DRT Case
7 months ago
I was an employee in the company. The company made me a director with 1% share.
The company took a loan of 40 lakh and defaulted on the same due to COVID-19.
I was unaware of all this as I was not managing anything I was only an employee and later on resigned.
i got calls from the bank but my company told me to ignore the calls.
Bank filled the case in DRT.
DRT has sent the case to the recovery officer and I have got the notice to appear before the recovery officer.
What should i do?
How to know who is the recovery officer?
I am from Delhi, Bank has filled the case in Chandigarh DRT
A.Dear Client,
An employee can be elevated /appointed as Director, by following due procedure of law and a Board of Directors resolution, defining the Remuneration and perks & other benefits, payable under the provisions of the Companies Act. In terms of the Companies Act, a director is an agent, trustee and employee. A director is an employee if he holds a salaried employment and thus enjoys all the benefits which are given to a regular employee. A Managing Director is a director who holds such a position. Thus, all the executive directors ( including the managing director) are employees of the company too and at par with other employees. The director who has resigned shall be liable even after his resignation for the offenses that occurred during his tenure. He can be held liable for the offenses made by the company at the time of his office as a director. So, on receipt of notice of appearance from the Recovery Officer appointed by the Debt Recovery Tribunal(DRT), you should abide by the advice/instruction of the said notice and make yourself available before the Recovery Officer for recording your statement. Directors have powers subject to the Companies Act, Memorandum and Articles of Association. Whenever they exceed these limits they are personally liable for the act being ultra vires.
An employee can be elevated /appointed as Director, by following due procedure of law and a Board of Directors resolution, defining the Remuneration and perks & other benefits, payable under the provisions of the Companies Act. In terms of the Companies Act, a director is an agent, trustee and employee. A director is an employee if he holds a salaried employment and thus enjoys all the benefits which are given to a regular employee. A Managing Director is a director who holds such a position. Thus, all the executive directors ( including the managing director) are employees of the company too and at par with other employees. The director who has resigned shall be liable even after his resignation for the offenses that occurred during his tenure. He can be held liable for the offenses made by the company at the time of his office as a director. So, on receipt of notice of appearance from the Recovery Officer appointed by the Debt Recovery Tribunal(DRT), you should abide by the advice/instruction of the said notice and make yourself available before the Recovery Officer for recording your statement. Directors have powers subject to the Companies Act, Memorandum and Articles of Association. Whenever they exceed these limits they are personally liable for the act being ultra vires.
Helpful
Helpful
Share
A.Dear Client,
When you receive a notice to appear before the Recovery Officer in a Debt Recovery Tribunal (DRT) case, it's essential to take the appropriate steps to protect your interests. Here's what you should do:
Consult with a Lawyer: It's highly advisable to consult with a lawyer who specializes in debt recovery and DRT cases. They will be able to provide you with legal advice and guidance specific to your situation.
Gather Documents: Collect all relevant documents related to your involvement in the company, including your appointment as a director and any communication or evidence that shows you were not actively involved in managing the company's finances or aware of the loan default. These documents may be useful in your defense.
Attend the Hearing: You must attend the hearing as directed by the notice. Failure to do so can have adverse consequences. Your lawyer will accompany you to represent your case before the Recovery Officer.
Verification of the Recovery Officer: To find out who the Recovery Officer is and get more details about the case, you can contact the DRT in Chandigarh where the case has been filed. They should be able to provide you with the necessary information.
Negotiate and Defend: Work with your lawyer to negotiate with the bank or financial institution and present your defense. Explain your role in the company and your lack of involvement in financial management. Your lawyer will help you present your case effectively.
Explore Settlement Options: If appropriate, consider exploring the possibility of a settlement with the bank or financial institution to resolve the issue amicably. Your lawyer can guide you through this process.
Follow Legal Advice: Listen to your lawyer's advice and follow their instructions diligently. They will be best equipped to navigate the legal complexities of the case.
Remember that your lawyer will play a crucial role in helping you understand your rights and responsibilities in this situation and will represent your interests before the Recovery Officer.
Thank you.
When you receive a notice to appear before the Recovery Officer in a Debt Recovery Tribunal (DRT) case, it's essential to take the appropriate steps to protect your interests. Here's what you should do:
Consult with a Lawyer: It's highly advisable to consult with a lawyer who specializes in debt recovery and DRT cases. They will be able to provide you with legal advice and guidance specific to your situation.
Gather Documents: Collect all relevant documents related to your involvement in the company, including your appointment as a director and any communication or evidence that shows you were not actively involved in managing the company's finances or aware of the loan default. These documents may be useful in your defense.
Attend the Hearing: You must attend the hearing as directed by the notice. Failure to do so can have adverse consequences. Your lawyer will accompany you to represent your case before the Recovery Officer.
Verification of the Recovery Officer: To find out who the Recovery Officer is and get more details about the case, you can contact the DRT in Chandigarh where the case has been filed. They should be able to provide you with the necessary information.
Negotiate and Defend: Work with your lawyer to negotiate with the bank or financial institution and present your defense. Explain your role in the company and your lack of involvement in financial management. Your lawyer will help you present your case effectively.
Explore Settlement Options: If appropriate, consider exploring the possibility of a settlement with the bank or financial institution to resolve the issue amicably. Your lawyer can guide you through this process.
Follow Legal Advice: Listen to your lawyer's advice and follow their instructions diligently. They will be best equipped to navigate the legal complexities of the case.
Remember that your lawyer will play a crucial role in helping you understand your rights and responsibilities in this situation and will represent your interests before the Recovery Officer.
Thank you.
Helpful
Helpful
Share
Read Related Answers
Credit card
Dear Client,
You can try to negotiate a settlement of your credit card dues with the Banks on your own if your pocket permits and the bank agrees, but sometimes it's typically done through third parti...
Harrassment and verbal attack on personal misfortune by Bajaj Finserve TVM
Dear Client,
As per the contractual obligation you are bound to repay the loan but the creditors have no right to harass you to recall the amount, there are rules set as per RBI guidelines as to how...
Complaint regarding not refunding fees.
Dear Client,
It's essential to communicate clearly with the center about your request for a refund and to provide any necessary documentation, such as receipts or enrollment agreements, to support y...
Insolvency
Dear Client,
Under the Provincial Insolvency Act, 1920 (which is now repealed as IBC Code 2016), you can file for bankruptcy if you are unable to repay a debt greater than ₹500. After analyzing whethe...
How to get stay order of property possession taken by NBFC
Dear Client,
Sub-section (3A) of Section 13 of the SARFAESI Act was introduced by way of an amendment in the year 2004 whereby (3A) the borrower is allowed to make representation or raise an objectio...
Read Blogs on Debt Collection
Debt Collection Lawyers
Find Lawyers by Location
