The grievance is to seek your advice for the Loan facility availed from Bank of Baroda is following the prescribed procedure, including the R.B.I. guidelines and the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme. The cardinal principles of the scheme are as follows: Only MSEs engaged in manufacturing activities and those in the service sector, excluding retail trade, were eligible thereunder. The entire credit facility had to be given without collateral and/or third party guarantee. Loans were to be secured against the primary security which was defined under the scheme to include assets created out of the credit facility extended to the borrower and/or which are directly associated with the business/project of the borrower for which the credit facility had been extended. We have availed a Term loan account No [deleted] of Rs.10,00,000/- and Cash Credit account No [deleted] of Rs.1,50,000/- from Bank of Baroda Ulloor Branch, having insured it under the CGTMSE scheme. Since the business dint take off as per business plans, with the banks knowledge the primary asset were liquidated for Rs.9,50,000. The entire proceed were used to settle the cash credit and Rs.5,40,000 was used to settle the Term loan. The Total O/s on 22nd August 2014 stood at Rs.4,41,005. Subsequently we had received a mail on 20th September 2014 from Bank of Baroda on closing the cash credit and o/s balance of Rs.4,48,432.00 . Further we had anticipated recovery to complete using the CGTMSE procedure. After making settlement of other we had remitted Rs.1,00,000 on 17th November 2014 and another instalment of Rs.100000 on 12th December 2014 and with this the o/s balance was Rs. 2,69,021.00 That having been said, the fact however remains that the bank has not classified this account as a NPA and without claiming the amount due from the CGTMSE or disclosing full and proper facts as to the procedure adopted by it in terms of the scheme. The bank is now attempting to recover an amount of Rs.4,52,059 due with interest accruals . A notice through the Deputy Tahsildar has been send to us to recover the amount due through sale / attachment of the proprietor property. Please advice.
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1. The declaration of NPA of the loan account is mandatory before taking measures as prescribed under section 13 of the SARFAESI Act.
2. So if the bank does not do so then you can file an application under section 17 of the SARFAESI Act seeking injunction against the attachment.
3. If the DRT is satisfied that the provision and rules set under SARFAESI Act is not complied with as it appears then it can set aside the attachment notice in final adjudication.
In your opinion how should the response be drafted.
you should issue legal notice to bank to with draw sale/ attachment sought of your property
2) mention that as on date only Rs 2,69021 is due and payable and not Rs 4.52 lakhs as allegedly claimed by bank
3) take out legal proceedings to set aside attachment of property sought by Tehsildar
a. should I seek a legal help locally or can I seek a help from your self. b. should I write to Banking Ombudsman contesting that the loan was taken under CGTSME and bank is not recovering the amount from the trust and should challenge once recovery wasnt received from the trust.
you should contact local lawyer
2) you can write to banking ombudsman if you so desire
Hi,
You may write to banking ombudsman and can also take help of DRT.
You can first issue a reply notice to the legal demand notice sent by them.
If they have not sent any notice so far, then you may approach civil court with an injunction suit to restrain them from recovering the loan other than by due process of law.
They cannot approach Tahsildar for attachment of property of the proprietor, hey have to file a recovery suit through civil court and can seek attachment before judgment before civil court
You may get into an immediate action by consulting your advocate in this regard.
In your opinion how should the response be drafted.
You may follow the procedures as suggested in my previous post. .
You cannot get justice from Tahsildar's office, the injunction suit before a civil court will be the proper remedy for this.
a. should I seek a legal help locally or can I seek a help from your self.
It depends. You can take the assistance of a local lawyer for convenience
b. should I write to Banking Ombudsman contesting that the loan was taken under CGTSME and bank is not recovering the amount from the trust and should challenge once recovery wasnt received from the trust.
In my opinion it would be a futile effort because the reply from banking ombudsman would be in favor of the bank only.
Better skip that option.
It appears from the details that there is no personal guarantee executed. Moreover the scheme is clear that no collateral security. Therefore it is understood that the bank can proceed only against the primary security and in the event of any balance amount, then to recover from the property of the trust/entity/company, not from the personal property of directors/trustees unless otherwise agreed upon by way of a guarantee agreement. Therefore the revenue recovery proceedings appears to be not proper and you have options either to approach banking ombudsman or the high court for a stay of RR notice. Not recalling the loan, not making it NPA, having insurance for the loan all give rise to other technical defense as well.
