Loan taken few years ago what is the limitation for bank to file OA for recovery of balance amount?
Loan taken few years ago what is the limitation for bank to file OA for recovery of balance amount?
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The Process of DR
The Application Route
Under 19 of the RDDBFI Act, the conditions are laid down as to under which DRT one has to file an application.
Such an application can be filed by a bank or a financial institution to a DRT, that has the jurisdiction, and where the defendant either resides or carries out his business.
Moreover, an application can also be filed with a DRT, if the cause of action arises wholly or partly within the limits of the jurisdiction. Along with the application, the prescribed needs to be paid.
SARFAESI Route
An application to the DRT can also be made under the Securitisation and Reconstruction for Enforcement of Security Interest Act (SARFAESI), 2002.
Under SARFAESI, the secured creditor takes possession of the securities of the debtors, when he fails to discharge all his liabilities.
However, there occurs a case, wherein the securities are not able to discharge of the entire debt.
Under these circumstances, the creditors have an option of filing an application to the DRT for recovery of the remaining dues.
Moreover, under 17 of the SARFAESI Act, the borrowers can also appeal to the DRTs against the creditor’s findings.
Procedures to be followed post-filing an application
DRTs and DRATs are adjudicated by summary proceedings, in order to expediate the court proceedings.
Under 19(12) of the Act, the DRT has the powers to proclaim an interim order against the borrower in order to restrict him from disposing or transferring any property belonging to him without the prior permission from the Tribunal.
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Moreover, the DRT can go to the extent of detaining the borrower for a period of maximum 3 months for any disobedience of an order or breach of any order issued under 19(12), 19(13) or 19(18) of the RDDBFI Act.
When an application is made under the normal application route, then the time frame to complete the case is 180 days.
However, if the application is made to the DRT under the SARFAESI Act, then the cases are needed to be disposed off within 60 days to 4 months.
If the time duration gets exceeded then under 16 of the SARFAESI Act, either party can appeal to DRAT to direct the DRT to dispose of the pending application.
Under 19(4), the application made to a DRT warrants summons to be issued to the defendant to show cause within 30 days as to why the prayed relief should not be granted.
The defendant must turn in a written submission, for which extra time can be granted by the Tribunal.
A defendant can also file a counter-claim against the complainant with respect to the alleged sum of money, but only in the first hearing, except also in cases where the Tribunal explicitly grants such permission.
Based on the DRTs order, the Presiding Officer shall issue a certificate to the Recovery Officer to recover the debt amount, which has been specified in it, website The Recovery Officer may attach, sell or appoint a receiver for the management of the defendant’s property, in order to recover the debt.
Moreover, the DRTs also possess the power to obtain a police warrant to arrest the defendant in these cases.
Conclusion:
The conditions provided for under 19 of the RDDBFI Act are that DRT must be submitted. Such an application may be filed at DRT, which is competent and where the defendant either lives in or conducts his business by a bank or a financial institution. In addition, if a cause for action comes in whole or in part within the limitations of jurisdiction, the application can also be filed with a DRT. The prescribed requirements must also be paid with the request.
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