Debt Recovery Laws in Nepal/Debt Recovery Lawyer in Nepal/Debt Recovery Law Expert in Nepal
What is meant by Transaction?
- A transaction is an activity involved in conducting business or interacting with people. It may include any kind of exchange of goods, services, or financial assets in return for money. for example, paying employees their salary, borrowing funds from a creditor, paying off borrowed funds, etc.
When a Transaction is deemed to be made?
- As per Section 474 of Muluki Civil Code,2074, If there is a give-and-take of any amount or goods between two or more persons subject to any condition, the transaction shall be deemed to have been made between them. If a transaction is made like this, then the receiver of the amount or goods shall return the same to the giver of the amount or good.
What the term "amount" denotes?
- The term "amount" denotes a prize of goods.
When a loan is deemed to be borrowed?
- As per Section 475 of Muluki Civil Code, 2074, If a person has an obligation to pay any amount or goods to another person in any manner, such obligation shall be deemed to be a loan borrowed by that person, and such a person shall return such amount or goods to the concerned person.
Is any person carried on a transaction without executing deed?
- No person shall carry on a transaction without executing a deed in accordance with the law. [ Section 476 of Muluki Civil Code,2074 ]
What the term "deed" denotes?
- The term“deed” means any document that substantiates a transaction including a cheque, bill, voucher and receipt.
What are the matters to be set out in deed?
- As per Section 477 of Muluki Civil Code,2074, in carrying on a transaction, the following matters shall be set out in the deed according to the nature of the transaction:
(a) Name, surname, age and address of each person involved in transaction, and name of his or her father, mother, grand-father and grand-mother, Provided that in the case of a married person, the name of his or her husband or wife, as the case maybe, shall also be mentioned,
(b) Reason for the transaction,
(c) Volume of the transaction,
(d) In the case of transaction of any good, price of such goods,
(e) In the case of exchange of any goods by way of borrowing, loan or otherwise, the matter to that effect,
(f) Details of the goods, if any, exchanged,
(g) Date for repayment of the transacted amount,
(h) Rate of interest, if any, payable on the transaction,
(i) Matter that the creditor may recover the amount involved in the transaction from the borrower's assets in the event of failure to repay such amount within the specified time or to fulfill the other conditions set forth in the deed,
(j) Place of the deed executed,
(k) Date of the deed executed,
(l) Such other matters as required to be set out according to the nature of transaction.
What is the provision regarding the entitlement of creditors to interest from the debtor?
- If a deed on transaction provides for the payment of interest, the creditor may collect the interest from the debtor as set forth in the deed. The amount of interest that the creditor is entitled to collect from the debtor pursuant to this shall not exceed ten percent of the principal per annum and If the deed executed pursuant to this doesnot provide for the rate of interest but only for the payment of interest, the creditor may collect interest from the debtor at the rate of ten percent of the principal per annum. If the deed executed pursuant to this provides for the payment of profit instead of interest but does not specify the amount of such profit, the creditor may collect such profit from the debtor as if it were interest. [Section 478 of Muluki Civil Code, 2074 ]
Is the creditor allowed to collect interest from debtor?
- As per Section 479 of Muluki Civil Code,2074 , If the deed on transaction does not provide for the payment of interest, the creditor shall not collect interest from the debtor.
Is any creditor collects compound interest from a debtor?
- The creditor shall not collect compound interest from the debtor and If any creditor collects compound interest from a debtor, such interest shall be deducted from the principal and refunded if the principal has already been repaid. [Section 480]
What are the procedures to be fulfilled in paying and collecting principle and interest?
- As per Section 482 of Muluki Civil Code, 2074, the following procedures shall be fulfilled in paying and collecting interest:
(a) If the debtor repays the whole of the principal and interest, the creditor shall sign and return the deed on transaction to the debtor by tearing out the deed or indicating on its space or reverse side that the loan has been repaid,
(b) If the deed is not found at the time of repayment of the principal and interest pursuant to clause (a), the creditor shall give the debtor a receipt indicating the receipt of the particular amount on the particular date,
(c) In repaying some amount out of the principal and interest, the creditor shall indicate on the reverse side of the deed how much he or she has received from the debtor on which date, and get the debtor to sign the deed and issue a separate receipt of amount accordingly if the deed is not found immediately or itis not with the creditor for the time being.
What is the period of deed executed in household?
