Legal Question in Banking Law in India

Business Loan Default Scenario

My friend took a business loan against his house. However he has incurred losses and will not be in a position to pay off his debt. What could be worst legal action he can face. I can understand he may have to let go his house, but would he be sent to Jail? Will he face any criminal charges?


Asked on 7/20/09, 7:34 am

3 Answers from Attorneys
Rohini Kumar Tenneti R.K.1080 LEGAL SERVICES

Re: Business Loan Default Scenario

Your friend's liability would be discharged soon after the debt was recovered by the bank after adjusting the debt with the sale proceeds of the house/stock,etc.

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Answered on 7/21/09, 11:41 am
Sudershan Goel India Law Offices of Sudershan Goel - Advocate

Re: Business Loan Default Scenario

there should not be any criminal charges; however, the lender may effect recovery from his other assets also and in the event of failure, the decree holder may approach the court for civil detention of the judgement debtor.

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Answered on 7/20/09, 8:12 am
J. Radhakrishnan independent Practice

Re: Business Loan Default Scenario

No criminal charges will be made. The creditor if it is a Bank will proceed to sell the house under SARFAESI ACT

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Answered on 7/20/09, 10:15 am


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