kotak personal loan
2 months ago
Received arbitration notice in august 2024, then not attended 2 hearings, received claim Statement of Claim, Now received notice of the notice as u/s 25 of payment and settlement act on mail - 27/09/2024 What to do ? I don't have money to pay emi (Mumbai, Maharashtra)
Receiving an arbitration notice under Section 25 of the Payment and Settlement Act indicates that the lender has moved forward with legal proceedings due to non-payment of your EMIs. Since you haven’t attended previous hearings, the process might be moving forward without your defense being considered. Here’s what you can do in this situation
Failing to respond or appear in arbitration hearings can lead to an ex-parte decision, which means the arbitrator will pass a decision in favor of the lender without hearing your side.
File a response to the arbitrator or the lender’s counsel, explaining your financial difficulties. You can request additional time to settle the matter or propose a revised payment schedule. Even if you cannot afford to pay immediately, showing willingness to resolve the issue can often buy you more time and prevent harsh actions like repossession or wage garnishment.Lenders usually prefer settlement over litigation. If possible, try to negotiate a one-time settlement amount, an extension, or reduced EMIs based on your current financial condition.
The arbitrator can pass a decision in your absence, which may include a ruling in favor of the lender for immediate repayment. After arbitration, the lender can initiate legal recovery proceedings, which may include attachment of property or salary garnishment.
You must contact your lender and have discussion and must start attending the arbitration proceedings with a help of an advocate.
Regards
In case, a provision for resolving the dispute through arbitration under the Arbitration and Conciliation Act, 1996 exists in the personal loan agreement, before marking a loan as bad loan/NPA, the lender exhausts its course of action as stipulated in the loan agreement and send a Notice under Section 21 of the Arbitration and Conciliation Act, 1996 to the borrower who failed to repay his/her debt to resolve the matter at the pre-litigation stage which is mandatory before referring the disputes to Arbitration. Under Section 11(6) of the Act, for the appointment of an arbitrator, the limitation period of three years for filing such an application would commence from the date when the cause of action arose. Section 25 of the Act deals with the failure of parties to the arbitration hearing fixed by advance notice issued under Section 24(2) to the parties. According to sub-Section (c) of Section 25 of the Act, if a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it. An arbitral award is final and binding upon the parties unless challenged under Section 34 of the Act. It is equivalent to a decree passed by a Civil Judge and is binding upon the parties. The enforcement procedure and execution decrees and an arbitral award in India are governed as per the provision of the Arbitration and Conciliation Act, 1996. The time-limit for challenging an award under Section 34 of the Arbitration Act is absolute and no delay beyond 30 days from the prescribed period of 90 days can be condoned by any Court. Once the time for making an application to set aside the arbitral award under section 34 has expired or such an application has been refused, the award becomes enforceable and binding on the parties. Section 34(3) of the Arbitration and Conciliation Act, 1996 provides that an application for setting aside an arbitral award should be made before the High Court within three months(90 days) from the date on which the party receives the arbitral award. So, when you receive the arbitral award on 27/09/2024, it is still under the limitation period for challenging the award under Section 34 of the Act. If required you may hire the service of an Advocate to navigate the matter in the right way.
it is a cheque bounce case. you can easily get bail then you can prolong the matter for 2 to 3 years in he trail court then to sessions court then to high court.
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Section 25 in The Payment and Settlement Systems Act, 2007
25 Dishonour of Electronic Funds Transfer for insufficiency, etc., of funds in the account. —
(1) Where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that the amount of money standing to the credit of that account is insufficient to honour the transfer instruction or that it exceeds the amount arranged to be paid from that account by an agreement made with a bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the electronic funds transfer, or with both: Provided that nothing contained in this section shall apply unless—
(a) the electronic funds transfer was initiated for payment of any amount of money to another person for the discharge, in whole or in part, of any debt on other liability;
(b) the electronic funds transfer was initiated in accordance with the relevant procedural guidelines issued by the system provider;
(c) the beneficiary makes a demand for the payment of the said amount of money by giving a notice in writing to the person initiating the electronic funds transfer within thirty days of the receipt of information by him from the bank concerned regarding the dishonour of the electronic funds transfer; and
(d) the person initiating the electronic funds transfer fails to make the payment of the said money to the beneficiary within fifteen days of the receipt of the said notice.
(2) It shall be presumed, unless the contrary is proved, that the electronic funds transfer was initiated for the discharge, in whole or in part, of any debt or other liability.
(3) It shall not be a defence in a prosecution for an offence under sub-section (1) that the person, who initiated the electronic funds transfer through an instruction, authorization, order or agreement, did not have reason to believe at the time of such instruction, authorization, order or agreement that the credit of his account is insufficient to effect the electronic funds transfer.
(4) The Court shall, in respect of every proceeding under this section, on production of a communication from the bank denoting the dishonour of electronic funds transfer, presume the fact of dishonour of such electronic funds transfer, unless and until such fact is disproved.
(5) The provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of electronic funds transfer to the extent the circumstances admit. Explanation. —For the purpose of this section, “debt or other liability” means a legally enforceable debt or other liability, as the case may be.
You need to actively fight the case or consider declaring insolvency. Ignoring the arbitration process can lead to unfavorable outcomes, including a potential judgment against you. If financial strain is preventing you from attending hearings or making payments, declaring insolvency could provide some relief and allow you to restructure your debts. It’s essential to consult with a lawyer and understand your options and ensure you take the necessary steps to protect your interests.
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