Customer and Guarantor of a vehicle loan are absconding
6 months ago
If a customer and Guarantor of a vehicle loan are absconding with vehicle, how can a company or bank recover the amount or re posses the vehicle?
A.Dear Client,
A Look Out Circular (LOC), is a measure to make a person surrender before investigating authorities or a court of law and can be issued only when there are sufficient reasons for it. While issuing notice under section 41A of the CrPC, the Investigating Authority has got inherent power to take necessary steps to see that the accused in the case doesn't leave the jurisdiction and cooperation with the inquiry. Public sector banks have been included in the list of authorities permitted to issue LOC from October 4, 2018 only through managing director and chief executive officers. The purpose of the issuance of an LOC is to prevent an individual from leaving the country to escape their financial liabilities. A Look-out circular can be said to be a coercive measure adopted by the State to restrict and regulate the movement of persons, who are accused of cognizable offenses, and in certain exceptional circumstances can be issued against witnesses as well. In the given situation, both the borrower and guarantor of the vehicle loan may face severe consequences once an LOC is issued against them by the concerned authority/Court.
A Look Out Circular (LOC), is a measure to make a person surrender before investigating authorities or a court of law and can be issued only when there are sufficient reasons for it. While issuing notice under section 41A of the CrPC, the Investigating Authority has got inherent power to take necessary steps to see that the accused in the case doesn't leave the jurisdiction and cooperation with the inquiry. Public sector banks have been included in the list of authorities permitted to issue LOC from October 4, 2018 only through managing director and chief executive officers. The purpose of the issuance of an LOC is to prevent an individual from leaving the country to escape their financial liabilities. A Look-out circular can be said to be a coercive measure adopted by the State to restrict and regulate the movement of persons, who are accused of cognizable offenses, and in certain exceptional circumstances can be issued against witnesses as well. In the given situation, both the borrower and guarantor of the vehicle loan may face severe consequences once an LOC is issued against them by the concerned authority/Court.
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A.Dear Client,
The first step often involves sending a legal notice to the borrower and the guarantor, demanding the repayment of the outstanding loan amount. This notice typically gives them a specified period to respond and settle the debt. If the borrower and guarantor fail to respond or do not comply with the notice, the bank or financial institution may file a complaint in the appropriate court. This could be a civil court or a debt recovery tribunal (DRT), depending on the amount involved. After filing a complaint, the court may issue an order directing the borrower and guarantor to repay the loan amount. If they still do not comply, the court may grant permission for the repossession of the vehicle. Repossession of the vehicle is typically carried out by a court-appointed receiver or agent. The lender must follow the legal procedures for repossession, which may involve coordinating with local law enforcement to ensure a peaceful repossession process. Once the vehicle is repossessed, it is usually auctioned or sold by the bank or financial institution to recover the outstanding loan amount. The sale must be conducted in accordance with legal requirements, and the proceeds are used to settle the loan. If the auctioned amount exceeds the outstanding loan amount and associated costs, the surplus amount may be returned to the borrower or guarantor. Conversely, if there is a shortfall, the borrower and guarantor may still be liable for the remaining debt.
The first step often involves sending a legal notice to the borrower and the guarantor, demanding the repayment of the outstanding loan amount. This notice typically gives them a specified period to respond and settle the debt. If the borrower and guarantor fail to respond or do not comply with the notice, the bank or financial institution may file a complaint in the appropriate court. This could be a civil court or a debt recovery tribunal (DRT), depending on the amount involved. After filing a complaint, the court may issue an order directing the borrower and guarantor to repay the loan amount. If they still do not comply, the court may grant permission for the repossession of the vehicle. Repossession of the vehicle is typically carried out by a court-appointed receiver or agent. The lender must follow the legal procedures for repossession, which may involve coordinating with local law enforcement to ensure a peaceful repossession process. Once the vehicle is repossessed, it is usually auctioned or sold by the bank or financial institution to recover the outstanding loan amount. The sale must be conducted in accordance with legal requirements, and the proceeds are used to settle the loan. If the auctioned amount exceeds the outstanding loan amount and associated costs, the surplus amount may be returned to the borrower or guarantor. Conversely, if there is a shortfall, the borrower and guarantor may still be liable for the remaining debt.
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