mr. Kumar prima facie constitute criminal offenses like cheating and criminal breach of trust. A police complaint should be filed immediately.
• Take Action Against the Lenders: The harassment and intimidation by recovery agents are illegal. Separate complaints should be filed against them and their employing companies.
• Civil Suit for Recovery: Alongside the criminal case, a civil suit for the recovery of money can be filed against Mr. Kumar based on the partnership agreement and transaction records.
• Communicate with the Lenders Formally: Send a legal notice to the lending companies detailing the fraud committed by your partner and the illegal recovery tactics being used by their agents, putting them on notice.
• Gather All Evidence: Systematically collect all documents, communication records, and witness details related to both the fraudulent investment and the harassment.
• 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

Under the new Indian laws, the following sections are relevant:

• Section 316 of the Bharatiya Nyaya Sanhita, 2023 (BNS): This section deals with Criminal Breach of Trust. When Mr. Kumar misappropriated the funds entrusted to him for the business, he committed this offense.
• Section 318 of the Bharatiya Nyaya Sanhita, 2023 (BNS): This section pertains to Cheating and Dishonestly Inducing Delivery of Property. Mr. Kumar’s act of inducing Mr. Sharma to part with his money with a dishonest intention from the outset falls under this category.
• Section 351 of the Bharatiya Nyaya Sanhita, 2023 (BNS): This section covers Criminal Intimidation. The threats made by the recovery agents to Mr. Sharma and his wife are punishable under this law.
• Reserve Bank of India (RBI) Guidelines: The RBI has laid down strict guidelines on Fair Practices Code for Lenders, which prohibit banks and financial institutions from using harassment, intimidation, or coercion for loan recovery.

If you are the complainant

If you are in Mr. Sharma’s position and wish to file a complaint against the fraudulent partner:

• Draft a Detailed Complaint: Write a clear, chronological account of events. Mention the dates of fund transfers, the nature of the agreement, and the details of the fraud. Attach copies of bank statements, the partnership deed, and any communication (WhatsApp, SMS, emails).
• Approach the Police: Submit the written complaint to the officer in charge of your local police station. Ensure you get a receipt or a Community Service Register (CSR) number for your complaint.
• Follow-Up: If the police do not register a First Information Report (FIR), you can escalate the matter by sending the complaint to the Superintendent of Police (SP) or a higher-ranking officer.
• Court Complaint: If the police still fail to act, you can file a private complaint before the Magistrate under Section 175(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), who can direct the police to investigate.
• 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 you are being harassed by loan recovery agents:

• Do Not Be Intimidated: Understand that recovery agents have no legal authority to threaten, humiliate, or harass you. Their job is only to remind you of the payment.
• Document Everything: Record their phone calls (informing them that you are doing so). Note down the names of the agents, the dates and times of their calls and visits, and what was said. If they visit, try to have a witness present or record the interaction on video.
• File a Police Complaint: Go to the nearest police station and file a complaint for criminal intimidation and harassment against the specific agents and the financial company they represent.
• Complain to the RBI: You can file a formal complaint against the lending company with the RBI’s Ombudsman, citing a violation of the Fair Practices Code.
• Send a Legal Notice: Have a lawyer send a cease-and-desist notice to the financial institution, holding them vicariously liable for the illegal actions of their agents.
• 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

Initially, the police might perceive the dispute with the business partner as a “civil matter” concerning a business loss. It is crucial to clearly explain the element of criminal intent—cheating and dishonest misappropriation of funds. Providing strong documentary evidence can persuade them to register an FIR. Regarding harassment by recovery agents, the police are generally more receptive, as criminal intimidation is a clear-cut offense. A lawyer’s intervention can be instrumental in ensuring the police take both complaints seriously and act promptly.

FAQs people normally have

• Is an un-notarized partnership agreement legally valid?
  Yes, a signed agreement, even if not notarized, is a valid contract and can be used as crucial evidence in both civil and criminal proceedings to establish the existence of the partnership and its terms.
• Can recovery agents contact my family members?
  No. As per RBI guidelines, agents are supposed to contact only the borrower and not engage in any form of intimidation or harassment of family members, friends, or colleagues.
• What if I cannot pay the EMI? Is it a criminal offense?
  Defaulting on a loan is a civil wrong, not a criminal offense. The company can initiate legal proceedings for recovery through a civil court or under the Arbitration and Conciliation Act, but they cannot file a criminal case for non-payment, nor can they use strong-arm tactics.

What evidence is required?

To build a strong case, you will need:

• The loan agreements with “SwiftLoan Finance” and “QuickCash Lenders.”
• Bank statements showing the loan amount being credited to your account and subsequently transferred to your partner, Mr. Kumar.
• The signed partnership agreement, even if not notarized.
• All communication records with Mr. Kumar, such as WhatsApp chats, SMS messages, emails, or call recordings.
• For harassment, keep call logs, recordings of threatening calls, and video footage of agents’ visits. Note down the names and contact details of the agents.
• Details of any witnesses to the harassment.

How long will the investigation take?

The duration of legal proceedings can vary significantly. A police investigation leading to a chargesheet can take anywhere from 60 to 90 days, or sometimes longer, depending on the complexity. The subsequent court trial, both criminal and civil, can be a lengthy process, often taking several years to conclude. However, initiating the process by filing an FIR can provide immediate relief, as it puts legal pressure on the fraudulent partner and serves as a strong deterrent against further harassment by recovery agents.

Advocate Sudhir Rao, Supreme Court of India