IF a bank has sanctioned, a sum of Rs. 10 lacs as CC Facility to Mr. X at 12% p.a. against the mortgage of immovable property of market value of Rs. 20 lacs in June 2008 (after execution of proper documents on June 30, 2008). Mr X has not utilized the limits at all. Now, client in May 2011 has utilized the full limits and doesn’t pay neither principal nor interest and the outstanding amount due is Rs. 15 lacs. Let us assume also, in the meantime, the market value of the property has gone down to Rs. 5 lacs. Now, on August 2011, banker wants to recover his dues and sell the property for Rs. 5 lacs. Now, can bank recover his balance amount of Rs. 10 lacs from Mr. X personally or from his other properties. Please note, no AOD has been executed.
In my view, yes, as suit was filed in August 2011, and clients utlized limits on May 2011 (3 years has not expired)
Please also confirm whether Law of Limitation (ie 3 years) should start from the date of documents or date of first utilization by client
And, are there other ways of extension of law of limitation apart from the execution of AOD.
Regards,
CA. Ankur Bansal
