Legal Question in Banking Law in India

I am one of the Guarantors of Term Loan and Bridging Loan against the sanction of Central Investment Subsidy. The Loan was disbursed in 1986 and defaulted in 1987. The Financial Institution a Recovery Certificate to the District Collector on 14.02.2004 to recover the entire dues from the guarantors. After sending the Recovery Certificate the Mortgaged Assets of the Borrower Company was sold by the Joint Lenders/Mortgagees, but neither the origional R.C. has been revised nor any credit has been allowed for the amount realised by the Financial Institution namely PICUP, Lucknow. The RC has been forwarded by the Collector Lucknow to Collector Churu, Rajasthan, where I do reside. The Collector Churu is note paying any heed to my representations/submissions and saying that the Collector is simply a Collecting Agent for this RC and any relief can be obtained from the Collector Lucknow or the PICUP. Please advise me and clarify my legal position on the issues (a) The RC under the U.P. Act of 1973 can not be issued in view of the RDDBI ACT,1993 (b) No recovery can be initiated after a period beyond 3 years of making default in payment (c) RC can not be issued against guarantors before liquidating the mortgaged assets of the borrower.

Asked on 12/26/09, 5:45 am

J. Radhakrishnan independent Practice

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a) There is no bar for issue of RC under the UP Act. RDDBI Act is only in addition to and not in lieu of existing remedies under State Acts.

b) RC might havebeen issued within three years of demand and default. Pl. check up the dates

c) Guarantor is co extensively liable with borrower. It is not necessary to exhaust the remedies against mortgaged assets of the borrower.

Answered on 12/27/09, 6:41 pm

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