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Chapter 15: INFORMATION grievance redress to customers of regulated

TECHNOLOGY ACT, 2000 entities covered under the RBIOS 2021 (the
Scheme) for grievances against Credit
Information Companies.
➢ The Banking Ombudsman Scheme 2006' was The 'Credit Information Company' as defined in
a scheme which became operative from the Credit Information Companies (Regulation)
January 01 2006 for providing an Act, 2005, shall also be treated as a 'Regulated
expeditious and inexpensive forum for bank Entity' for the purpose of the Scheme."
customers for resolution of complaints
➢ "Appellate Authority" means the Executive
relating to certain services rendered by
Director in-Charge of the Department of the
banks.
Reserve Bank administering the Scheme;
➢ The Scheme was introduced under Clause
➢ "Appellate Authority Secretariat" means the
35A of the Banking Regulation Act, 1949 by
Department in the Reserve Bank which is
RBI. It was also amended/updated from
administering the Scheme;
time to time the latest being from July 1
2017. ➢ "Authorized Representative" means a
person, other than an advocate, duly
➢ The Scheme covers the following regulated
appointed and authorized in writing to
entities:
represent the complainant in the
(i) All Commercial Banks, Regional Rural Banks, proceedings before the Ombudsman;
Scheduled Primary (Urban) Cooperative Banks
➢ “Award” means an award passed by the
and Non-Scheduled Primary (Urban) Co-
Ombudsman in accordance with the
operative Banks with deposits size of Rupees
Scheme;
50 crore and above as on the date of the
audited balance sheet of the previous financial ➢ “bank” means a ‘banking company', a
year; 'corresponding new bank', a ‘Regional Bank
of India' as defined in the Banking
(ii) All Non-Banking Financial Companies
Regulation Act, 1949, a 'co-operative bank'
(excluding Housing Finance Companies) which
as defined in Clause 56 (c) of the Banking
are authorized to accept deposits; or have
Regulation Act, 1949 to the extent not
customer interface, with an assets size of
excluded under the Scheme, but does not
Rupees 100 crore and above as on the date of
include a bank in resolution or winding up
the audited balance sheet of the previous
or under directions or any other bank as
financial year;
specified by the Reserve Bank;
(iii) In terms of RBI directives dated 05-08-2022
(Ref.CEPD.PRD. No. S544/13.01.001/2022-23)
"to provide an avenue for cost free alternate
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➢ "Deputy Ombudsman” means any person
appointed by the Reserve Bank as such
under the Scheme;
➢ "Regulated Entity" means a bank or a Non-
Banking Financial Company or a System
Participant as defined in the Scheme, or any
other entity as may be specified by the
Reserve Bank from time to time; to the
extent not excluded under the Scheme.
➢ "Settlement" means an agreement reached
by the parties to the complaint by
facilitation or conciliation or mediation, as
per the provisions of this Scheme
➢ "System Participant" means a person other
than the Reserve Bank and a System
Provider, participating m a payment system
as defined in the Payment and Settlement
Systems Act, 2007;
➢ "System Provider" means and includes a
person who operates an authorized
payment system as defined in Clause of the
Payment and Settlement Systems Act, 2007.
➢ The Reserve Bank may appoint one or more
of its officers as Ombudsman and Deputy
Ombudsman, to carry out the functions
entrusted to them under the Scheme and
The appointment of Ombudsman or the
Deputy Ombudsman, as the case may be,
shall be made for a period not exceeding
three years at a time."
➢ The offices of the Ombudsman shall be at
such places as may be specified by the
Reserve Bank. In order to expedite disposal
of the complaints, the Ombudsman may
hold sittings at such places and in such
manner as may be considered necessary and
proper in respect of a complaint."
➢ The Reserve Bank shall establish the
Centralized Receipt and Processing Centre at
any place as may be decided by it to receive
the complaints filed under the Scheme and
process them.
