(Guest)

Loan recovery

I have taken a Business loan (Suvidha Plus) of 200,000 INR from Kerala Bank in 2022. I had been paying all the EMIs until the last two months when I could not make the payments due to being hospitalized and my shop being closed. Now, my shop is open, and I am trying to catch up on the payments.

Recently, the manager and an executive visited my shop and informed me that they would initiate a revenue recovery process since they possess my land tax receipt. However, the original documents of my property are with KSFE for a Chitty.

Can the bank proceed with revenue recovery and attach my property if they only have my land tax receipt? What actions can the other entity, which holds my original documents as collateral, take in this situation?

Please advise.

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7 Replies

T. Kalaiselvan, Advocate (Advocate) 26 June 2024

The bank can adopt the existing remedies for recovery of loan, if this is feasible then they can proceed.

The property documents are held by bank as collateral but that will not prevent the lender to initiate action for recovery through the available sources.

kavksatyanarayana (subregistrar/supdt.(retired)) 26 June 2024

Request the Branch Manager of the bank to give some time to coop up the pending amount and inform the bank authorities that the original document is with KSFE.

Dr. J C Vashista (Advocate ) 27 June 2024

Default is for 2 EMIs only, which is not such a serious issue for initiaiion of recovery through collateral security.

Settle the issue with Branch Manager.

(Guest)

Originally posted by : T. Kalaiselvan, Advocate

The bank can adopt the existing remedies for recovery of loan, if this is feasible then they can proceed. The property documents are held by bank as collateral but that will not prevent the lender to initiate action for recovery through the available sources.

Are you suggesting that a land tax receipt is considered collateral? What are the legal means available for a bank to possess my land? Do you believe that a bank can recover my land without holding any original documents? Is there any law that supports this?

P. Venu (Advocate) 27 June 2024

As per the Notification No. 54415/S3/86/RD dated 13.10.1987 and published in the Kerala Gazette No. 45 dated 17.10.1987 (SRO 1465/87) referred 1st above, Government declared that the provisions of Section 71 of the Kerala Revenue Recovery Act, 1968 shall be applicable to the recovery of all kinds of loans advanced by banks under various development schemes, in the interest of banking development in the State and with a view to removing impediments to the flow of credit from banks.

However, the Banks need to follow the due process as provided under the Act.

The Kerala High Court has held that banks and financial institutions can initiate proceedings under the Kerala Revenue Recovery Act, 1968 for recovering debts below ₹20 lakh as the provisions of the Recovery of Debts and Bankruptcy Act, 1993 applies only to defaulted loans of ₹20 lakh and above.

Smath Henry 04 July 2024

You've indicated that the original documents of your property are held by KSFE for a Chitty. This means that KSFE has a lien or mortgage over your drift hunters property as collateral for another transaction. This arrangement complicates the situation because the property's documents are not physically with the lender (Kerala Bank).