Dear Law Experts,
I’m writing the following on behalf of my cousin.
One of my cousins availed a Mortgage loan of Rs. 10 Lakhs on Oct’2007 from one of the nationalized bank in Chennai and the Loan tenure is about 5 years. The Interest is w.r.to the current PLR and of daily diminishing from the outstanding. Initially for a period of 23 months (almost 2 yrs.), my cousin happily paid the Principal as well as the interest without any delay. But unfortunately, Due to global recession, he lost his job and also been hospitalized for some months because of illness. So at this situation, he couldn’t able to re-pay the EMIs for about 4 months collectively, however, he made some adjustments in his loan account in the subsequent months and mobilized accordingly. Suppose, if he couldn’t able to pay the EMI by the month of January, he must dropped both Jan & Feb month’s EMIs by the next subsequent month i.e., by February. Likewise, he tried to regularize his loan.
On November 2009, the Bank Manager has effected the Standing Instruction from his Saving Account where he has already with the same branch but without his mandate / consent. While my cousin questioned about this matter with the Bank Manager, the manager said that he only effected the SI under Sec-171 Act and also, said that he never need his mandate / consent to effect SI to recover the loan EMI. Is that been possible to do so? Please clarify me.
But as per RBI guidelines, we understand that ‘’Banks have a right to exercise lien under section 171 of the Indian Contract Act against the dues from constituents/customers. However, the banks CAN NOT exercise lien over the personal account of a customer on the ground that money was due to the bank in another account where he acts in a different capacity, if there is no agreement to that effect’’. If it is so, how the manager has effected the SI? Moreover, he admitted that he can take action under Sec-138. How it’s possible to enact such act in this case?
Till last January’2010, the past due is for 4 months (i.e., Rs. 22,500 per month). So, my cousin has to pay around Rs. 90, 000. But he has paid only Rs. 40,000, where he has only that much of amount at that time. Also, he communicated to manager that the rest will be paid soon. But the Manager has declared his loan A/C as NPA and sent the preliminary Notice to pay the outstanding due amount of Rs. 1, 35,000 within 10 days of time. Since my cousin has paid around Rs. 5.25 Lakhs till January’2010 (Principal cum Interest), he doubted that there’re some discrepancies in the amount mentioned. So, he asked the manager to send the 'Detailed Amortization Schedule / Statement' of his Loan A/C and asked the manager to re-classify his account as ‘Standard Account’ and asked for Re-Scheduling of re-payment plan after explaining his crisis.
But, on the other hand, the manager said that my cousin has to pay 8 months EMI with some penal charges and also, he sent the Notice u/s 13(2) of SARFASI ACT immediately by next following week itself by giving 60 days of timeframe to settle the amount of Rs. 7.8 Lakhs (Principal cum Interest for the period served of 2 years / till date). The bank didn’t give any time to serve the notice period of 10 days as declared in the earlier preliminary notice. Later, my cousin has given a counter by sending ‘Representation/Objection under Sub-Sec-13(A) of Sec-13 of SARFAESI ACT’ based on the aforesaid grounds. Although, there is another 3 years (apprx.) of tenure for full disbursement, we're forced to pay the full settlement now. However, we’re planning to settle the amount in FULL now and get the property back; but, we need some buffer time to arrange the said amount.
If there’s NO reply from banker side for our representation, shall we go appeal at DRT? If so, what are all the procedures? To appeal at DRT, is it mandatory to send Representation/Objection letter to the concerned Banker? And are we needed to wait till the notice period of 60 days to complete for appealing at DRT / DRAT? If they go for possession, is that symbolic possession or critical possession that they must enact and how long it will take for them to achieve the auction / sale? If we appealed at DRT / DRAT, can we get some benefits like interest free installments when disbursing of loan amount? Also, can we get some additional time to settle our loan amount? Furthermore, can we request the manager or DRT officials to Re-schedule his Mortgage Loan and grant him some 'Re-payment Holiday / Moratorium' until he get placed in a job (as he’s getting some job offers now).
Also, let us know when an account has declared as NPA? As per RBI Guidelines, we understand that the account of any concern/individual can be declared NPA by the banks when NO amount (Interest/Principle) is deposited by the borrower in its account for the last 90 days (Earlier it was 180 days). Is that the 90 days period is of continuous or intermediate terms because he failed to make his EMI only for collective of 4 months, intermediately?
Hope you can understand our above said queries and get us clarified, which helps my cousin to exit from his problems. Also, please correct us, if we were wrong anywhere.
Appreciate your immediate respond!
Thanks a lot for your valuable time!!