Liability In Terms Of Section 2(g) Of The DRT Act Can Be Claimed As ‘Due’ By The Bank Only From A Defaulting Party

THE LIABILITY IN TERMS OF SECTION 2(g) OF THE DRT ACT CAN BE CLAIMED AS ‘DUE’ BY THE BANK ONLY FROM A DEFAULTING PARTY, WHICH IS THE PRINCIPAL DEBTOR                                                                                       

1.         Section 2(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“DRT Act”) defines ‘debt' to mean:

any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the audemars piguet replica watches financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil Court or any arbitration award or otherwise or under a mortgage and subsisting and legally recoverable on, the date of the application.” (emphasis supplied)

 

INTERPRETATION — SECTION 2(g)

Section 2(g) of the DRT Act states "any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution". As per dictionary meaning the term ‘due’ means owing, unpaid, outstanding, owed or payable by a defaulting party. Such outstanding would create a liability on the principal debtor. Such a liability would arise when the principal debtor makes any default in repayment of any loan advanced by a bank or a financial institution. The liability in terms of Section 2(g) of the DRT Act can be claimed as due by the bank or a financial institution only from a defaulting party. There cannot be any outstanding as is envisaged in Section 2(g) by a surety or a guarantor. The liability of a surety or  guarantor to repay the loan of the principal debtor arises only when a outstanding is not paid by the principal debtor. Further, ordinarily the liability of the principal debtor can be secured or unsecured, or assigned but not that of a surety or a guarantor. In the result, any liability (inclusive of interest) can be claimed as due by a bank or a financial institution from the principal debtor but not from a surety or a guarantor.

DRT Has No Jurisdiction

























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