➢ The complaints under the Scheme made
online shall be registered on the portal
(https://cms.rbi.org.in). Complaints in
electronic mode (E-mail) and physical form,
including postal and hand-delivered
complaints, shall be addressed and sent to
the place where the Centralized Receipt and
Processing Centre of the Reserve Bank is
established, for scrutiny and initial
processing.
➢ Provided that the complaints that are
received directly in any of the offices of the
Reserve Bank shall be forwarded to the
Centralized Receipt and Processing Centre
for further action.
➢ The staffing of the office of the Ombudsman
and the CRPC will be the responsibility and
at the cost of the RBI.
➢ As per clause 9 "Any customer aggrieved by
an act or omission of a Regulated Entity
resulting in deficiency in service may file a
complaint under the Scheme personally or
through an authorized representative as
defined under clause 3(1)(c)"
➢ Clause 10(1) lists the circumstances under
which a complaint would become non-
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maintainable. These are in respect of
matters involving Commercial
judgment/commercial decision of a
Regulated Entity;
➢ The complaint, if submitted in physical
form, shall be duly signed by the
complainant or by the authorized
representative. The complaint shall be
submitted in electronic or physical mode in
such format and containing such
information as may be specified by Reserve
Bank.”
➢ Provided that in e event of failure of a
Regulated Entity to comply with the
requisition without sufficient cause, the
Ombudsman may draw an inference that
the Regulated Entity has no information to
furnish."
➢ The complaint would be deemed to be
resolved when It has been settled by the
Regulated Entity with the complainant upon
the intervention of the Ombudsman; or The
complainant has agreed in writing or
otherwise (which may be recorded) that the
manner and the extent of resolution of the
grievance is satisfactory; or
➢ Unless the complaint is rejected under
clause 16, the Ombudsman shall pass an
Award in the event of non-furnishing of
documents/information as enumerated in
clause 14(4); or the matter not getting
resolved under clause 14(9) based on
records placed, and after affording a
reasonable opportunity of being heard to
both the parties.
➢ A copy of the Award shall be sent to the
complainant and the Regulated Entity.
➢ The Regulated Entity shall comply with the
Award and intimate compliance to the
within 30 days from the date of receipt of
the letter of acceptance from the
complainant, unless it has preferred an
appeal under sub-clause (2) of clause 17"
➢ Both the regulated entity and the
complainant has the right to prefer an
appeal, the procedure for which, is provided
in Clause 17 of the Scheme. (4) The
Appellate Authority's Secretariat shall
scrutinize and process the Appeal.
➢ The Appellate Authority may, after giving
the parties a reasonable opportunity of
being heard- Dismiss the appeal; or Allow
the appeal and set aside the Award or order
of the Ombudsman; or Remand the matter
to the Ombudsman for fresh disposal in
accordance with such directions as the
Appellate Authority may consider necessary
or proper; or Modify the order of the
Ombudsman or Award and pass such
directions as may be necessary to give effect
to the order of the Ombudsman or Award so
modified; or Pass any other order as it may
deem fit.
➢ Under the Scheme the RBI has been
accorded the authority, through an order to
" suspend for such period as may be
specified in the order, the operation of all or
any of the clauses of the Scheme, either
generally or in relation to any specified
Regulated Entity and The Reserve Bank may,
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by order, extend from time to time, the
period of any suspension ordered as
aforesaid by such period, as it may deem
fit." (Clause 2).
Chapter 16: MSME ACT, 2006
➢ The Micro, Small and Medium Enterprises
Development Act, 2006, offers several
benefits and provisions to promote the
growth of MSMEs like Credit Facilities,
Delayed Payment Provisions, Reservation of
Products and Support for Technology
Upgradation.
➢ After 14 years since the MSME Development
Act came into existence in 2006, a revision
in MSME definition was announced in the
Atma-Nirbhar Bharat package on 13th May,
2020
➢ Central government established a board
called as the National Board for Micro, Small
and Medium Enterprises, head office at
Delhi.
➢ The NBMSME consists of 47 members,
including 18 ex-officio members,
representing various segments connected to
MSMEs, such as manufacturing and service
enterprises, women enterprises, Central
Ministries, States, and trade unions.
