You have said that your friend invested the amount in your business. Further, though you have not fully clarified, it appears that he deposited the amount in your account through a bank transaction. If it is so, then it may be considered as loan given to you, even though the actual understanding between both of you might have been different.
However, if you had started a new business in “partnership” with him (such as a partnership firm) and if the amount was deposited in the bank account of such partnership firm, then, of course, the situation would be different, because in that case the amount given by your friend may be considered as an “investment” in that partnership firm and not a loan to you.
Please also note that Section 138 of the Negotiable Instruments Act requires that cheque should have been given “for the discharge, in whole or in part, of any debt or other liability”. But, then, Section 139 raised a presumption in favour of the holder/payee of the cheque, by laying down that, “It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability”.
Therefore, in the above situation, it may be presumed that the cheque was given by you for the discharge of a debt or liability, and you may have to prove it wrong. While doing so, you can lead all relevant evidence that you have in your possession to show that the amount given initially to you was not as a loan to you but as an investment in a joint business, etc.
Also, with regard to the issue of cash loan given to you, please read my reply: Cheque bounce under S. 138 for friendly cash loan or hand loan.
If the case is decided against you by the trial court, then you can file an appeal in the Sessions Court.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.