Harassments from the not-so-well-placed and not-so-well-occupied recovery agents acting on commands/behalf of banks in recovering the overdue amount are quite objectionable & seriously unacceptable as such incidents leave the other party (borrower) with sheer disappointment. Verbal abusive remarks, attempts of force assault are quite common. Here’s what one must know and do in all such circumstances.
What is the legal status and what are the rights of a defaulter borrower who is unable to pay off the loan amount sanctioned from the bank? The fact that borrower being a defaulter does not take away/strip off/dilute any of his rights nor does it make him a criminal and all his rights remain to be the same as before the time he was sanctioned loan to. The amount of overdue balance is nothing but a moderate liability over the borrower to the bank, the recovery of which is established protected regulated by a lawful/humanitarian process, process which is laid down by the Reserve Bank of India (RBI) to be strictly adhered by all the Banks. The RBI through various enactments lays down guidelines to be followed by banks for the protection, welfare and safety of the borrowers. The banks while recovering the dues (through the recovery agents) cannot behave like moneylenders and have to comply with the best human treatments. Every borrower has the right to decide & give his authorisation about the place/time of meetings with the recovery agents as per his/her interest and recovery agents have to comply such decision of the borrower. If the recovery agents do not follow this process & forcefully meet at any other place the same would amount to criminal intimidation an offence u/sec 503 Indian Penal Code (IPC) punishable with imprisonment upto 2 years, together with the application u/sec 156 CrPC directing the police officer’s power to investigate the case.
Right to be served notice & Right to be heard: Every bank has to issue notice to the borrower before every process...in cases of sale of assets banks have to serve a notice to the borrower mentioning details about the sale, fair value of the asset(assessed by bank’s valuers) date & time of auction. In addition to this the borrower has a right to be heard in all the stages of auction and receive necessary details about the process of auction/sale.
Right to objection: On receiving any such notice of sale/auction of asset by the bank the borrower has the right to convey & raise his objection on the ground that the fair value assessed by bank is undervalued. The borrower has the right to introduce prospective buyers of the asset to the bank who are willing to offer a better pric of the asset.
Right to realisation of refund and balance: The money from sale/auction of asset belongs to the borrower & the banks are under strict duty and responsibility to refund the balance amount to the borrower after recovering the dues and the expenses of conducting the auction.
Things to do when you lend money
Do not let your hard earned money advanced to any borrower be fraudulently deceived. Do not let any borrower play the crooked defending game resulting in settlement with half the amount of dues in a prolonged litigation in court of law.
Remember and do these things while you advance loan to any person:
Make a written agreement with the person you are advancing loan to with testimony of a witness. Such an agreement is termed as- Loan Agreement.
Take a promissory note and a signed cheque in his handwriting. This will ensure that you have advanced the loan and the borrower cannot take the defence that his signatures have been taken, obtained by fraud, forgery, under undue influence, without free consent
Always pay the money through/by cheque or account transfer so that there is a record of the transaction. Pay such amount that you can lawfully and reasonably justify in the court of law in accordance with the income tax returns.
Keep a record of the communications voice, short message services based, whatsapp etc. these are admitted as evidentiary proof in the court of law.
Important guidelines for clauses in service agreements
Do not let vital informations relating your business realities and your clients fraudulently getting stolen by any wicked minded employee who believe in such activity by reposing and winning your trust and stealing such informations for their personal gains. Remember to add and rely on the following clause and agreements.
Professional Misconduct clause: Such a professional misconduct clause gives you and protects your right to dissolve the employment of any employee who has been found to be engrossed in something detrimental to the interest of the organization and such an employee cannot take any legal recourse thereafter.
Severance Agreement: When you really discover the fact that any vital important thing/information is stolen by any employee you have an option of entering a severance agreement with the employee which ensures that he pays the dues with your organization and moreover he cannot take the support of the labor court thereafter.
Non Disclosure Agreement : On such a situation you still have one more recourse to sign with the employee a non-disclosure agreement that ensures the employee would not disclose the facts/informations.
Documents to be checked/reviewed & stocked when you buy a new or resale property
Title Certificate: Issued by local land governing authority it is a certificate of ownership which certifies the person, group, entity, incorporation of the right of ownership
Mother Deed: Also called Parent Document is a legal document which traces the previous change of ownership of property by sale/gift/partition etc.
Sale Deed: It is a legal document which is a proof of transfer of ownership from the seller to the buyer.
Approval and No Objection Certificates: These include commencement certificate/completion certificate/conversion certificate (applicable only to land with change of land use)/occupancy certificate/certificate from the local water-electricity-fire etc. bodies and any other department of the concerned locality/latest Tax paid Receipts. Possession Receipt.
Action an aggrieved buyer must take against malpractices of builders
Delayed possession, insufficiency & failure in obtaining govt. approvals/certificates, use of inferior & low quality raw materials, improper drainage system, water leakage are the grounds you can instigate suits* against the builder as all these amount to offences like cheating/ fraud/ Breach of contract/ Not responding to grievance and delivery of poor quality construction… among the suits of criminal nature against the builder for all such malpractices and deficient services towards the buyers.
In addition to this an aggrieved buyer has an option of approaching a consumer forum court for claiming the genuine refunds from the builder with interest and an alternate accommodation from the builder as well.
The consumer forum courts are governed by The Consumer Protection Act which protects the rights of the buyers(consumers) and provides remedies to the consumers against all such malpractices and deficient services of builders.
The aggrieved buyer has yet another option of approaching The Competition Commission of India that protects the rights of the buyers, prevents practices which adversely effect competition, prevent dominance of malpracticing & deficient builders. Governed by The Competition Act the Commission imposes stringent penalties against the offenders (builders).
• Denial of compensation or insurance amount by insurance companies
• Failure of Builders to deliver possession in the time promised
• Unfair trade practices by authorized automobile service stations
• Faulty services to customers
• Deficiency of services by telecom & internet service providers
• Breach of contractual obligations with the customers
Many often we see all such issues suffered by innocent customers leading to mental agony and pain. The Legal system in India works on the principle that where there is a wrong there is a remedy. The Consumer Protection Act through the district consumer forum, state consumer commission and the national consumer commission lays down guidelines for the care protection and redressal of complaints of the aggrieved customers/consumers against all such deficient service providing entities who fail to deliver the services promised to the consumers. All these courts impose directions to such companies to pay the compensation amount to the aggrieved consumers + impose fine + additional sum against the litigation expenses borne by the consumers.