Kapali Tamasuk Expired? Validity & Laws of Personal Loan Deed (2025)

In Nepal, informal lending between friends, family, or neighbors often relies on a document known as “Kapali Tamasuk” (Personal Loan Deed). While convenient, many lenders lose their money because they don’t understand the legal validity period and registration rules.

A common nightmare scenario: You lent money 12 years ago, and now the borrower refuses to pay. Can you sue them?

What is the Validity Period of a Kapali Tamasuk?

The most critical aspect of a Kapali Tamasuk is its Statute of Limitations (Hadh Myad).

According to the provisions related to “Household Deeds” (Gharasar ko likhat) in the Muluki Civil Code 2074:

• Validity: A household deed like a Kapali Tamasuk is valid for 10 Years from the date of execution (unless a shorter period is specified).
• Suit Filing Limit (Hadh Myad): While Section 170 of the Civil Code mentions a general 2-year limit for debt recovery lawsuits, Section 477-related provisions allow up to 10 years for deeds where a specific repayment term isn’t breached earlier.
• Expiry: If 10 years pass and the borrower has not paid any principal or interest, and you haven’t filed a case, the deed expires.
• Extension: If the borrower endorses a payment on the back of the paper (Pith Lekh) within the 10 years, the countdown acts as a renewal.

Is Ward Registration Mandatory?

Yes and No. Traditionally, handwritten deeds on Nepali paper were enough. However, recent legal reforms suggest that for large amounts (typically above NPR 50,000), the document should be certified/registered at the local Ward Office to be strong evidence in court.

A simple paper hidden at home is easy to challenge in court (borrower can claim forgery). A Ward-certified document carries much higher weight.

Legal Limits on Interest Rates

Many lenders try to charge 24% or 36% interest. This is illegal.

• Maximum Interest: The law allows a maximum of 10% per annum.
• Compound Interest: Charging interest on interest (Byaj ko Byaj) is strictly prohibited. If a court finds you charged compound interest, they will deduct it from the principal.
• Sahu Asami: If the interest paid exceeds the principal amount, the debt is considered cleared.

Frequently Asked Questions (FAQ)

Q: My Tamasuk is 12 years old. Can I file a case? A: Generally, no. The statute of limitations is 10 years. Unless you can prove some payment was made within the last 10 years, your claim is likely time-barred.

Q: What is “Kapali” vs “Likhat”? A: “Kapali” refers to a deed based on trust/person (unsigned collateral), while other deeds might involve mortgages (Drishya Bandhak).

Q: Can I use a normal white paper or must it be Nepali paper? A: Legally, white paper is accepted if it has the correct fingerprints (Left and Right thumb) and signatures. However, traditionally, Nepali paper is preferred for durability and authenticity.

Disclaimer: Financial disputes are tricky. This article explains the general law. For specific recovery of debts, consult a lawyer to draft a legal notice.