Different Situations under Artha Rin Adalat Ain, 2003

  

Legal Opinion in Different Situations under Artha Rin Adalat Ain, 2003:


1. Death of Mortgagor during Trial


Problem:
A Commercial Bank filed a suit under Artha Rin Adalat Ain-2003 against the defaulter Borrower “P” and Mortgagor “Q” & “R”. During trial of the suit, the Mortgagor “Q” died.

Solution:
In such situation, Bank shall take steps for substituting the legal heirs of the Mortgagor “Q”.

2. Directors of a Company Not Made Defendants:

Problem:
A Commercial Bank filed a suit under Artha Rin Adalat Ain-2003 against the defaulted borrower “XYZ Company Limited”. Later on, it is found that all the directors of the defaulter Company are not made defendants in that Artha Rin Suit.

Solution:
Bank shall take steps for including the names of the directors as defendants by filing an application under Order-1, Rule-10(2) of CPC-1908 read with Section 57 of Artha Rin Adalat Ain-2003.

3. Decree Copy Found After Two Years
Problem:
A Commercial Bank obtained a decree under Artha Rin Adalat Ain-2003, but the judgement & decree copy was mistakenly kept in safe custody and found after two years.

Solution:
As per Section 28 of Artha Rin Adalat Ain-2003, Execution Suit must be filed within one year. Since this is a special law, delay cannot be condoned. If the time expires, Bank loses the right to execute the decree.
However, mortgage remains valid and Bank should attempt settlement or compromise. Parallelly, Bank may file a case under NI Act, if applicable.

4. Auction Notice Stayed by High Court.

Problem:
Bank published auction notice under Section 12 of ARA Ain-2003, but Borrower/Mortgagor filed a Writ Petition and High Court stayed the auction.

Solution:
Bank must postpone the auction and engage a lawyer to vacate the stay. If no bar exists on other proceedings, Bank may file Artha Rin Suit.

5. Status-quo Order Due to Partition Suit.

Problem:
Mr. “X” mortgaged inherited land. His brother “Y” filed a partition suit and Court issued status-quo on the property.

Solution:
This indicates weak documentation. Bank should verify heirs, obtain demarcation and mutation. In the present case, Bank must apply for addition of party in the partition suit.

6. Decree without Pendente Lite Interest.

Problem:
Court decreed the claim amount but omitted pendente lite interest.

Solution:
As per Section 50 of ARA Ain, pendente lite interest is a legal claim. Bank must file an appeal.

7. Miscellaneous Case against Ex-parte Decree.

Problem:
After an ex-parte decree, Borrower/Mortgagor filed Miscellaneous Case under Section 19.

Solution:
Bank must contest the case. Burden of proof lies on the applicant to prove non-service of notice.

8. Banker’s Misappropriation of Bank Money.

Problem:
A Banker misappropriates money during service.

Solution:
Bank shall file FIR and thereafter a Money Suit before District Judge Court.
As per Section 18(1), no Artha Rin Suit is maintainable against a Banker.

9. Defendant Exempted from Artha Rin Suit.

Problem:
Artha Rin Court exempts a defendant.

Solution:
Bank must file a Writ Petition before High Court Division since no appeal or revision lies under Section 44(2).


10. Rescheduling during Trial of Artha Rin Suit.

Problem:
Borrower paid partial amount and applied for rescheduling.

Solution:
Bank shall file a Solemama for stay of proceedings.
If time exceeds 3 years and Court passes compromise decree, Execution Suit must be filed within one year.


11. Defendant Exempted during Execution Suit.

Problem:
Execution Court exempted a defendant.

Solution:
Execution Court cannot alter decree. Bank must file a Writ Petition under Section 44(2).

12. Interest Not Allowed or Reduced by Court.

Problem:
Court disallowed interest or reduced rate mistakenly.

Solution:
Bank should apply under Sections 151 & 152 CPC read with Section 57 of ARA Ain.
If Court logically refuses, Bank must prefer appeal.

13. Certificate under Section 33(5)
Effects:

a) Possession & enjoyment till realization
b) Auction sale under Section 33(1)-(3)
c) Further execution under Section 33(6)
d) Deduction execution under Section 33(6ka)
e) Excess proceeds refundable
f) Possession under Section 33(7ka).


14. Certificate under Section 33(7)
Effects:

a) Treated as title document
b) Sent to Sub-Registrar
c) Possession under Section 33(7ka)
d) Bank becomes absolute owner (subject to Banking Companies Act)
e) No claim if sale insufficient
f) Excess sale proceeds retained by Bank.

15. Certificate Stayed by High Court
Problem:
Writ filed against certificate under 33(5) or 33(7).

Solution:
Bank must not act on certificate and must seek vacation of stay.


16. Rescheduling during Execution Suit.
Problem:
Execution Suit stayed by Solemama, but Court disposes case.

Solution:
Bank must file 2nd Execution Suit within one year and within 6 years from filing of 1st Execution Suit.

17. Warrant of Arrest Issued but Loan Adjusted.

Problem:
Loan adjusted after WA/Civil Jail order.

Solution:
Bank must inform Court, seek recall of WA, and withdraw Execution Suit.

18. Death of Defendant against whom WA Issued.

Problem:
Defendant died during Execution Suit.

Solution:
WA cannot be executed against heirs (Section 34(2)).
Heirs must be substituted and other properties attached.

19. NI Act Case – Amount Paid After Conviction.

Problem:
Borrower paid cheque amount after conviction.

Solution:
Borrower shall file appeal by depositing 20%.
Bank shall inform Appellate Court and may initiate fresh legal action if liability remains.


20. NI Act Case – Accused Died
Problem:

Accused died during NI Act proceedings.

Solution:
Criminal proceedings abate.
Bank must file Artha Rin Suit against legal heirs.


21. NI Act Case – Loan Rescheduled and Regular.


Problem:
Borrower paid partial cheque value, loan rescheduled and regular.

Solution:
Bank must withdraw NI Act case as it is compoundable.
Fresh cheques may be taken under rescheduling terms.

22. Commercial Bank filed a C.R (Complaint Register) Case under NI Act against the defaulted Borrower "P" who gave a cheque and later on the cheque was bounced for insufficient balance. During trial of the suit, the Accused "P" died. In such situation, what steps should be taken by the Bank?

Solution: In criminal cases, criminal liability does not shift to the legal heirs of the accused person. The proceedings of CR/Session case stop as soon as the accused dies. So, Bank can do nothing is this case. But for the recovery of defaulted loan, Bank should file Artha Rin suit as per law where the legal heirs of the deceased borrower shall be included as defendant.

1. A Commercial Bank filed a C.R (Complaint Register) Case under NI Act against the defaulted Borrower "P" who gave a cheque and later on the cheque was bounced for insufficient balance. During trial of the suit, the borrower paid partial amount of the Cheque Value and Bank rescheduled the said Loan. Later on, the borrower is paying the instalment as per repayment schedule and loan is now regular. What shall Bank do in respect of Cheque Dishonor Case?

Solution: Since the borrower is paying the instalment as per repayment schedule and the loan is regular in CIB, Bank shall have to withdraw the Cheque Dishonor Case. Because the Cheque Dishonor Case is Compoundable/Compromisable in nature. To avoid future legal complicacy, Bank may take cheques as per terms and condition of reschedulement.