➢ The Board's primary functions include
examining factors affecting the promotion
and development of MSMEs, reviewing
government policies and programs, making
recommendations to the Central
Government, and advising on the use of
funds.
➢ Section 7(2) of the MSMED Act, 2006
establishes the Advisory Committee for
MSMEs, which is essential for the
development and competitiveness of the
MSME sector.
➢ The Advisory Committee is established by
notification under the Chairmanship of the
'Secretary, Ministry of Micro, Small and
Medium Enterprises.'
Composition of the Advisory Committee:
Five officers of the Central Government who
have experience in matters related to Micro,
Small, and Medium Enterprises.
➢ Three representatives from State
Governments.
➢ One representative each from Micro, Small,
and Medium Enterprise associations.
Additionally, the Member Secretary of the
National Board of Micro, Small & Medium
Enterprises (NBMSME) also serves as the
Member Secretary of the Advisory
Committee.
➢ The memorandum filing is categorized
based on the type of enterprise.
➢ Those intending to establish a micro or
small enterprise, or a medium enterprise
engaged in providing services, are required
to file the memorandum at their discretion.
➢ The statute allows for exceptions.
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➢ Individuals who established a small-scale
industry and obtained a registration
certificate prior to the enactment of the
MSMED Act can choose to file the
memorandum at their discretion.
➢ Liability of Buyer to Make Payment (Section
15): When a supplier provides goods or
services to a buyer, it is the buyer's
responsibility to make payment.
➢ The payment should be made on or before
the date agreed upon in writing between
the buyer and the supplier.
➢ If there is no written agreement, the
payment should be made before the
appointed day. The agreed period for
payment in writing between the supplier
and the buyer should not exceed forty-five
days from the day of acceptance.
➢ If a buyer fails to make payment to the
supplier as per the provisions of Section 15,
they are liable to pay compound interest to
the supplier.
➢ The additional information that buyers must
furnish includes Principal Amount and
Interest Due to Suppliers, Payment Beyond
Appointed Day, Interest Due and Payable
for Delayed Payments and Interest Accrued
and Remaining Unpaid.
➢ Penalties (Has been covered in Section 27)
➢ In the case of the first conviction for
intentionally contravening the Act's
provisions, the offender can be punished
with a fine, which may extend to rupees one
thousand.
➢ If an individual is convicted for the second
or subsequent time, the fine imposed shall
not be less than rupees one thousand but
may extend to rupees ten thousand.
➢ Specific Penalty for Section 22: Where a
buyer contravenes the provisions of Section
22 of the Act, they shall be punishable with
a fine that shall not be less than rupees ten
thousand.
Chapter 17A: INTRODUCTION TO
SARFAESI ACT, 2002
SARFAESI: Securitization and Reconstruction of
Financial Assets and Enforcement of Security
Interest Act, 2002.
Banks and Financial institutions lend money by
obtaining security, except for the category of
clean loans.
The security obtained is to act as a protection
for the money advanced and in the case of
need, the money can be realized by the sale of
securities.
The lender's rights over the securities, both
moveable and immoveable, for realization of
the amount advanced, were limited and less
effective since they were required to take help
of the legal system which was taking unduly
long time to complete prior to the passing of
the SARFAESI Act, 2002.
This Act introduced major changes in the legal
framework for the recovery of dues by laying
hands on the securities.
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The Act was also a major step in financial procedure as provided in the Act and the Rules
sector reforms. framed there under, for recovery of the loans.

It has brought a legal framework for the The Act has retrospective application, i.e., it
following important activities in the credit applies for loans and securities created prior to
market: the Act coming into operation.

(a) Securitization of financial assets. 6. The Act is applicable to cases where security
interest for securing repayment of any financial
(b) Reconstruction of financial assets.
asset is more than Rs. 1 Lakh and the amount
(c) Recognition of any 'interest' created in the due is 20% or more of the principal amount
security for due repayment of a loan as a and interest thereon.
