Clash between Bank & CTO

Sreedhar Valiveti (Querist) 20 October 2008 This query is : Resolved
Dear friends,
Bank has moved under securitization act, against a bad debt for recovery. When the matter is at the stage of auction, CTO has sent a notie to Bank by informing their dues along with penality.

My question is CTO has a right to move against party for recovery of dues along with penality, but when Bank holds 1st charge over the said property, then can CTO can claim penality from the Bank or not. As of my knowledge CTO can claim Dues only but not penality.

Please resolve and give ciations if any!
Thanking you sir

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Guest (Expert) 22 October 2008
I think State has got first right as Public Money is involved. Only after the State recovers, Bank will get the Power. Penalty aspect not sure. Dues Yes.

Manish Singh (Expert) 23 October 2008
both realisation proceedings can go simultaneously and from the sale proceeds, the debt shall be settled and the state shall get priority. he can claim penalty also.

Sreedhar Valiveti (Querist) 23 October 2008
Dear sirs,

i am sure that state dues will get the 1st priority, but with regard to the penality portion, state govt. can't claim the penal portion, from a secured creditor.

So, kindly go through the aspect in that mode, and suggest me, if any citations are there, to support my argument.

Thanking you sir/s

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