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CAIIB Paper 4 BRBL Module C Unit 15 : Recovery Of Debts Determined By Tribunal And Miscellaneous Provisions (New Syllabus)
IIBF has released the New Syllabus Exam Pattern for CAIIB Exam 2023. Following the format of the current exam, CAIIB 2023 will have now four papers. The CAIIB Paper 4 (BANKING REGULATIONS AND BUSINESS LAWS) includes an important topic called “Recovery Of Debts Determined By Tribunal And Miscellaneous Provisions”. Every candidate who are appearing for the CAIIB Certification Examination 2023 must understand each unit included in the syllabus.
In this article, we are going to cover all the necessary details of CAIIB Paper 4 (BRBL) Module C (IMPORTANT ACTS/LAWS & LEGAL ASPECTS OF BANKING OPERATIONS – PART B) Unit 15 : Recovery Of Debts Determined By Tribunal And Miscellaneous Provisions, Aspirants must go through this article to better understand the topic, Recovery Of Debts Determined By Tribunal And Miscellaneous Provisions and practice using our Online Mock Test Series to strengthen their knowledge of Recovery Of Debts Determined By Tribunal And Miscellaneous Provisions. Unit 15 : Recovery Of Debts Determined By Tribunal And Miscellaneous Provisions
Modes Of Recovery Of Debts
As per Section 25 of the Act, on receipt of the copy of the recovery certificate issued under Section 19(22), the Recovery Officer has to proceed to recover the amount specified in the certificate by one or more of the following modes:-
- Attachment and sale of movable and immovable property of the defendants.
- Arrest of the defendant and his detention in prison.
- Appointment of a receiver for the management of the movable and immovable properties of the defendant.
- Taking possession of property over which security interest is created or any other property of the defendant and appointing receiver for such property and to sell the same; (Section 25 aa).
- Any other mode of recovery as may be prescribed by the Central Government. (Section 25d).
Validity Of Recovery Certificate and Amendment Thereof
- The defendant is debarred from raising any dispute before the Recovery Officer about the correctness of the amount specified in the recovery certificate issued by the Tribunal.
- The Presiding Officer of the Tribunal who had issued the recovery certificate is authorized to withdraw the certificate or correct any clerical or mathematical error in the certificate.
- When any party wants to have a review of the order passed by the Tribunal or the recovery certificate issued by the Tribunal on the ground that error is apparent on the face of the record, he can make application for review within sixty days of passing the order or issuing the certificate. Such application needs to be supported by affidavit verifying the contents. It is also required that the opposite party is given notice and hearing before the application is granted.
Stay Of Proceedings Under Certificate And Amendment Or Withdrawal
As per Section 27 of the Act
- Notwithstanding that a certificate has been issued to the Recovery Officer for the recovery of any amount, the Presiding Officer, may by an order, grant time for payment of the amount, provided the defendant makes a down payment of not less than twenty-five per cent. of the amount specified in the recovery certificate and gives an unconditional undertaking to pay the balance within a reasonable time, which is acceptable to the applicant bank or financial institution holding recovery certificate.
- (1A) The Recovery Officer shall, after receipt of the order passed under sub-section (1), stay the proceedings until the expiry of the time so granted.
- (1B) Where defendant agrees to pay the amount specified in the Recovery Certificate and proceeding are stayed by the Recovery Officer, the defendant shall forfeit right to file appeal against the orders of the Tribunal.
- (1C) Where the defendant commits any default in payment of the amount under sub-section (1), the stay of recovery proceedings shall stand withdrawn and the Recovery Officer shall take steps for recovery of remaining amount of debt due and payable.
- Where a certificate for the recovery of amount has been issued, the Presiding Officer shall keep the Recovery Officer informed of any amount paid or time granted for payment, subsequent to the issue of such certificate to the Recovery Officer.
Application Of Certain Provisions Of The Income Tax Ac
- Provisions of Section 29 of this Act are linked to certain sections of the Income Tax Act, 1961.
- For its effective purpose and to avoid its repetition in this Act, it is stated that these provisions will apply as if provided in this Act and Rules framed there under. This also makes it possible that any amendment made in the Income Tax Act to those provisions will automatically become applicable for this Act without there being requirement to amend this Act.
- Due to this provision the debt due from the defendant to the bank or financial institution is treated on par with Income Tax arrears and can be recovered like the arrears under the income tax.
Appeal Against The Order Of Recovery Officer
- The Recovery Officer is given powers under Sections 25 and 28 to recover the amount mentioned in the recovery certificate. As per Section 26, the defendant cannot question or dispute before the Recovery Officer about the correctness of the amount mentioned in the recovery certificate.
- When the Recovery Officer attaches and sells the property it is possible that the third party having any interest in such property may get affected. Therefore, Section 30 provides that any person aggrieved by the order of Recovery Officer may appeal within thirty days to the Tribunal. The period of thirty days is to be counted from the date on which a copy of the order is issued to him. On receipt of the appeal, the Tribunal has to hear the appellant and make enquiries as it deems fit. Thereafter the order of the Recovery Officer may be either confirmed or modified or set aside.
Transfer Of Pending Cases
- As per Section 31: Every suit or other proceeding pending before any court immediately before the date of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal.
- Provided further that any recovery proceedings in relation to the recovery of debts due to any multi-State co-operative bank pending before the date of commencement of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2012 under the Multi-State Co-operative Societies Act, 2002, shall be continued and nothing contained in this section shall apply to such proceedings.
Where any suit or other proceeding stands transferred from any court to a Tribunal under sub-section (1),—
- The court shall, as soon as may be after such transfer, forward the records of such suit or other proceeding to the Tribunal; and
- The Tribunal may, on receipt of such records, proceed to deal with such suit or other proceeding, in the same manner as in the case of an application made under section 19 from the stage which was reached before such transfer or from any earlier stage as the Tribunal may deem fit.
Power Of Tribunal To Issue Certificate Of Recovery In Case Of Decree Or Order
- If there is a decree or order passed by any court before coming into operation the DRT Act and the decree or order is not yet executed, the decree-holder may apply to the Tribunal for issue of recovery certificate. There is no fresh hearing or trial, etc., in such cases and the tribunal has to directly issue the recovery certificate based on the decree of the Civil Court.
Chairperson, Presiding Officer And Staff Of Appellate Tribunal
- The Chairperson of an Appellate Tribunal, the Presiding Officer of a tribunal, the Recovery Officer and other officers of the Appellate Tribunal and Tribunal are deemed public servants within the meaning of Section 21 of the Indian Penal Code. (Section 32).
Protection Of Action Taken In Good Faith (Section 33)
- When anything is done in good faith under this Act or is intended to be done so, no suit, prosecution or other proceeding shall lie against the Central Government, the Presiding Officer of a Tribunal or the Chairperson of an Appellate Tribunal or against the Recovery Officer. This protection is given so that the authorities can function without fear as well as hindrances that the borrower otherwise can put.
Overriding Effect Of The Act
- As per Section 34 of the Act: the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.
- DRT proceedings cannot be stayed by Company Court nor can proceedings be transferred to Company Court.
- DRT Act overrides the Companies Act and, therefore, leave of the company court is not necessary even if the company is under winding up proceedings.
- Moneys realized under DRT Act, distribution between bank and other secured creditors, when winding up proceedings are pending in company court, priority of secured creditors is subject to provisions of 529A of Companies Act.
- In respect of moneys realized under DRT Act out of the assets not charged, distribution between Bank/ FIs and other creditors, when no winding up order is passed against the company, the priorities have to be decided subject to principles underlying Section 73 of CPC and principles of natural justice.