DEBTS AND RECOVERY TRIBUNAL AND SARFAESI ACT

Hello friends, today we shall talk regarding the general procedure adopted by the banks and other financial institutions in order to recover the amount which they have credited to the borrowers.

For recovery of loan amounting to less than Rs. 10 lacs, the security creditor be it bank or otherwise, can file a simple suit for recovery or suit under order 37 CPC in case of having any valid proof like acknowledgement.

For recovery of loan amount of more than 10 lacs, the bank has to approach the forum known as Debts Recovery Bank, ( in short DRT )which has been notified and established by the Central Govt. for banks and other financial institutions to recover their dues.

Now the procedure which banks need to resort to before filing a case of recovery before DRT has been defined in Section 13 of the SARFAESI Act.

As per Section 13(2) of the Act, in case the borrower makes a default in payment of installments, in such an event, the bank, after the prescribed period can label his account as non performing asset, and then makes a written demand of the loan amount under this provision, by giving him a period of 60 days.

Now in case the borrower fails to make payment within the above mentioned period of 60 days, in such an event the bank may take resort to Section 13(4) of the act, by filing an application before the District Magistrate, for appointment of the receiver to the secured asset and thereby permission to sell the said property to recover the dues.

As per Section 13(8) of the Act, in case the defaulter/borrower makes the payment before the date of sale of property, in such an event the bank will not complete and shall return the said asset to the borrower.

In case where the appointment of the receiver is not as per law or for some other reason the same needs to be challenged, then an appropriate application may be filed before DRT.

I hope you have got the brief view of debts and recovery procedure. If you have any queries, kindly comment below in the comments section.

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