DRT/cgtmse case
raj bhatia
(Querist) 01 April 2016
This query is : Resolved
I had a partnership firm in New Delhi, and me and my partner took a loan of Rs. 70,00,000 from a bank under the CGTMSE scheme where no collateral was given.
The business suffered badly as there were some issues with our buyer which is major corporate in India. The bank was well aware that the business was suffering and even wrote to our buyer directly. However we do not have access to that communication.
Me and my partner had a dispute and we decided to close the company, my partner eloped to the UK without informing anyone.
The company was closed down suddenly as we were in a rented premises, and we did not have the resources to meet rent and other overheads. The proceeds of raw material sale etc which sold less then a third of market price were used to pay off govt dues like Excise duties, TDS, VAT, ESI and employee salaries.
I was also living in a rented premises and changed houses. And just came to know that the bank has filed a case with the DRT. I did not receive any summon as I had changed address.
Now I do not have any assets / property in my name and since the last 2 years since the business closed down have been living off support from my father and I had to move in with him as I could not afford rentals.
Now I want to understand what could be my liability here, and wether any problems can happen for my father.
Please advise.
Devajyoti Barman
(Expert) 01 April 2016
Without seeing the petition of DRT no further advice cna be given.
Being a Director you will be criminally prosecuted if it is found that you duped the bank while getting the loan.
It is public money and no one is allowed to play risk game with it.
raj bhatia
(Querist) 01 April 2016
It was not a risk game, gut a genuine case of shipmentnt worth Rs. 7 crores being rejected. Both me and partner lost more then 1 crore each.
selva perumal
(Expert) 01 April 2016
It is clear in your massage that the loan obtained by you without given any collateral security to the bank. Now you are in a defaulter list. As a director the company you are liable person to pay the loan amount from the company or by your own income. If you think you are not in a position to pay loan or do not have the source to settle the default amount then you can approach the court to declare you as an insolvent person before they initiate the criminal proceedings. But, the bankers cannot initiate any action against your father to the default committed by your personal capacity.
selva perumal
(Expert) 01 April 2016
It is clear in your massage that the loan obtained by you without given any collateral security to the bank. Now you are in a defaulter list. As a director the company you are liable person to pay the loan amount from the company or by your own income. If you think you are not in a position to pay loan or do not have the source to settle the default amount then you can approach the court to declare you as an insolvent person before they initiate the criminal proceedings. But, the bankers cannot initiate any action against your father to the default committed by your personal capacity.
Rajendra K Goyal
(Expert) 01 April 2016
Banker would receive major part (55 to 75 % or more depend ) of the loss due to your default from CGTSME.
Bank would try to recover from you. Recovery would be shared with CGTSME in the same ratio it received the claim.
Being a director, bank may also proceed criminally against you.
You may file petition of insolvency.
R.K Nanda
(Expert) 02 April 2016
nothing to add.
raj bhatia
(Querist) 05 April 2016
A recent development has happened, I came to know that the DRT has passed an order for recovery. I have time to appeal, will get the copy or order in a couple of days. I am very confused, as to should I go for appeal in DRAT or not. If I go then what would be the court fee in Delhi DRAT, as even that amount will be difficult to arrange. and lawyer fee, that might also be an issue and not sure if that would help.
Or should I file for Insolvency as mentioned in your advice above? What is the best route Ibshould take?