'security interest', irrespective of its form and
7. The Act is not applicable to any security
nature but when it is not in the possession of
interest created on agricultural land and
the creditor.
certain properties not liable to attachment
(d) Power to enforce such a security for the under some specified Acts.
realization of money due to banks and the
8. Creditors other than secured creditors not
financial institutions in the event of a default,
eligible to exercise right of enforcement of
without the intervention of the Courts.
securities under this Act.
(e) Enabling provisions for the setting up a
9. The statute has, since its inception in 2002,
central registry for the purpose of registration
been amended a number of times viz. in 2004,
of transactions of securitization, reconstruction
2013, 2016 and 2021 (by Finance Act).
and the creation of the security interest.
In the year 2020 certain provisions i.e. sections
4. The Act extends to whole of India including
17, 18 and 19 of the amendment act of 2016
the State of Jammu & Kashmir. It is effective
were enforced with effect from 24th January
from 21 June, 2002.
2020.
The Act is applicable also to housing finance
CONSTITUTIONAL VALIDITY OF THE ACT:
companies (HFC) whose names are notified by
the Central Government. In Mardia Chemicals vs Union of India, a three-
member bench of the Supreme Court declared
5. The Act has presupposed a simple thing,
this Act as constitutionally valid, except a part
that there is an obligation on the part of the
of the Section 17(2).
borrowers to repay loans and if they are
unable to repay, then the securities for the The Section 17(2) laid down that when the
loans can be sold without intervention of the lender intends to take action of taking
Courts of Law or Tribunals, by following the possession of the security asset, the borrower
can file an appeal to the DRT only after
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depositing 75% of the amount claimed by the
lender.
The Supreme Court declared this condition of
the deposit of 75% of the claim amount as
unreasonable, oppressive, arbitrary and
violative of the Article 14 of the Constitution.
The Act has since been suitably amended by
deleting the condition of pre-deposit of the
amount for filing an application/appeal under
Section 17.
Chapter 17B: DEFINITIONS UNDER
SARFAESI ACT, 2002
➢ An Asset Reconstruction Company (ARC) is a
financial institution that buys non-
performing assets (NPAs) from banks and
financial institutions.
➢ ARCs buy bad loans from banks and attempt
to recover the debts
➢ SARFAESI Act allows the filing of appeals
against Debts Recovery Tribunal (DRT)
orders in Debts Recovery Appellate Tribunal
(DRAT) 45 days from receiving the order to
file an appeal.
➢ Financial deposit: 50% of the claimed
amount, potentially reducible to 25% on
justifiable grounds.
➢ Tribunals are established by the Central
Government as per the provisions of the
Recovery of Debts due to Bank and Financial
Institutions Act, 1993.
➢ Section 3 of the SARFAESI Act states that no
ARC shall commence or carry on the
business of securitization or asset
reconstruction without obtaining a
certificate of registration granted under this
section, and having net owned fund of not
less than Rs. two crore or such other higher
amount as specified by the Reserve Bank.
➢ The definition of "borrower" as per Section
2(f) of the Act includes any person who has
been granted financial assistance by any
bank or financial institution.
➢ The Central Registry was established under
the Securitization and Reconstruction of
Financial Assets and Enforcement of
Security Interest (SARFAESI) Act 2002 by the
Central Government to register transactions
related to asset securitization,
reconstruction, and creation of security
interests.
➢ The Recovery of Debts Due to Banks and
Financial Institutions Act (RDDBFI Act),
1993, established Debts Recovery Tribunals
(DRTs) with original jurisdiction and Debts
Recovery Appellate Tribunals (DRATs) with
appellate jurisdiction, for expeditious
adjudication and recovery of debts due to
banks and financial institutions.
➢ According to Section 2 (j), 'Default' can be
categorized into two main scenarios Non-
Payment Leading to Non-Performing Asset
(NPA) Classification and Non-Payment in
Debt Securities After Notice.
➢ The definition of "financial asset"
encompasses a broad range of assets,
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including debt or receivables. It also
includes both secured and unsecured claims
to debt or receivables, as well as mortgages,
charges, hypothecations, pledges, and other
forms of security.
