Section 31 of drt act

The query is not in DRT Act; but it is about Sec.31 of SARFAESI Act.  It is true that if the loan dues is less than Re1 lakh or if the total dues are less than 20 % of the principal and interest accrued.

Please state clearly whether the bank can proceed under section 13(2) when the defaulted or due amount is less than Rs. 1 lakh or 20% of the total bank facilities.

Section 31

This act shall not apply

Mr. sukhbir It is currect

DRT and Bank do not care or take cognisance of this once they have declared an account NPA issued 13(2) and in spite of representation accepted by the Bank for payment issue notice 13(4) ignoring the basic point, what the borrower should do.   What is the avenue open to him to challenge this to those very people who have done this mistake.

The Borrower should be relaxed and pay attention to the productive part of the business, Cause the Bank has no legal right to proceed in such cases. All the Borrower needs to do is stand firm and resist any illegal action by the Bank under various sections of IPC & CrPC. If u r from Maharashtra u may contact Adv. Manish Bohade for further consultations on - 09371505560.

Thanks for your suggestion.  I am from Delhi.   Although my Advocate is fighting this case in DRT at New Delhi but it all depend on Bank's presentation which is not touching this issue and replying to this issue but raising questions of their total dues which they raised after issuance of 13(2)and did nto bother to appropriate amount as per their own internal instructions or as per RBI guidelines.   Advise me whether I can go directly to the High Court even though the case is pending in the DRT with regard to above.  

If you are aggrieved with the Orders of DRT, you may approach DRAT under Appeal as per Sec.18 of the SARFAESI Act.

The dues are to be calculated as on the date of NPA. If the outstanding dues is less than the 20 pc of the total dues on that day, i.e. the date of NPA, then only provisions of SARFAESIA are not applicable.

Its clear that your case do not fall under this ACT as per Section 31

Did they give you prior notice , as stipulated , in the ACT , before declaring your A/C NPA

Are you ready to pay the dues with interest and a settlement with Bank

Afterall YOU WILL HAVE TO PAY THE DUES

If you want then there can be a settlement

The Bank will not listen after they have declared it NPA under Rule 13

If you have money to repay , its a different issue

If you dont have , you can fight upto Supreme Court and go on occupying Property for a long long time

But to do that at least you will have to spend about 5Cr spread for 15-20yrs till final decision comes from REview of Supreme Court

Depends on You

You can tell the DRT the notice is wrong as the matter does not fall under DRT .

This you can do it without charge

The question is what happens to the amount locked in NPA account .

If its meagre , open another account which you will have

If its large go for out of court settlement

With regards

The Bank asked on 1.9.2009 to clear overdue of interest and two principal instalments amounting to Rs.15 lakhs.  The total working capital limit on that is Rs.2.65 crore.  This amount of Rs.15 lakhs is not paid till October 2009, Bank declares NPA, issue 13(2) with total dues of Rs.2.65 crore with effect from 30.9.2009.  Party make a request with payment of Rs.1.85 crore, request for restructuring the balance as it is a workign export unit.  We deposit Rs.2 crore in the Bank. Bank refund back Rs.15 lakhs.   Due to some reason, Bank did not released the accepted properties against the payment and I took them to the District Court, which ruled against the Bank.  All this happened when only 13(2) was issued.   The amount of Rs.15 lakh is much below 20% of the total limits which according to ECGC were valid till 31.3.2010. 

And thereafter issue 13(4)which is being challenged, since accepted the amount, released part property, refunded the amount above Rs.1.85 crore also.   Then how can they proceed.  

The dues in the account were only Rs.15 lakhs in September 2009.  It is an export unit enjoying working capital facility of Rs.2.65 crore.  NPA declared from 30,9.2009 due to overdue of only Rs.15 lakhs, which is less than 20%.

Party made substantial payment on receiipt of 13(2), it paid Rs.2 crore, but the bank refunded back Rs.15 lakh as agreed amount was Rs.1.85 crore and balance to be restructured.  But after accepting the payment, due to some other reasons, branch action was not approved by the Circle Office, and they backed out even after accepting substantial payment.  And issued 13(4).   When representation has been made after 13(2), Bank accepted the payment, should have acted as per RBI guidelines.  and as per DRT Act alos.  They did not.   Assets with me mortgaged to the Bank are much more than the balance dues, and should have been restructured.  

A little clrification

total overdues 2.65Cr

You deposited 2 Cr

Balance remaining , as restructuring not settled  is .65 Cr

20% of 2.65 Cr  is .53 Cr or 53 Lakh

.65 Cr or 65 Lakhs is more than 20%

also the difference is enhanced if the returned 15 lakh is added to 65+15 =  80Lakhs

How its not covered under Debt Tribunal  Act as per 13(2)

Did you get the RESTRUCTURING  LETTER FROM THE BANK

clarify

it is not 65 crore.  It is Rs.2.65 crore total limits sanctioned valid upto 31.3.2010 approved by ECGC.  The account become NPA because of overdue of Rs.15.00 lakhs.   If I had paid this Rs.15 lakhs by 30th Sept the account is not declared NPA.    I sold a factory for Rs.3 crore and pay to bank an amount of Rs.1.85 crore as agreed by them for release of this property.  But I deposited a cheque of Rs.2 crore and they retained Rs.15 lakhs.  This all after issue of notice u/s 13(2).  They did not appropriate this amount properly and still showe interest of Rs.15 lakhs payable. They could have kept Rs.15 lakh which the Branch returned in my savings account.    Lawyers are not very clear about this 20% condition as enshrined in section 31(J).  My overdue were Rs.15 lakhs only before issue of 13(2) which is less than even 10% of the sanctioned limit of Rs.2.65 crore.   Action u/s 13(2) is also under Sarfaesi Act.  So according to me and many learned lawyers, even though the account may become NPA, but the action under the Act can only be taken if the amount in question (overdue interest, term loan instalments, etc) due to which the account becomes NPA is more than 20%, then only the action can start.   This is a very serious question which many lawyers are interpreting differently, and I also do not see any case so far in any Court on this issue of section 13(j) which prohibit action under section sarfaesi, whether be it 13(2) or 13(4).   This is the moot issue.  The securities available with the Bank are substantial, the account is not a lost account, and was not substandard from any angle, nor it was declared as such.

The points raised by you may be argued in DRT/ DRAT through a competent / Senior lawyer.  Then only, landmark decisions emenate, which would be helpful to you and also to the public at large in similar situations.