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Vishal Thakare   25 December 2020

Loan Repayment

Hello, My query is about my family business.My father started one business 10 years back. He took loan of 47 Lacs for the same. He kept 40 acres land as mortgage for same loan. There was EMI about 1 lacs per month for this loan. He did pay regular EMI for atleast 3 years, however due to some market situation, he faced some loss in business & he was unable to pay to monthly EMI. However, He did try hard to make deal with bank & paid only interest for loan for atleast 2 years. But this loss in business did continue & he stopped that business. After that 3 years of regular payment of EMI & 2 years of only payment of interest. He paid totally nearly 40 lacs to bank. However, still there was 32 Lacs of principal was pending in bank. He could not do anything, because all his property was mortgage in bank & he could not sell it. We invested nearly 2 cr. of our own in this business. because of this loss, we lost everything. However, Now Bank had sent us notice that this is criminal offence, now they are saying that they will file police complaint & send my father in jail. Please advice us on this point because we have kept 40 acres land as mortgage, they can auction it if they want because we understand that we are loan defaulter & we are ready to let go our land. But we can not understand why they are giving notice of police complaint.


Learning

 8 Replies

SIVARAMAPRASAD KAPPAGANTU (Retired Manager)     26 December 2020

Loan default attracts a civil case only unless loan was obtained under false documents with an intention to defraud the bank. From your narration it appears to be a civil case only.

 

Approach the Bank with a proposal to have a one-time settlement whereby bank sells the property under mortgage and takes the amount and balance if any shall be given to you.

Dr J C Vashista (Advocate)     26 December 2020

It is a civil and not a criminal case.

The bank has every right to recover outstanding amount by auction of mortgaged properties.

It would be better to consult and engage a local prudent lawyer for appreciation of facts and documents, professional advise and necessary proceeding.

 

 

 

G.L.N. Prasad (Retired employee.)     26 December 2020

You are not coming out with facts.  What is the purpose of the loan?  Whether such an asset was really acquired or fake bills were produced with escalated costs?  Whether such immovable assets mortgaged or moveable assets under hypothecation was disposed of by the borrower.  Every banker knows fundamentals and concludes on the basis of recorded facts or audit objection or after inspection.  I am sure that the end-use of the funds was misused (Not utilized for acquiring such asset) or asset disposed of without intimating the bank..  Escalating the value, filing fabricated financial statements, stating such assets not owned by the borrower are also criminal offenses.  I am sure that no sensible person resorts to such criminal offense unless strong grounds are there.  One may think after all the NPA is Rs.40lakhs, or express personal difficulties while repaying loan like a business not properly running, etc.   That is the ground of each and every defaulter.  Such small amounts from each branch in India goes to hundreds of crores for the Bank.

Vishal Thakare   26 December 2020

Thank you Everyone. If I understood it correctly, if there is not any wrongdoing from our side ( like fund misuse, submission of wrong financial data, submission of false moratage paper), there is no possibility of criminal case. If it is guinene case of loss in business, bank can auction properties which we can accept as one time settlement. Dear experts, this loan was taken to start milk bussiness (construction of structure & buying of buffalos). Due to ups-downs market situation in that, we had faced guinene loss, which we have informed bank representative orally time to time. Mortgage property paper is guinene, this is our ancestor's property.

G.L.N. Prasad (Retired employee.)     26 December 2020

Members are not aware of truth/facts and in general, what is treated as a criminal offense was stated.  What happened to Buffallows is the key factor ?.  You can contact a local advocate and submit to Bank for taking possession of the mortgaged property and express such reasons that can convince them.  A banker is aware that criminal complaint can not help in recovering the amount.  Inform outstanding in the account and market value of such properties mortgaged, the bank if adequate value is there never goes for criminal complaint.  The bank may be apprehending that they can not find buyers if  borrower is influential.  

SIVARAMAPRASAD KAPPAGANTU (Retired Manager)     26 December 2020

Good. If everything is okay and there is no criminal angle in any way, you may approach the Bank to discuss a One Time Settlement (OTS). Here please do understand that OTS cannot be demanded as a matter of right by the borrower. If you put forth your reasonable proposal for the OTS and ready to make a sizeable amount to show your sincerity, Bank shall surely examine it and give a positive response. Further, the OTS proposal shall not be permitted at branch level and it needs to be referred to higher authorities at the Zonal level.  You can seek the audience of the higher authorities and discuss with them and  explain your difficulties and impress upon the Officials concerned. All the best.

P. Venu (Advocate)     27 December 2020

Yes, the facts posted do not suggest any grounds or cause of action for initiating a criminal action.

Dr J C Vashista (Advocate)     28 December 2020

It is better to consult and engage a local prudent lawyer for better appreciation of facts/ documents, professional advise and necessary proceeding.


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