Drt matter
K.K.Ganguly
(Querist) 19 June 2012
This query is : Resolved
Would the Ld. Experts kindly opine on the following:
A) A Small & Medium Scale Enterprise (Tailoring Shop) owner had taken loan from Bank for Rs.19 Lakhs for buying machines for enhancing production as per the guidance of one broker who had contact with Bank & who took 10% towards commission for arranging loan,
B) The broker made the project report for the SMSE & charged Rs.80,000/-,
C) The broker arranged for the machinery for Rs.9 Lakhs from a supplier which costs Rs.5 Lkahs only as found later on by the uneducated owner of the SMSE,
D) The Bank also took a consent letter for covering the loan under Central Govt. Credit Guarantee Scheme,
E) The Account became NPA & the Bank has filed Application before DRT u/s19 of Recovery of Debts Due to Bank & Financial Institution Act and asked for order for taking possession of the hypothecated machinery for recovering the dues,
F) Meantime the Bank also has advertised in paper for OTS for all SMSEs including those against whom Applications have been filed before DRT.
My questions are:
1) Can Bank file Application before DRT for taking possession of the hypothecated machinery for recovery of the outstanding amount when the said loan was already covered under Central Govt. Credit Guarantee Scheme? Can Bank recover the outstanding twice, once from Central Government and again from the borrower?
2) When the Bank advertised in paper regarding OTS from all SMSEs including those against whom Applications for recovery have been filed before DRT and when one SMSE applied for such OTS, did it not make the Applications before DRT for recovery from him ineffective?
Kiran Kumar
(Expert) 19 June 2012
read the policy again but carefully.
bank is not entitled to twin benefits.
but they have got right to proceed against the assets.
govt. guarantee does not mean outright responsibility.
pendency OA before DRT does not put any restriction for OTS....its rather a good offer and if possible the Debtor may avail it.
ajay sethi
(Expert) 19 June 2012
it does not make application before DRT ineffective . DRT will adjourn the amtter till your application for OTS is decided .
apply for OTS . bank generally settles for principal amount and waives part of interest .
bank can file application for attachment of hypothectaed machinery and subseqnely sell the said machinery by auction after inviting bids
c.p.s. ramachary
(Expert) 20 June 2012
Dear Mr. Ganguly,
Any amount guaranteed under credit guarantee scheme does not have character of 'debt'. It is for the creditor to file claim in court or DRT for recovery of debt as a condition precedent to claim guarantee amount. On recovery of the loan the bank has to refund the guarantee amount. Hence please do not be confused that bank is enjoying double benefit in recovery. OTS under SMSE Scheme is beneficial to you to avoid the burden of paying the actual dues. Instead of disputing on the above confused point you may pursue the bank for OTS as rightly advised by Mr. Ajay Sethi. DRT will not be prejudiced if you pursue OTS because DRT will get disposal of one case in its record.
K.K.Ganguly
(Querist) 20 June 2012
Thank you Ld.Experts. I could enrich myself. I am much obliged.
malipeddi jaggarao
(Expert) 20 June 2012
I agree with the expert Mr.Ramachari.
You have given lot of irrelevant information regarding broker. It is difficult to prove the role of the Bank in such cases.
1) Can Bank file Application before DRT for taking possession of the hypothecated machinery for recovery of the outstanding amount when the said loan was already covered under Central Govt. Credit Guarantee Scheme? Can Bank recover the outstanding twice, once from Central Government and again from the borrower?
Answer: Yes. Though the claim of the Bank with Credit Guarantee Corporation is settled, Bank has right to proceed against the borrower and if there is any recovery from the borrower, it has to refund the amount to Guarantee Corporation proportionately after deducting the reasonable expenses for such recovery.
2) When the Bank advertised in paper regarding OTS from all SMSEs including those against whom Applications for recovery have been filed before DRT and when one SMSE applied for such OTS, did it not make the Applications before DRT for recovery from him ineffective?
Already replied other experts. It is not ineffective. Once OTS is satisfied ( amount is paid) Bank will withdraw the case in the DRT.
RAJU O.F.,
(Expert) 20 June 2012
Better submit proposal immediately, for OTS offered by bank and settle the dues within a short period. File memo before DRT enclosing copy of your proposal for OTS and if the bank agree, Hon'ble Tribunal would post the matter to a longer date, to ascertain the outcome of OTS.
M V Gupta
(Expert) 21 June 2012
Under OTS banks would not reduce t he principal amount due. They may waive in full or part the interest accrued on the debt.
c.p.s. ramachary
(Expert) 23 June 2012
under OTS the banks recover balance outstanding as on the ate of NPA. There will not be any deduction in respect of the principal amount i.e.the balance outstanding amount. Only interest subsequent to the date of NPA may be waived in part or full as rightly said by Expert Mr.M.V.Gupta.
