Best Law Firm for DRT cases in Kolkata

Protect yourself from wrongful DRT and SARFAESI cases by knowing your rights.

When you know and are aware about your rights and then you can defend yourself and protect your property against the wrongful and illegal acts of a secured creditor.

Section 13(2) Notice and how to avoid or negate that.

The bank sends a Section 13(2) notice to demand the outstanding loan when the loan account has become NPA. It is expected that the borrower will pay the amount demanded. In case the notice has been issued without following the due procedure and is not right then the borrower must reply to the notice recording his protests that will help to evade further DRT cases.

Section 13(4) Notice for symbolic possession of the property

Under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 the bank can take possession of the secured property and auction it to recover the loan amount from the borrower or the guarantor. It is called symbolic possession of the property and bank officials will paste a copy of the notice on the door or wall of the property.

Application to District Magistrate (DM) or Chief Judicial Magistrate (CJM)

Banks and financial creditors also file applications to DM or CJM under Section 14 of the SARFAESI Act to seek their intervention and support to recover the dues by helping them auction the properties of the borrower.

Borrower’s right to defend and protect itself from bank’s action under SARFAESI.

When the borrower has received notices under Section 13(2) or 13(4) or has come to know that the bank has moved application under Section 14 to DM’s office then the borrower can file a SA (Securitization Application) to DRT under Section 17 of the Act. There has to be grounds to prove that the bank has not taken the action properly, or their action was time barred, or there was no NPA etc. to get relief from the Tribunal. The best DRT Kolkata advocate can help in this kind of scenario.

What are the ways to avoid court or DRT cases due to non-payment of loan?

To avoid DRT cases or court cases for recovery of loan amount here are certain ways which a borrower can resort to and protect itself from hassles.

1. Restructuring of loan Installment
   The loan installment amount or EMI can be made smaller or bigger depending upon the income of the customer. Increasing the EMI amount will lead to faster closer of the loan account.
2. Changing the tenure period
   If there is any financial issue, then the bank can be requested to increase the loan tenure that will reduce the EMI amount to a comfortable level and avoid the loan becoming NPA
3. Payment of extra money whenever possible
   Whenever there is a windfall gain or bonus or any extra income then an additional amount can be deposited into the loan account. This helps in closing the loan account quickly
4. One time settlement scheme (OTS)
   If the account has already become NPA then the OTS scheme floated by the RBI is the best way to ensure that no legal action is taken by the bank against the borrower.

The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act)

Establishment of Debt Recovery Tribunals (DRTs)

The Act has provisions for the constitution of the DRTs to speed up the recovery of bank and other financial institutions’’ claims.

Adjudication of Claims

DRTs have the authority to hear and determine all matters falling under the Recovery of Debts Act and this affords cases quick dispensation.

Powers of DRTs

DRTs can pass orders to attach the properties, appoint the receivers, and do any other acts that are necessary for realizing the amount due.

Appeal to Debt Recovery Appellate Tribunal (DRAT)

Appeals are provided against DRT orders to the Debt Recovery Appellate Tribunal.

Limitation Period

The Act also defines the periods within which any claim under the Act must be brought in court, as provided by the Limitation Act of 1963.

What is this Debt Recovery Tribunal (DRT) that is mentioned by the amendment to the Act?

DRTs are envisaged to be summary courts distinct from civil courts that are specifically designed to hear and determine cases to recover debts owed to banks and other financial institutions.

Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)

Important Provisions:

Enforcement of Security Interests

Enables the banks and other financial institutions to realize their securities (for example, mortgages) without involving the courts thereby accelerating the recovery process.

Securitization of Financial Assets

Enables specific banking facilities to sell other financial assets thus enhancing a bank’s ability to manage its balance sheet by turning loans into saleable assets.

Reconstruction of Financial Assets

Allows the NBFCs to reconstruct bad loans through asset reconstruction companies (ARCs) to control and revive non–performing assets (NPAs).

Power to Take Possession of Secured Assets

Permits banks to seize assets charged as securities and dispose of them to recover amounts due where the borrower has defaulted.

Creation of a Central Registry

Often adopted to maintain a public register of all the transactions involving securitization, reconstruction of assets, and any security interests.

Securitization refers to the practice of transforming the bank’s loan portfolios into tradable securities that it can further sell to other investors in the market to increase its cash flow.