Defaulter’s pre-deposit is not secured asset The debt recovery tribunal or a high court often asks a defaulting borrower to make pre-deposit with it to show its bona fides in returning the loan. But the creditor cannot claim that amount arguing that it is a secured asset.
The deposit is not towards the satisfaction of the debt and is free from the claims under the Securitisation (SARFAESI) Act. The Supreme Court clarified this point last week in its judgment in Kut Energy Ltd vs Punjab National Bank. A consortium of nationalised banks had granted loans to the company for a ...
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