Limitation period for recovery suit by bank
Guest
(Querist) 05 August 2015
This query is : Resolved
Respected Experts,
Bank extended loan to a person for purchase of a new car which was hypothecated with bank. The balance & security confirmation was also made by the borrower before expiry of three years from date of sanction of loan. Thereafter there was a default in repayment of loan amount.
My queries are as under: -
1. The period of limitation to file suit for recovery will start from the date of balance & security confirmation by borrower or from the date of last payment made by borrower?
2. Is the date of account becoming NPA relevant from the point of limitation?
Actually, the three years period has already elapsed from the date of Balance & security confirmation by the borrower and the bank has not filed the suit for recovery but the date of last installment & date of NPA is within the period of three years.
Is bank legally empowered to file suit for recovery or its right has been extinguished by Limitation Act?
Please cite relevant section of limitation act in the context.
Jeetender Gupta
(Expert) 05 August 2015
Period of limitation starts from a breach. So date of last installment can well qualify to be considered as start of limitation period.
P. Venu
(Expert) 05 August 2015
Prima facie, you intent to take advantage of the law to own a car at the expense of the public,
Guest
(Querist) 05 August 2015
Respected Experts,
Shri Jeetender Gupta: Thanks sir.
Shri P. Venu: Sir, I am on the other side so please change your views about me.
Advocate Bhartesh goyal
(Expert) 05 August 2015
Period of limitation will start from date of payment of last instalment.
Rajendra K Goyal
(Expert) 05 August 2015
The limitation would start from date of last balance confirmation / debt confirmation or date of last installment paid whichever is later.
rajagopal.s
(Expert) 05 August 2015
Hi
In this case the period of limitation will start from the date of balance & security confirmation by borrower or from the date of last payment made by borrower whichever is later.
The date of account being an NPA is irrelevant from the point of view of limitation.
Dear friend, normally car loans are either Hire purchase or Lease agreements and technically banks are the owners of the car. Till such time the hypothecation deed is cancelled, the car belongs to the bank and the banks can recover the same at any time as long as hypothecation deed subsist.
Guest
(Querist) 05 August 2015
Thanks Bhartesh Goyal Ji, Rajendra K. Goyal Ji & Rajagopal Ji.
Respected Experts,
I have one more query, which is as under:
If payment is made in loan account of borrower by some other person in cash
or
payment is made by transfer from one account (saving or otherwise in the same bank) of the borrower to loan account of the borrower by bank itself and borrower does not object to it,
then is it disputable from the point of view of limitation or it is as good as payment made by borrower himself.
If there is any judgment giving clarity on the point please also cite the same.
N.K.Assumi
(Expert) 05 August 2015
Period of limitation is three years and computation of limitation period will start running from the moment the Loan is made or Cheque is paid.
N.K.Assumi
(Expert) 05 August 2015
If you are worried with you Bank's documents being hit by limitation period, you can send me private message for my humble suggestions.
Guest
(Querist) 05 August 2015
Thanks Assumi Ji.
The situation is the same as explained earlier. There were no PDCs. The payment was either made in cash by some third person or it was transferred by bank itself from one account to other.
K.K.Ganguly
(Expert) 06 August 2015
1. The date of confirmation of debt or the date of last payment, whichever is latest and falls within 3 years period, will be used by the Bank for filing suit,
2. Date of NPA is of no relevance here,
3. However, as a general practice, lending Banks collect blank, undated, signed acknowledgement of debt to counter such limitation problems which may arise in future.
Guest
(Querist) 08 August 2015
Respected Ganguly Ji,
You are right sir, but unfortunately undated, signed acknowledgement is not there. Therefore, please advise that
1. If payment is made in loan account of borrower by some other person in cash
or payment is made by transfer from one account (saving or otherwise in the same bank) of the borrower to loan account of the borrower by bank itself and borrower does not object to it, then is it disputable from the point of view of limitation
or
it is as good as payment made by borrower himself.
If there is any judgment giving clarity on the point please also cite the same.
K.K.Ganguly
(Expert) 08 August 2015
1. This arguments we face almost every day before the DRT, Kolkata,
2. Unscrupulous borrowers claim that they are not aware how the amounts have been deposited in their accounts, if the pay -in- slips filled up for depositing the cash, do not bear their signatures but the signatures of their employees,
3. This argument is immediately rejected by the DRT.
Guest
(Querist) 09 August 2015
Respected Ganguly Sir,
I am grateful to you for your advise. I am bit relaxed now.
