Harsh (None) 26 January 2019

Misuse of security cheque by a nationalised bank

Respected Experts

One of my Known Old Aged person has taken Housing loan of around 60 Lakhs from a Nationalised Bank. He Paid EMI for around four years. Aftersome time due to Heavy loss in Business he was not able to pay EMI.

The Banks Exectutives approached him several time and each time he told them that he is not able to pay.

The Bank Gave him a Letter to vaccate the Hosue by the end of September 2018 else they will take the possession by themselves by Jan-2019. The person by the end of September vaccated the house and tried to handed over the keys to the Bank Authorities immediately.

The Bank Manager asked him to keep the keys with himself so that if any customer for the repurchase of the House will come it will be convnenient for him to show the house for resale and if the house is sold he will also be free from legal things. But the house was not sold till Date.

In December 2018 , The Bank Executive again gave a notice to the person at his shop (as He vacatted the hosue) that Since you have not given any possession Bank will take it in 2-Jan-2019 infront of the police. A copy of that letter was also addressed to The SP Police

The Person Again approached to Bank to Hand over the Keys and with a Letter this so that no scene of poilce and all is created there. But The Bank Managert told him that it is just a formality and we will Take the possession and there is no need to any letter and Keep the Keys with you as sugessted earlier. Manager also assured that Uncle you have our customer so long, You are old Aged we so best for you , whatever we can.

On the Date of Possession i.e January 2019 Bank Pasted its Posession Letter on the House but Didnt Took Keys and told him to keep with him Everyting was going in good faith.

BUT now on 25 January that person has received a Notice from the court U/s 138. The Bank Presented Cheques which were given as Security at the time of Taking the loan.

Now this person has no money and Living Temporarily somewhere in his close relatives house and have no money even to Bail Himself as it is heard that 20 % of the Cheque Bounced amount is to be deposited in court Now a Days.

Kindly Guide what is to be done under circumstatnces,

Thank You

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9 Replies

Dr J C Vashista (Advocate) 27 January 2019

The borrower has to engage a local prudent lawyer for his defence and contest the case(s) filed/ likely to be instituted by bank and get rid of auction/ sale of mortgaged property.

G.L.N. Prasad (Retired employee.) 27 January 2019

Let us appreciate the understanding banker who has empathy and provided all opportunities.

The bank has not been using that cheque money for themselves, and when a cheque was given with a purpose for repayment of a housing loan, it is unkind to state that cheque was misused.

The only guidance that can be given is let the borrower himself find a purchaser and take some advance money and settle the loan with the co-operation of his banker, who must be understanding and wants the only repayment of a loan and nothing else.

A senior citizen going for a housing loan without study income is itself a mistake, now he should not step into the court and for various cases particularly when the opponent is a strong PSU Bank equipped with men, money, and machinery. Remember, every paisa they spend is finally recovered from the borrower.

Think practically for an ultimate solution without further expenses and troubles.

P. Venu (Advocate) 27 January 2019

The affected person may reply to the Notice brining all the facts on record. At this stage, there is no requirement of taking any bail.

R Trivedi (advocate.dma@gmail.com) 28 January 2019

This is bad application of S.138 of NI Act. Banks act smart as they know the civil procedure of getting their dues is tedious so they misuse, yes misuse, the security cheque. The misuse is complete when courts admit such cases. Bank has the collateral security with them, that security amount in all likelihood is much more than the dues amount, so banks must not be lawfully permitted to force people into criminal litigation, if they have collateral security. The problem is with the law, and nowadays lawmakers are......least said is better.

R Trivedi (advocate.dma@gmail.com) 28 January 2019

S.67 of the stamp act, if I recall correctly, makes any undated or post dated instrument bad in law. Hon SC interpretation of PDC is without reference to above, and various HC order on blank cheque is also bad as S.20 of NI Act is not applicable on cheques. Think of it, a simple S.138 of NI Act is made so complicated, because these lower judicial guys do not understand the mercantile transactions.

Harsh (None) 28 January 2019

Thanks for the reply sir. The problem is more escalated because now a days there is no appreciation in the rates of property here and there are very less number of buyers. Moreover in Chhattisgarh Region , now registry for new house can be made only when all the documents are well updated online and in more than 75 % cases they are not. Under such circumstances, buyers are also not available. Can we approach to higher court (without contesting here) to get the case filed u/s 138 be quashed or direct to file civil suit instead. Thanks

R Trivedi (advocate.dma@gmail.com) 28 January 2019

You should attempt under S.482 to High Court. it shd be more like a question of propriety and law, rather than merit of your case. It may succeed and will save thousands of harrassed-by-Bank guys.