- As per Section 484 of the Muluki Civil Code,2074 on the provision regarding transaction, the period of a deed executed in household shall not exceed ten years. Other than this if the debtor repays some of the principal or interest thereon to the creditor or the term of a deed is extended for the repayment of principal or interest within the period of ten years, another period often years shall be extended from the date of such repayment of principal or interest or extension of the period, as the case may be.
Transaction carried out by a person with an incompetent or quasi- competent can get a legal recognition?
- A transaction carried on by a person with an incompetent or quasi-competent person shall not get legal recognition. [Section 485 of Muluki Civil Code,2074]
What is the provision regarding recovery of amount while doing transactions?
- If any person carries on the transaction with another person and the deed of such transaction does not bear the signature of the person acting as the head of family, the creditor shall not be entitled to recover his or her amount from such property until the debtor's right in the property in common is established. Other than this if the person acting as the head of family repays such amount, the creditor may recover the same and if any person is not able to recover the amount from the debtor on the occurrence of the circumstance referred to this, the creditor shall make a lawsuit against the debtor and maintain his or her right within a period of ten years. In the event of the maintenance of the right with the debtor when a person is not able to recover the amount, the creditor may recover his or her amount from the debtor in accordance with law after his or her right in the property in common has been established and the statute of limitation for making a lawsuit shall, for the recovery of the amount pursuant to this commence is from the date of establishment of the debtor's right. [Section 486 of Muluki Civil Code,2074]
Is exchange of movable property allowed without consent?
- A person of majority age in a joint family is not allowed to exchange any movable property in common without consent of the person acting as the head of family but if the the consent of the person acting as the head of family shall not be required to exchange his or her private property. [ Section 487]
What is the provision regarding recovery of amount if transactions appear to have carried on?
- Even though any person does not execute a deed by fulfilling the procedures referred to in Muluki Civil Code,2074 regarding provision regarding transaction, if it appears from any deed, banking transaction, negotiable instrument, cheque, voucher or book of account that transaction has been carried on with any person, the court may, based on such deed, banking transaction, negotiable instrument, cheque, voucher or book of account, order the recovery of such amount from the debtor to the lawsuit maker.[ Section 488 of Muluki Civil Code,2074 ]
What are the procedure to be followed if deed executed on household is lost or destroyed due to force majeure event?
- As per Section 489 of Muluki Civil Code,2074, If a deed executed in household is lost or destroyed due to a force majeure event, the creditor shall make an application, setting out the matter, to the concerned Local Level within fifteen days from the date of loss o occurrence of the force majeure event.
What is the provision regarding returning of goods transacted in the event of imperfection?
- As per section 490 of Muluki Civil Code,2074, except as otherwise provided for in the deed, if the receiver of any goods transacted with specification of price is not able to possess the goods due to the fact that the goods do not correspond to that set forth in the deed or are imperfect for any reason, he or she shall give notice thereof to the giver of goods within thirty-five days of such transaction. If a notice is received from the receiver of goods pursuant to this and his or her statement appears to be reasonable, the exchange of goods shall be made if the giver has similar other goods, and if the giver does not have such goods, he or she shall get back his or her goods and cancel the deed executed in relation to such transaction and If the giver of goods refuses to exchange or to take back the goods pursuant to this, the receiver of goods may make a lawsuit to have recovery of an amount equivalent to the price of such goods and reasonable compensation for the loss and damage caused to him or her from the concerned person or get such transaction to be void.
What is the provision regarding returning of goods in original condition?
- As per section 491 of Muluki Civil Code,2074, If any person obtains or borrows for any specific purpose any goods owned or possessed by another person whether for rent or not or for borrowing or not or on any other terms and conditions, the person shall, after the completion of the purpose, return the goods that are the same in kind, quantity and quality as have been so acquired or borrowed, to the owner or possessor. If the goods obtained pursuant to this are lost, broken, destroyed, out of order or otherwise damaged, except as otherwise provided for in the deed, the person obtaining such goods shall return similar other goods to the owner or possessor or pay to the owner or possessor an amount equivalent to the prevailing market price of such goods if similar other goods are not available.
What is the statute of limitation regarding transactions?
- There shall be no statute of limitation for making a lawsuit in the matter of transaction carried on with intent to take rights to, misappropriate, cause loss to, or disorder, the property of an incompetent and quasi-competent person or in the matter of collection of compound interest or collection of interest in excess of ten percent. [Section 492 of Muluki Civil Code,2074].