Legal Question in Credit and Debt Law in India
recovery of debts given without any security
A government organisation had given financial assistance to industrialists in order to invest in new or existing projects. But this loan was given without keeping any sort of security against it. Now how can effective recovery be initiated and under what legal provisions?
Whether criminal prosecution for fraud, misrepresentation, breach of trust be initiated against the defaulters for diverting the funds to projects other than what they had specified earlier and for misuse of public money lended to them in bonafide.
Whether section 29 of State Financial Corporations Act, 1951 is applicable outside the juridiction of the State which is lending the money, to effectuate the recovery process.
2 Answers from Attorneys
Re: recovery of debts given without any security
From your question, I gather that the organisation in question is a State FInancial Insitution. Please note that if a person has, in fact, comitted fraud cheating, etc, he difinitely will be prosecuted.
Since it is very unsual for a State Financial Institution to lend on basis of assets / projects outside th state, is is likely that some kind of fraud was involved to mislead the SFC into lending. Therefore, more details are necssary.
And even if no security is offered, any creditor can enforce a due debt.
Re: recovery of debts given without any security
From the brief facts given by you, it is possible to initiate criminal proceedings on fraud etc., and also civil proceedings for recovery of loan amount.
Related Questions & Answers
-
About IPC Section 138 I have issued a a cheque to Mr.X for a sum of 4 Lakh... Asked 10/22/04, 7:43 am in India Credit, Debt and Collections Law
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
