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Nitin   28 February 2017

Bank refusing the one time settlement done 4.5 years ago.

In 2000 my dad had taken a salary loan from a cooperative bank he was working in. Due to personal reasons, he decided to leave the job in 2002. So, per discussion with his manager over phone in 2002, he had sent his resignation and application to credit proceeds from PF, gratutity and security deposit to his loan account and close off the loan account which bank did not do in 2002. In 2012, he came to know about not closure of his loan account from one of his colleagues. So he went to bank and discussed with chairman of the bank verbally about this case. Chairman told that time, you pay off the principal amount and settle the loan. So bank manager accepetd one cheque from my dad. My dad also filled in PF and gratutity forms. This all communication was verbal and is no where documented. Trusting the bank and chairman of the bank, my dad did not ask for the closure letter of loan account. Now suddenly in the last week after almost 4/5 years, new bank manager called him up and told that there is a huge outstanding of Rs. 6 lacs in his loan account. My dad met chairman again and talked about the problem happened. Now chairman is asking him to pay off remaining outstanding amount again with so huge interest. Though bank did not have new communication address to send him in notices, it does have my dad's cell phone number and it did not call him in last 6 years for the same. My dad has xerox copy of application he had initially sent to bank in 2003. Also there is no security with bank against this loan as it was a salary loan. My dad is also retired now and he/I cannot afford to pay such a huge amount. What should we do now? Should we file complaint against bank in consumer court or wait for bank to take up action and then respond? Also if case goes in court, what would be the worst result we will need to deal with. Please help.



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 12 Replies

Kumar Doab (FIN)     28 February 2017

Your father has grossly erred by indulging in verbal transactions.

Your father has copy of application and it can help.

Your father could have avoided payment by cheque therafter.

Has the bank settled his FnF?

 

 

Nitin   28 February 2017

Thanks Kumar for your reply.

Yes. Bank had accepted his resignation in 2003 only. They also gave him his experience letter long back in 2004 as he had to join some other bank in 2004. Bank did full and final settlement by crediting gratuity to his loan account and asking him to fill in withdrawal of PF back in 2012 only (5 years back). In 2012 only chairman and bank had agreed to do one time settlement. So he had given cheque for full and final settlement long back in 2012. He didn't give any cheques to bank in last 5 years as he assumed that loan was settled and there is nothing remaining out there. My dad may have few recordings of conversations he had over phone in 2012 with the then bank manager but we will need to search them in his phone.

Doesn't this come under time barred limitation of loan law? Bank must have had asked for this outstanding in 2012 only..right?

Despite of all of this happening, my dad agreed to pay back principal amount again to bank but asked to give loan closure certificate this time to which bank chairman denied. We did record conversation my dad had with chairman this time in last week.

 

Your father could have avoided payment by cheque therafter. - He gave cheque to bank to do one time loan settlement in 2012 as there was more outstanding in loan account than what proceeds from gratuity.

Kumar Doab (FIN)     28 February 2017

Did he get PF funds or that were also adjusted in FnF settlement? 

Does he have FnF statement showing adjustment of PF, Gratuity in FnF settlement?

Does FnF show any blance to be paid?

Did he accept FnF statement in writing?

The Chairman seemd to have reset the clock of limitation by collecting and banking cheque in 2012, and ot get written communication  leading to admission and reseting clock of limitation.

In any case he borowed and may try to get waiver of interest  computed after LWD, get loan a/c statement shwoing it, and pay rest of the debt if any, after all adjustments.

The bank on its own may/may not agree to waiver. 

 

In that case all parties can let the court settle the matter on merits.

Nitin   28 February 2017

Did he get PF funds or that were also adjusted in FnF settlement? 

He got PF funds in his savings account and part of it was paid through cheque to bank in 2012.

Does he have FnF statement showing adjustment of PF, Gratuity in FnF settlement?

No. He didn't get the revised statement from bank showing nil balance. But in latest statement, there is a entry of settlement of gratuity amount in loan account statement.  

Does FnF show any blance to be paid?

As he didn't get the statement that time, he doesn't have it now.

Did he accept FnF statement in writing?

My dad did not do anything related to FnF settlement in writing.

The Chairman seemd to have reset the clock of limitation by collecting and banking cheque in 2012, and ot get written communication  leading to admission and reseting clock of limitation.

What is the time of clock of limitation?

In any case he borowed and may try to get waiver of interest  computed after LWD, get loan a/c statement shwoing it, and pay rest of the debt if any, after all adjustments. The bank on its own may/may not agree to waiver.    In that case all parties can let the court settle the matter on merits.
 

Yes. Bank is not agreeing to waive off the interest and we cannot pay it now. Who should initiate - taking this matter to court now? Bank even don't have details of our communcation address though they can get it anyway if they want to. Should we send them any legal notice or any application further clarifying the matter or requesting something or should we just ignore and wait for action to be taken by bank? What are worst consequences we will have to bear in this case?

Thanks once again for all your help. 

Kumar Doab (FIN)     28 February 2017

Your father should be aware as ON LWD:

What was FnF amount payable to him e.g; salary, leave encashment, bonus etc ?

What was loan balance?

What was payment of Gratuity? Hence how much of loan was adjusted against Gratuity+FnF and how much was balance?

If entire loan (Principle+ interest) was paid then nothing was balance.

If there was balance, that is why your father agreed to pay later by cheque.

The fault of bank that you are pointing out is: It did not communicate after receiving the application from your father at the time of resignation and later.

Probably: That is why it does not want to give anything in writing and want your father to write and admit and reset clock of limitation (if it applies in his case) OR it does not become barred by limitation.

 

NO one does not seem to admit the lapse. delay, fault and become responsible, including bank, bankers and your father.

 

There can be many ifs and buts hence it shall be appropriate to consult a counsel well versed with Co-Op Bank matters and advise you in person.

 

Nitin   28 February 2017

Sure..Thanks Kumar.

Kumar Doab (FIN)     28 February 2017

You are welcome.

If you wish you can get in touch with LCI experts Mr. Rajendra K Goyal, Mr. Mallipedi Jaggarao.

They have been with banks and may be in a position to advise you much better, than in a thread. 

 

1 Like

Kumar Doab (FIN)     28 February 2017

Or you can discuss with a counsel of unshakable repute, that has been on panel of Banks/handling consumer matters/civil matters.

1 Like

Nitin   28 February 2017

Ok. Thank you!

rajeev sharma (Advocate Ex senior manager law )     28 February 2017

As you stated the last payn\ment was made by your father in the year 2012 and it was in that year the last acknowledge of loan was made by your father . You also stated that it was a loan against salary and no security was given against the loan by your father . Since 2012 the bank was sleeping over the matter and no demand was raised by it .

If all these assertion made by you are true then you need not worry. Yhe limitation period for filing a suit/ proceedings for recovery of clean loan is three year from the last acknowledgement of loan. Let the bank do whatever it wishes. If the bank files any suit for recovering the amount contest that with the help of any able lawyer.

1 Like

Nitin   28 February 2017

Whaterevr I have mentioned is all true. Thanks so much for confirming on limitation period for filing a suit for recovery of clean loan.

Kumar Doab (FIN)     01 March 2017

Discuss in person with local counsel. 


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