➢ Hypothecation (Section 2 (n) of SARFESI Act,
2002) means a charge in or upon any
moveable property existing or future
created by a borrower in favor of a secured
creditor.
➢ In plain meaning, when the bank or financial
institution lends money against security,
they are the originator.
➢ Obligor means a person liable to pay to the
originator.
➢ Obligator is just a borrower.
Definition of Property in SARFAESI ACT,
2022: Immoveable property, Moveable
property, any debt or any right to receive
payment of money whether secured or
unsecured, Receivables, whether existing or
future and Intangible assets such as patents,
copyright, trademarks, license, franchise or
any other business or commercial right of a
similar nature.
➢ Qualified Buyers include Financial
Institutions, Insurance companies, Banks,
State Financial Corporations, State Industrial
Development Corporations, trustee or ARCs
registered under SARFAESI and Asset
Management Companies registered under
SEBI that invest on behalf of mutual funds,
pension funds, FIIs, etc.
➢ Securitization, involves the acquisition of
financial assets by an Asset Reconstruction
Company (ARC) from the originator (owner
of financial Assets), typically through the
raising of funds from qualified buyers (QB)
by issuing security receipts (SR) representing
undivided interest in the financial assets or
through other means.
➢ The acquisition of the financial asset by the
Asset Reconstruction Company can be
considered a sale of the asset without
recourse to the bank or financial institution.
➢ ARC is required to have a minimum Net
Owned Fund (NOF) of not less than Rupees
two crore, or such higher amount as
specified by the Reserve Bank, in order to
commence or carry on the business of
securitization or asset reconstruction.
➢ Additionally, the cap on owned fund of 15%
of financial assets has been dispensed with.
➢ Secured asset means the property on which
a security interest is created.
➢ The powers given by SARFAESI act for the
enforcement of securities are against the
secured assets only.
➢ Secured Creditor as per Section 2(z d) of the
Act means Any bank or financial institution
or any consortium or group of banks or
financial institutions holding any right, title
or interest upon any tangible asset or
intangible asset or Debenture trustee
appointed by any bank or financial
institution or An ARC whether acting as such
or managing a trust set up by such ARC for
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the securitization or reconstruction, as the
case may be.
➢ Security debt means a debt which is secured
by any security interest.
➢ "Security interest" means right, title or
interest of any kind, other than those
specified in section 31 {where we can’t
apply SARFAESI Act}, upon property created
in favor of any secured creditor.
➢ The security receipt evidences the
purchaser's undivided right, title and
interest in the security. These receipts are
transferable in the market.
➢ The ARC shall issue SRs only to QBs and hold
and administer the financial assets for the
benefit of the QBs.
➢ Sponsor is an entity holding not less than
10% of the paid-up equity capital of Asset
Reconstruction Company (ARC).
Chapter 17C: REGULATION OF
SECURITISATION AND
RECONSTRUCTION OF FINANCIAL
ASSETS OF BANK AND FINANCIAL
INSTITUTIONS
➢ The Asset Reconstruction company can
commence or carry business, only after
complying with the following two conditions
if it obtains certification of registration from
the Reserve Bank of India by applying in
prescribed format and it has the Net Owned
Funds at the time of registration not less
than Rupees two crore or such other higher
amount as Reserve Bank may specify.
➢ Securitization and reconstruction activities
are considered similar.
➢ Registered companies can issue security
receipts and formulate schemes to raise
money for acquisition activities.
RBI will approve the application of ARC for its
establishment only if: The ARC should not have
incurred losses in any of the three preceding
financial years and There must be adequate
arrangements for the realization of financial
assets and the ability to pay returns and
redeem investments.
As per Section 4 of the SAFEASI Act 2002, the
registration granted to the Asset
Reconstruction Company by the Reserve Bank
of India is cancellable if the company ceases to
carry on the business of securitization or asset
reconstruction, or the company ceases to
receive or hold any investment from a qualified
institutional buyer, or the company fails to
comply with any of the conditions subject to
which the certificate of registration was
granted.
