False and contradictory overdue amounts stated by bank


On complaint lodged with Banking Ombudsman concerning wrong NPA classification, the bank has repeatedly given false and contradictory overdue amounts as reasons for NPA classification and also to justify illegal invocation of Sarafaesi act wherein it is prohibited to invoke this act for overdues below 1 lakh. Bank sold residential property given as martgage security under Sarfaesi act.

Banking Ombudsman closed the file on grounds that the bank has approached DRT and the matter is complicated.

Can a criminal case me made against the bank officials.

 
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Advocate

Did you redspond to the Notices issued by the bank before invoking the searfasi act?

 
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bank never gave any written intimation as when and due to which overdues in our various loan accounts all our accounts were classified as NPA. Due to this reason we could not respond since we never knew the overdue position based on which accounts are NPA.

The trigger point was payment default by one of our overseas buyers. This buyer was covered by ECGC buyerwise policy by us. Claim with ECGC was lodged through the bank and letter for extention of due date was given to bank before alleged NPA. He made 50% payment and the bank kept on adjusting payment from other regular buyers. The branch never maintained any ledger account for bill discounting and therefore never had a track on payments receievd and adjusted and revised due dates for discounted invoices. Due to this reason we assume the accounts were classified as NPA. There were no overdues in any other account.

On complaint lodged with Banking Ombudsman towards wrong NPA classification and invocation of sarfaesi act within 3 months of alleged NPA, the bank kept on giving false, inflated and contradictory overdue figures in our Machinery Term Loan  and Foreign bill discounting accounts. In the letter closing our complaint, the Banking Ombudsman has remarked "The Bank has reitrated that NPA classification of accounts was done as per Internal guidlines of the bank and Bank has all the right to take recovery action under Sarfaesi act".

The default amount in FBD account was Rs. 10 Lakhs but the bank kept on saying it is 17 Lakhs because of accounting errors. 3 payments from overseas buyers, just before NPA date, totalling Rs. 4 lakhs were never credited to any of our accounts and till date bank is unable to trace/explain where these payments have disappeared. We assume there is foul play by branch staff.

After NPA and Sarfaesi, against our various representations, the bank kept on repying that flow of working capital can be considered only after the 17 lakhs crystallised liability of FBD account is cleared. ECGC claim was in process at ECGC. We cleared the liability from our own sources and still the bank refused to cooperate and kept on adjusting these amounts towards principal and leaving the interest part unadjusted - only to somehow keep our accounts as NPA. Even after ECGC claim was received in full, the bank instead of cooperating, sold our residential property under sarfaesi act. After this sale, bank is paid 100% of its principal dues but interest in suspense account is pending. Towards this, we have argued that since entire working capital was covered under ECGC guarantee of bank, the bank should have claimed this from ECGC, which is obliged to pay as per policy terms. Bank continues to charge interest even after ECGC cliam amounts are received.

Knowing they have a weak case at Banking Ombudsman and the BO was about to write an order against the bank, the bank offcials filed OA at DRT. When we protested, they wrote back saying it is done due to limitation aspect. Due to this reason, BO refrained from passing any order.

In view of these facts, do we have a case for criminal action against the bank officials and can we proceed against them under chapter 29/30 of Sarfaesi act.

Please guide.

 

 
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Unfortunetly there are some banks which donot follow strict rules and regulation of R.B.I. Such things should not be tolerated by R.B.I. I am very happy that in recent times R.B.I. has taken strict action against some banks. I wish the same continues so that such things never occur in future again.

 
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Advocate

You can ask for the details of accounts to which Rs. 4 lakhs was credited. If they are reluctant, Send an RTI application for this.If you are sure that this amount was not brought to account, initiate criminal action against the bank, since these manouvres  resulted the account to be classified  as NPA


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Thanks. We are sure the amount is not credited in any of our accounts and bank has not been able to reply endless requests for clarification by written letters and also during hearing process at Banking Ombudsman.

Towards RTI application for this info the  PIO declined on grounds that matter is sub judice and OA is filed at DRT. Appeal has been filed last week on grounds that this info cannot be denied on grounds that it is subjudice and also it is for self defense. Reply awaited.

Under which section of criminal law can we proceed??

Can we proceed under sarfaesi act for recovery of losses and lost asset??

 
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A case of wrong NPA classification and wrongly invoking sarfaesi act is now clearly established by way of documentary evidense during pocess of hearing at Banking Ombudsman and account statements.

The urgent problem of ours now is how to get quick justice in view of the fact that we were never a defaulter before and after NPA and the bank is paid its entire principal dues of 80 Lakhs within 15 months of NPA.

We being an SSI - EOU manufacturer urgently need our securities released so that we could obtain credit facilities from other bankers and restart our manufacturing operations. 50+ employees, our dedicated vendors and us are now virtual street beggars inspite of never being a defaulter.

Since DRT is going to be a long drawn process, we thought about criminal proceedings. Is there any other way to get quick justice??

 
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Advocate

You are already ahead .Before filing a complaint, please ensure whether the amount  of 4lakhs been realised. With the facts of crediting or encashing the proceeds, (which could be verified with the issuing banker ) file a complaint which could be prosessed aunder section 120B. Regarding the lost  of asset deal with it in the DRT.


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Thanks. We have copies of bank's payment advises for this 4 lakh payments received during Feb and March'07. Copies have been given to bank. They are reluntant to discuss this issue of crediting now since the matter is at DRT.

We are being harassed because the bank is still holding high value self occupied residential flat as mortgage. Further, as per their OTS policy, if the bank is holding excessive security they cannot compromise on Principal or Interest amounts. Because there is an issue of staff side action, the bank lodged OA at DRT on frivoulous inflated overdues to drive the matter into long drawn litigation.

 
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FIN

You must have certified copy of all records i.e written replies of the bank ,your representations,notings from BO.

You should keep on persuing for reply under RTI.

The action of the bank is intentional,willfull, cunning,misuse and abuse of knowledge of law against a citizen,protection to illegal acts of its own emloyees..

You must have sent a  written representation to the MD and Chairman of the bank and Finance Minster,Governer Reserve bank of india,Prime Minster's offce demanding an enquiry into the matter by the Vigilance.You may make the higher officers a party.

If the bank has been audited for the period in question, you should ask for the audit repert to be tabled and its copy under RTI.

You may use your resources and approach one of the old lawyers on the pannel of the bank in your or other city, and you may be able to know the remedy.

You may approach a good criminal lawyer in your city or around.

You

 
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