LAW OF LIMITATION...
SUMEET
(Querist) 20 May 2008
This query is : Resolved
A FRIEND OF MINE HAS AVAILED A LOAN FACILITY FROM CO-OPERATIVE BANK IN MAHARASHTRA 8 YEARS BACK. HE REPAID A FEW INSTALLMENTS AND HIS BUSINESS TURNED INTO A FAILURE. THE MORTGAGED PROPERTY TO THE BANK WAS A HOUSE IN A NON-REGISTERED AREA. THE BANK BEING A CO-OPERATIVE ONE HAS ALLOTTED SHARE TO MY FRIEND AND HE ACCEPTED TO TURN THE ANNUAL DIVIDEND INTO THE LOAN ACCOUNT UNDER STANDING ORDETRS FOR THE WHOLE PERIOD.
NOW, THREE YEARS HAS ELAPSED SINCE HIS PAYMENT OF THE LAST INSTALLMENT TO THE BANK. DURING THIS PERIOD, THE LOAN WAS NOT RENEWED, EITHER ORALLY OR IN WRITTEN.
NOW, MY QUESTION IS THAT, CAN HE DENY THE REPAYMENT OF THE LOAN ON THE BASIS OF DEBT BECOMING DEBARRED UNDER THE "LAW OF LIMITATION" SINCE HE HAS NOT PAID ANY INSTALLMENT NOR ADMITTED HIS LIABILITY FOR A PERIOD OF THREE YEARS. WILL THE DIVIDEND ADJUSTMENT MAKE IT IMPOSSIBLE TO DENY REPAYMENT?
HAD SUCH ADJUSTMENT NOT BEEN THERE, WOULD IT BE POSSIBLE TO DENY REPAYMENT.
~ A FRIEND...
J K Agrawal
(Expert) 20 May 2008
As per best of my knowledge the Law of co-operative societies is different then civil laws. You have taken a loan from co-operative bank and the law of limitation is not applicable in case of a transaction between a member and a cooperative society. It does not make any deference that your dividend is being credited in your account regularly. Had the bank be other then co-operative bank you would have a good defense of limitation with you.(Proper law section is not with me right now) Secondly your property is mortgaged and the limitation for foreclosure is 30 year starting from the date the money secured becomes due (article 63 the limitation act 1963). Limitation of 3 years is only when bank files for recovery on money due. Many Bank makes this mistake regularly and I think you are also lucky. advocatejk@yahoo.co.in
SUMEET
(Querist) 21 May 2008
DEAR SIR,
A THING IN MY NARRATION IS MISSING THAT THE PROPERTY IS SOLD AS OF NOW AND A FEW BANK OFFICIALS KNOW IT WELL. FURTHER THE BANK HAS FILED A SUIT FOR THE RECOVERY OF DUE AMOUNT AND FINALLY IT WAS AGREED TO CREATE A TERM LOAN IN MY FRIEND'S NAME AND THE EARLIER LOAN WAS TREATED AS FULLY PAID. AFTER A FEW MONTHS, NO INSTALLMENT IS PAID BY HIM FOR THREE YEARS. UNDER THESE CIRCUMSTANCES IS THERE ANY VALID DEFENCE FOR HIM.
HE HAS APPROACHED TO THE BANK TWO YEARS BEFORE TO SETTLE THE LOAN AT ONCE BY PAYING IN LUMPSUM. THE BANK OFFICIALS COULD NOT PAY ANY ATTENTION TO HIM.
THANK YOU AND WAITING FOR YOUR REPLY...