➢ The securitization or reconstruction
company whose registration is cancelled can
prefer an appeal within thirty days from the
date of communication of order, to the
Central Government.
➢ Even if the application for registration is
rejected or the already existing registration
is cancelled, shall be deemed as
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Securitization Company or Asset ➢ Fundraising and Security Receipts: Asset
Reconstruction Company, until the company Reconstruction Companies raise funds for
pays the dues of the investors along with asset acquisition by issuing security receipts.
interest within the period as the RBI may
➢ These receipts are not offered to the public;
the company specify.
only qualified institutional buyers (QIB) and
➢ Stamp Duty Exemption: Documents other specified investors, as determined by
executed by a bank or financial institution in the Reserve Bank in consultation with the
favor of the asset reconstruction company Board, can acquire them.
for the purpose of asset reconstruction or
➢ Complex Investment Field: The investment
securitization are exempt from stamp duty
and financial market related to Asset
in accordance with the Indian Stamp Act,
Reconstruction Companies is intricate
unless the acquisition of financial assets is
(complex), requiring detailed risk
for purposes other than asset reconstruction
assessment.
or securitization.
➢ Trust Arrangements: The Act provides for
➢ Pending legal proceedings related to the
the creation of trust arrangements for each
acquired financial assets may be continued,
scheme of an asset reconstruction company.
prosecuted, and enforced by or against the
asset reconstruction company. ➢ The company acts as a trustee, managing
the trust, with the investors in the scheme
➢ With the consent of the originator, the asset
as beneficiaries.
reconstruction company may file an
application for the substitution of its name ➢ When the ARC issues security receipts, the
in any pending legal proceedings, and the holder of the security receipts is entitled to
relevant tribunal, court, or authority shall an undivided interest in the financial assets.
pass orders for such substitution upon
➢ In such an event the security receipt does
receipt of the application.
not require registration that is otherwise
➢ When a bank or financial institution decides compulsory under the Registration Act,
to transfer a financial asset to an Asset 1908.
Reconstruction Company, it has the option
➢ However, registration of the security
to give a notice of such acquisition to the
receipt is required in the following case: If
obligor (borrower or person liable to repay)
the security receipt is creating, declaring,
and the Registrar of Companies if the
assigning, limiting or extinguishing any right,
obligor is a company.
title or interest to or in an immoveable
➢ However, giving such notice is optional and property. (Section 8)
not compulsory under the Act.
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➢ Asset reconstruction companies registered
under section 3 are authorized to act as an
agent for banks or financial institutions to
recover dues from borrowers, subject to
mutually agreed fees or charges.
➢ Asset reconstruction companies engaged in
other businesses prior to the
commencement of the Act are required to
cease such activities within one year.
➢ Disputes among banks, financial
institutions, and Asset Reconstruction
Companies (ARCs) must be settled through
conciliation or arbitration as per the
Arbitration and Conciliation Act, 1996.
➢ The RBI is empowered to conduct audits and
inspections of ARCs to ensure compliance
and proper management.
➢ ARCs must ensure compliance with the
SARFAESI Act regulations within six months
from the commencement of the Act.
Chapter 17D: ENFORCEMENT OF
SECURITY INTEREST
➢ Under SARFAESI Act, secured creditors can
enforce security interests without
court/tribunal intervention.
➢ Notice must be given to the defaulting
borrower, now an NPA, to discharge
liabilities within 60 days.
➢ Although not required, borrowers can
respond.
➢ Secured creditors must consider and
internally evaluate such responses,
communicating reasons for any rejection
within 15 days.
➢ Various rights accrue to secured creditor on
non-payment, like asset possession and
management takeover.
➢ Transfer by a secured creditor vests all
rights to the transferee as if by the asset
owner.
➢ In winding up, workmen’s dues have equal
charge with secured creditors as per
Companies Act 2013.
➢ Rights under SARFAESI to be exercised by
authorized officers or persons in control of
the creditor's business.
➢ Authorized officer issues sale certificate,
requiring stamping per state laws.
➢ Under the SARFAESI Act, secured creditors
have the right to enforce their security
interest without the intervention of the
court, in case of default.
