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Can i accept cash from debtors in court settlement

Alok sharma (Business) (3 Points)

18 November 2016

Hi. My debtor shown in my books since 3 years is willing to settle the accountand repay me money in cash if only I withdraw all cases against him in court..

In such case in the willingness of both the parties the debtor is ready to pay old cash through court and my lawyer says it is possible.. my question is will I be able to deposit such cash in my account if the case is settled in court and court procedure of settlement itself? Pls guide me in such case

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8 Replies

Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 18 November 2016

Your Debtor has agreed to pay you after three years that too when the Court case is in process is nothing but the DeMONETIZATION effect. Youe Debtor is not scared of loosing the case definitely.
Since your debtor is ready to pay you all in cash , there is no doubt that he will be paying you all in old currency of 500 and 1000 denomination.
The most important point is Court gives judgement ue eitger you win the case or you lose it.
Cases are settoed outside tye court where both parties mutually agree to withdrawn the matter or close the matter.
Moreover if case is settled through court which I havent heard of ,then as per my knowledge court will always ask for settlement by Draft or Cheque and not by cash.
Now the management has to decide whether it is ready to accept the currency which have decreased to be the legal tender following 8 Nov 2016.

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Dharmesh (Student) (1025 Points)
Replied 18 November 2016

What would be the basis for acceptance of illegal tender ie the old notes after 8th nov..? On deposits of huge amounts expect IT scrutiny and also on what grounds court will allow you to take old notes! Kindly take proper advice before accepting or depositing the same.

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raghavan (self) (611 Points)
Replied 18 November 2016

cash of old notesvare not legal tender from 9th onwards. no court will approve invalid money as settlement. if cash settled is dealt on 8 the Nov it will be approved by court. however the settlor should give written statement for basis of dispute settlement and the same may be viewed in scrutiny by cbdt. all the best.

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R S Nambi (Practising Chartered Accountan) (41 Points)
Replied 18 November 2016

Court can always take cognisance of the situation and direct bank transfer or through direct deposit into your account

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VINOD NAVSARIWALA (self employed) (32 Points)
Replied 18 November 2016

After the midnight of 8th November, 2016 the old currency notes of Rs. 500 and Rs. 1000 can not be accepted in settlement of dues under the legal case. Hon'ble will not give direction to accept such non tenderable currency.

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Amit G (PPD) (27 Points)
Replied 18 November 2016

Hi. My debtor shown in my books since 3 years is willing to settle the accountand repay me money in cash if only I withdraw all cases against him in court.. In such case in the willingness of both the parties the debtor is ready to pay old cash through court and my lawyer says it is possible.. my question is will I be able to deposit such cash in my account if the case is settled in court and court procedure of settlement itself? Pls guide me in such case

-----> As this is in the Hon'ble Court you can ask them to pay the amount in Demand Draft (DD) / RTGS / NEFT and also ask your consellor to assit you. It should not be in Cash form.

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kota janardhana rao (partner) (23 Points)
Replied 18 November 2016

IF YOU HAD SETTLED THE MATTER ON OR BEFORE 08.11.2016, OUTSIDE THE COURT BY COMPROMISE, YOU WOULD HAVE BEEN SAFE. CONSULT YOUR AUDITOR AND ADVOCATE FOR A SOLUTION.