LAW OF LIMITATION...
(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...
(Expert) 29 May 2008
The bank can always file a suit for foreclosure on the mortgaged property. The periof or three years shall apply only for recovery of money. Since in this case, there is a mortgage, the question of 3 years would no come into play.
(Expert) 10 June 2008
Dear Sumeet 1st thing as the there is continous adjustment of dividend into the loan account your friend cannot take shelter under non-payment for three years and that the debt is time barred. 2nd thing to stop the divided from adjusting to loan account your friend either have to surrender the sahre or must give a letter to the bank stalling them from depositing the same to the loan account. 3rd in case of mortage the limitation period to file a suit is 12 years but not 3 years. Hope your doubt is cleared