➢ When necessary to take possession or
control of secured assets, or when such
assets must be sold or transferred, the
secured creditor may request assistance
from judicial authorities.
➢ Assistance can be sought from Chief
Metropolitan Magistrate (CMM) or District
Magistrate (DM) or an officer authorized by
the CMM or DM
➢ The secured creditor must submit a written
request to the relevant authority within
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whose jurisdiction the asset or its ➢ Shareholders cannot appoint directors
documents are located. independently.

➢ On receiving the request, the official must:
Take possession of the security asset and
related documents.
➢ Forward the assets and documents to the
secured creditor.
➢ Shareholder resolutions require secured
creditor approval.
➢ Any court proceedings for winding up or
appointing a receiver require the secured
creditor's consent.

➢ The DM/CMM/authorized officer is required ➢ An aggrieved person, including the

to pass an order for taking possession within borrower, can apply to the Debts Recovery
30 days. Tribunal within 45 days of possession
measures taken by the secured creditor.
➢ An extension of another 30 days is
permissible, with recorded reasons. ➢ The Debts Recovery Tribunal is required to
dispose of the application in accordance
➢ Immunity Clause: Actions taken by the
with the provisions of the recovery of debts
DM/CMM or authorized officer while taking
due to Banks and Financial Institutions Act,
possession cannot be questioned in court or
1993 and its rules, ideally within 60 days.
before any authority.
➢ Any aggrieved individual has the right to
➢ A notice must be published in both English
appeal against orders made by the Debt
and a local Indian language newspaper. The
Recovery Tribunal (DRT) to Appellate
location for publication is the borrower's
Tribunal.
principal office.
➢ The appeal must be filed within 30 days
➢ The secured creditor or ARC can appoint
from the receipt of the DRT order.
new directors.
➢ The borrower must deposit 50% of the debt
➢ The existing directors are considered to
claimed by the secured creditor to file an
have vacated their offices once the notice is
appeal.
published.
➢ The tribunal may reduce the required
➢ Administrators are appointed to manage
deposit to 25% upon recording reasons for
the business.
the reduction.
➢ The newly appointed directors or
administrators, Take custody of all business
properties and effects.

➢ Assume full powers of superintendence,

direction, and control.
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Chapter 17 E: CENTRAL REGISTRY
➢ Under the SARFEASI Act, there is a provision
for the establishment of a Central Registry
under Section 20 of the Act.
➢ The Central Government may, by
notification, a registry to be known as the
Central Registry with its own seal for the
purposes of registration of transaction of
securitization and reconstruction of financial
assets and creation of security interest. The
head office of the Central Registry shall be
at such place as the Central Government
may specify and for the purpose of
facilitating registration of transactions
referred to in sub-section (1).
➢ The provisions of this Act pertaining to the
Central Registry shall be in addition to and
not in derogation of any of the provisions
contained in the Registration Act, 1908, the
Companies Act, 1956, the Merchant
Shipping Act, 1958 etc.
➢ CERSAI is central registry in India. CERSAI:
Central Registry of Securitisation Asset
Reconstruction and Security Interest.
➢ All creditors including secured creditors may
file particulars of transactions with central
registry.
➢ Creditors other than secured creditors are
not eligible to exercise right of enforcement
of securities under this Act.
➢ Any person having order of attachment
against the borrower shall file such order
with Central registry.
➢ Such registration will be deemed to be
public notice from the date of filing with the
Central Registry.
➢ No secured creditor shall be allowed to
exercise right of enforcement of securities
unless the security interest created has been
registered with the Central Registry.
➢ The Central Government has to appoint by
notification a person as central registrar for
the purpose of registration.
➢ The Central Government, vide its
notification of March 2011, has brought the
Central Registry under the superintendence
and direction of the Central Registrar.
➢ A record shall be maintained at the central
register at the head office in which
transactions relating to Securitization of
financial assets, Reconstruction of financial
assets and Creation of security interests
shall be maintained.
