Received recovery notice of a defaulted loan in the year 1998
04-Apr-2023 (In Recovery Law)
Sir, I am a gurantor in a loan by my realitive in the year 1998 for a loan regarding computer amounting 1 lakh. The borrower defaulted in the same year..bank did not took any action against him..the person died in 2006..now in the year 2016 i receive a notice with order of the court (2002 order) regarding seize of my account in the same bank..which is my joint account with my wife..and my wife is the primary holder of account.. Please help what to do..
Limitation for suit or application for recovery of debts: -
In cash credit account there are debits and credits and the account is a running one. The Clayton's Rule applies and the first deposit by the borrower is applied to satisfy the first advance or withdrawal by the customer. The limitation for recovery of the outstanding amount in the cash credit account is 3 years from the last deposit made by the borrower in the account provided the pay in slip is available with the bank. The position is the same so far as overdraft account is concerned. In term loan account, the loan is payable in installments. The limitations in respect of each installment will be 3 years from the due date of payment and as such for the bank waives the defaults then the limitation will be from the last date on which the last installment was payable from which 3 years will be available.The general rule is 3 year period is available for recovery of each advance made to the borrower in case of the advances being payable on demand. In other accounts the limitation will be 3 years from the date when the bank is entitled to claim payment. In terms loans the limitation commences from each default in payment of installment. In case of waiver of default, the limitation commences from the date of last default in payment of the last installment as originally fixed , articles 37 of limitation Act will apply , official liquidator v Mohan Lal (1978)48 com case 271. Under section 18 of limitation act 1963, if there is is an acknowledgement in writing of the debt to the bank and such acknowledgement is made before expiry of 3 years from the date when money was payable then the period of limitation will be extended by acknowledgment in respect of liability concerning property or right before the expiry of the period of limitation and should be in writing and signed by the borrower. Tilak ram v natha,AIR 1967 SC 935: Shapoor Freedommazda v Durga Prasad Chamaria, AIR 1961SC 1239: Lakshminarain Cotton Mills Co lts vbehari lal ram charan, AIR 1971 SC 1482. Balance sheet is an acknowledgement of debt on the date it is signed. Vijay kumar machinery &Electrical Stores v Alaparthi Lakshmi Kanthama.(1969 74 itr 224, 241-42.). The acknowledgement need not specify the exact nature of the property or the right claimed. If the wording express jural relationship then it will amount toan acknowledgment within Section 18 of the limitation act,
Tilak Ram v Nathu AIR 1967 SC935.
In cash credit account there are debits and credits and the account is a running one. The Clayton's Rule applies and the first deposit by the borrower is applied to satisfy the first advance or withdrawal by the customer. The limitation for recovery of the outstanding amount in the cash credit account is 3 years from the last deposit made by the borrower in the account provided the pay in slip is available with the bank. The position is the same so far as overdraft account is concerned. In term loan account, the loan is payable in installments. The limitations in respect of each installment will be 3 years from the due date of payment and as such for the bank waives the defaults then the limitation will be from the last date on which the last installment was payable from which 3 years will be available.The general rule is 3 year period is available for recovery of each advance made to the borrower in case of the advances being payable on demand. In other accounts the limitation will be 3 years from the date when the bank is entitled to claim payment. In terms loans the limitation commences from each default in payment of installment. In case of waiver of default, the limitation commences from the date of last default in payment of the last installment as originally fixed , articles 37 of limitation Act will apply , official liquidator v Mohan Lal (1978)48 com case 271. Under section 18 of limitation act 1963, if there is is an acknowledgement in writing of the debt to the bank and such acknowledgement is made before expiry of 3 years from the date when money was payable then the period of limitation will be extended by acknowledgment in respect of liability concerning property or right before the expiry of the period of limitation and should be in writing and signed by the borrower. Tilak ram v natha,AIR 1967 SC 935: Shapoor Freedommazda v Durga Prasad Chamaria, AIR 1961SC 1239: Lakshminarain Cotton Mills Co lts vbehari lal ram charan, AIR 1971 SC 1482. Balance sheet is an acknowledgement of debt on the date it is signed. Vijay kumar machinery &Electrical Stores v Alaparthi Lakshmi Kanthama.(1969 74 itr 224, 241-42.). The acknowledgement need not specify the exact nature of the property or the right claimed. If the wording express jural relationship then it will amount toan acknowledgment within Section 18 of the limitation act,
Tilak Ram v Nathu AIR 1967 SC935.
The responsibility of Guarantor is limited to the amount due to the bank. If your borrower has defaulted and died, your inquire whether he had opted for any life insurance or any insurance was connected with him. Because every bank ATM card holder carries some amount of insurance with account. As your wife is primary account holder they can not seize your account. Hire advocate and send Notice to the bank.
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