Personal loan sold to ARC – limitation and arbitration query

949 votes

From the facts stated, unsecured loan and credit card claims are generally governed by a 3-year limitation period under the Limitation Act, calculated from the date of default or the date of the last acknowledged payment/acknowledgment in writing. If the last payment was made in 2021 and there has been no subsequent payment or written acknowledgment, limitation would ordinarily expire three years from the date of default/last acknowledgment. Assignment of the debt to an Asset Reconstruction Company (ARC) does not extend or revive limitation. The assignee steps into the shoes of the bank and cannot claim a better right than the original lender. However, you must carefully verify: Whether there was any written acknowledgment (including email, settlement request, balance confirmation, or restructuring request). Whether the loan agreement contains an arbitration clause. The exact date of NPA classification and recall notice. Arbitration cannot validly result in an enforceable award if the claim itself is time-barred. Limitation applies equally to arbitration proceedings. If arbitration is initiated beyond limitation, you are entitled to raise limitation as a preliminary objection. Legal risks you may face: Recovery calls and settlement pressure. Arbitration notice (even if time-barred, you must respond). Civil recovery proceedings (subject to limitation defence). Adverse impact on credit score (which may continue despite limitation). Importantly, do not make any fresh payment or written acknowledgment without legal advice, as it may revive limitation under Section 18 of the Limitation Act. A document review is essential to determine the exact limitation position and risk exposure before taking any step.

Advocate Pavani Kumari LawRato

575 votes

If you are unable to pay the emi and your account is transferred to third party , I think all your bank accounts are freezed , check it once your bank accounts once , if u any query approach us we will help u

Advocate Rajkiran Govindcar LawRato