Bank Loan (recovery limitation act )

Anand (Querist) 12 November 2009 This query is : Resolved
Sir,

We had taken a term loan of Rs.40 lacs from a multi state schedule bank in the year 1999 (april to be precise ). To be repaid in 42 months.

But the things went totaly the other way and the project remained incomplete due to shortage of fund. As the actual amount required was more than double the loan sanctioned.

The bank never disburssed the promised additional amount (verbal promises only ) and for about 4 years we hanged on to get some help from the bank.We then lost interest and ability to do anything further.

Now suddenly after all these years they last year june sent us a notice to remain present before an arbritator appointed by bank itself. we attend the dates but what
we want to know is , , ,

Is not our case time barred after so many years ? ? ? ?

We have never given any commitment in writing to the bank for repayment ? ?

Bank had sent 2 / 3 reminders by ordinary posts ? ? ?

Can some one from the Lawyers Club help me
and guide me ? ? ?

My friends tell that its time barred and no need to worry But I want to have a legal word for this and to know about Limitation Act for time barring recovery by bank.

Pl help me as i am in dark about the future development.

Anand

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adv. rajeev ( rajoo ) (Expert) 12 November 2009
Dear Anand,
i think u might have forgotten, while sanctioning the loan bankers obtaines the signatures on Acknowledgement of Debt, they use the same while filing the suit.
Which bank itz, is their any conditons regading appointment of arbitraror.
If there is no Acknowledgement of Debt then the debt is timebarred. Issuance of notice b y ordinary post cannot be valid and do not admit it regarding receipt of notice.
If u had mentioned the doucments what bank has produced before the arbitrator, could have been better to answer this querrry.

bhupender sharma (Expert) 12 November 2009
three is the limitation if the debt is acknowledge on running account.

Y V Vishweshwar Rao (Expert) 12 November 2009
1- Loan taken in 1999 - it is now 10-11 years

2- The Lona is 40 lakhs

3- Is there any mortgage as security for the loan ?

4- if Mortgage is there the limitation is 12 years

5- Revival Letters / repayment shcedule 42 months - 3 & years 6 months from commencement of the installments

6- There will be gestation period after loan is disburced - it may be 6 or 9 or 12 months after the loan is released

In view of the above facts and if the mortgage security is available to the Bank - the Claim of the Bank is not time barrred !

Howevewr, the Terms of the loan documents and other facts/ particulars- to be verified , as suggested by lrd friends Mr Vadarli & Mr Sharma