Upgrad LLM

harshness in serving notice and taking forceful possession


I wish to bring to you my plight in regarding OTS with the Bank. I have availed a loan in 2001 for Rs 9, 95,000 for my education. Due to unforeseen circumstances I had to go through a traumatic experience in me getting the degree certificate from the University. Due to an administrative error in totaling the amount of credits required to award me degree I was awarded a Diploma. This went through an appeal process and was successful and I was ascertained degree in Dec 2004. In March 2005 I returned back to India due to a raid conducted by the local enforcement department and after repeated pleas informing that I am student at the University, and even after the University and International Office confirming the same, I was served with an Un-appealable decision for administrative removal by the enforcement Department and was asked to leave before detention.

 

I had made payments even after coming back in 2005 with no job and limited means to fulfill my debt obligation. In 2007 I have made a written application to the bank for OTS after me remitting an amount of Rs 25000 towards the loan. I also sent reminders to the bank regarding the same. Due to poor financial situation and my father retiring in 2008 and my mother being a heart patient had to go through hospitalization expenses. I had approached a lawyer who informed me that he will take up the case with the bank and seek amicable settlement. He asked me to stop making payments.

 

In 2009 the bank served a notice under Surfasi Act and declared NPA with an amount of 11,90,000.  The advocate informed me that he is looking after the case and asked me to provide Rs 25000 for filing the case in the magistrate court for non-recovery of the debt.

 

In Febuary 2011, the Bank suddenly approached to seize the property when we went to request for a settlement. The Bank informed that the property value is higher than the Loan amount and they can auction it to get the money. The advocate made me run to Chennai high court for getting the stay in DRT and made me spend Rs 75000 for all expenses in 1 day. The Honourable Judge in DRT informed me that as the case belongs to Hyderabad, he will provide judgment in Hyderabad only and I had to return back. The bank seized the property by force and made my family to vacate the house by force. My mother who was seriously ill was in ICU and she passed away in March 2011 because of the force used by the bank to possess the house. It is the only house we have and I am now survived by my wife and my father.

 

The bank has quoted a price of Rs 33,00,000 as reserved price. I had to change my advocate and had got a stay in DRT. Even after making a plea to the bank several times, the bank is not agreeing to an amicable settlement and is still demanding the same amount. I have requested for simple interest from the day it is declared NPA and notice being served.

 

Request for your advice and help.

 
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Advocate

OTS is at the discretion of the bank only.  Hence, apprise the bank officials to have mercy for amicable settlement of dues.  The Presiding Officer of DRT also can help you to direct the bank to reach an amicable settlement.

 
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LAWYER

The Bank will not agree to any rebates unless u file a counter claim in DRT based on the wrong doings of the Bank. U may contact Adv. Manish Bohade in Mumbai - 9371505560. He would guide u properly in this case.

 
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Also to the above mentioned facts the bank has furnished a wrongful statement of accounts. In 2001 the loan was offered at an interest rate of 11% which now shows an interest rate of 13% and overdue interest charged in excess to an extent of amount ranging more than  200% of the initial principal amount of 9,85,000 which is against RBI Norms . The notice as on 8-12-2007 notice shows an amount of Rs 11,12,247. At this point it is declared NPA. The bank has allowed to take its own sweet time to accumulate security interest so that they can grab the property by force. They might as well wait till my next generation or another 20 years to gain additional interest so that they can auction the property at a higher value than it is now. They can get better profit than it is now. But the act of forcefully taking posession has lead to the death of my mother which is a criminal offence by the bank officials. The letter sent to the bank in 2007 clearly mentions that my mother is a heart patient and going through regular hospitalization. This raises a criminal intent by the bank. And when spoke to the bank officials they informed they are not gundas or rowdy sheeters but are the same people in white color doing the act diplomatically.  Can they compensate me my mother back for their act.

 
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RBI/2010-11/74
DBOD.No.BP.BC.21 /21.04.048/2010-11

Master Circular - Prudential Norms on Income Recognition,
Asset Classification and Provisioning pertaining to Advances

Part A3.4  Interest Application

On an account turning NPA, banks should reverse the interest already charged and not collected by debiting Profit and Loss account, and stop further application of interest. However, banks may continue to record such accrued interest in a Memorandum account in their books. For the purpose of computing Gross Advances, interest recorded in the Memorandum account should not be taken into account.

The bank officals have acted against the RBI norms creating stress,trauma,agony and loss of a family member by effecting coerision to obtain the property. This is a government bank and should act in the interest of public and not behave like gundas. The pupose of the loan is education and not business. Let alone the purpose but the act has a criminal intent.

 
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Also there has been no rehabilitation provided, or restructuring provided by the bank before taking such coressive actions. In 2007 I made a request to the bank asking them to covert it to a mortgage loan and would be glad to make the payment. The bank denied my request and kept charging interest at an obsorbunt rate .Concerning the RBI norms, the bank has inflated the book value to 75% of the asset value which as per the Section  3.4 of the MasterCircular mentioned above can only be taken into their books of accounts but cannot be charged to the customers as it is an NPA. If the principal cannot be claimed, charging additional interest to the account makes no sense and as per RBI guidelines it cannot be charged to the account and has to be reversed back. So measures taken by the bank was in lieu of corresive methods to obtain the property with a malific intent to cause agony and distress. I have already made a payment upto 3,00,000 by 2008 towards this account which has only been applied to interest.

 
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LAWYER

Mr. Shekhar, 

Looking at the facts mentioned by u there lies a case for Damages against the Bank. U may contact a good DRT Lawyer for going ahead with u r case. 

MANOJ

 
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Mr. Shekhar

I really pity you for a difficult postion in which you stand at present. It seems you have not taken right advise in right time and allowed time to pass. Bank has nothing to do with your personal problems. Normal OTS (other than RBI OTS) is not a boon for defaulters. OTS amounts to rewriting of fresh contract in place of existing contract. Court or DRT has no power to give direction to any party to loan agreement to enter into fresh contract. This is settled law. I would like to tell you clearly all these points so that you do not take wrong steps. You are under wrong thinking that, the banks are not entitled to charge interest once the account turns to NPA.  Reversal of interest (unrealised) does not mean that the bank is barred from recovering the post NPA interest amount accrued which could not be realised. They are internal guidelines of RBI for accounting norms of banking system. DRT also has no power to determine the quantum of the claim amount demanded by the bank under SARFAESI Act.

For want of powers no decision will be taken in branch level. Therefore you have to approach the Settlement Management Committee in Head Office /Regional Office/Zonal Office of the bank and appraise them the entire position.  After a thorough discussion with top officials they may understand your personal difficulties and may help you and try to negotiate for a better deal and you have to workout the same without further loss of time. Please realize money value of time and time value of money. They may also take decision for staying further action if an acceptable deal is struck down between you and the bank.

 
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Advocate

I totally agree with Ramachari Sir. I am glad he has joined this forum. Welcome Sir. 

He is an experienced scholar in banking and also in law. This forum will be benefitted with his advice.

 
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