➢ The record of central register can be kept
fully or partly on computer, floppies,
diskettes, or any other electronic form.
➢ As per Section 23 of the SARFEASI Act 2002
the particulars of every transaction of
securitization, asset reconstruction or
creation of security interest shall be filed,
with the Central Registrar in the manner
and on payment of such fee as may be
prescribed.
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➢ The Central Government may, by rules,
prescribe forms for registration for different
types of security interest under this section
and fee to be charged for such registration.
➢ The methodology to be used for recording
satisfaction of security interest is provided
in Section 25 of the Act.
➢ As per Section 25: The asset reconstruction
company (ARC) or the secured creditors as
the case may be, shall give intimation to the
Central Registrar of the payment or
satisfaction in full within thirty days from
the date of such payment or satisfaction.
➢ On receipt of intimation, the Central
Registrar shall order that a memorandum of
satisfaction shall be entered in the Central
Register.
➢ If the concerned borrower gives an
intimation to the Central Registrar for not
recording the payment or satisfaction, the
Central Registrar shall on receipt of such
intimation, cause a notice to be sent to the
asset reconstruction company or the
secured creditors calling upon it to show
cause within a time not exceeding 14 days
specified in such notice, as to why payment
or satisfaction should not be recorded as
intimated to the Central Registrar.
➢ The particulars of securitization or
reconstruction or security interest entered
in the central register are open for
inspection by any person during office hours
on payment of fees as may be prescribed.
➢ Same is applicable if the data is kept in the
electronic form at the office of the central
registrar. (Section 26)
Chapter 17F: OFFENCES AND PENALTIES
➢ Sections 12 or 12A of the SARFAESI Act
empower the Reserve Bank of India to issue
directions to securitization or reconstruction
companies.
➢ Failure to comply with the RBI's directions
can lead to a fine not exceeding Rs. 5 lakhs
for the default.
➢ For a continued offense, an additional fine
of up to Rs. 10,000 per day of the default
can be imposed.
➢ The SARFAESI Act stipulates that any
individual who contravenes, attempts to
contravene the act's provisions or rules can
face punishment, including imprisonment
for up to one year, a fine, or both.
➢ Any violation of these provisions is subject
to punishment under Section 29 of the Act.
➢ The complaint must be made by an officer
who is generally or specially authorized in
writing by the Central Registrar or the
Reserve Bank.
➢ Cognizance of offenses under the SARFAESI
Act can only be taken by the Metropolitan
Magistrate or the Judicial Magistrate of First
Class.
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➢ Adjudicating authority means such officer or
a committee of officers of the Reserve Bank,
designated as such from time to time, by
notification, by the Central Board of Reserve
Bank.
➢ The penalty can be up to one crore rupees
or twice the amount involved in the failure
whichever is more where such amount is
quantifiable and where such failure is a
continuing one, a further penalty which may
extend to one lakh rupees for every day.
➢ The Act mandates that no complaint shall be
filed in court against a person in default in
any court pertaining to any failure for whom
a penalty has been imposed and recovered
by the Reserve Bank under this section.
➢ Section 30B outlines the process for
appealing against the decision of the
adjudicating authority, allowing for appeals
to the Appellate Authority within a period
of thirty days from the date on which such
order is passed.
➢ Section 30C designates the Central Board of
Reserve Bank to appoint officers or a
committee as the Appellate Authority,
defining its powers to pass orders and stay
enforcement of penalties pending appeal.
Chapter 17G: MISCELLANEOUS
PROVISIONS
➢ Section 31 gives the details of excluded
securities to which the SARFAESI Act is not
applicable If outstanding is up to one lakh
rupees, any security interest created in
agricultural land and Any case, in which the
amount due is less than 25% of the principal
amount and interest.
➢ The Reserve Bank or the Central Registry or
any secured creditor or any of its officers are
protected for actions taken in good faith by
the provisions made in the Act.
➢ Section 33 of the SARFAESI Act specifies the
punishment for offenses committed by a
company and its officers under the Act,
holding them accountable for statutory
obligations.
➢ Non-observance of statutory obligations
amounts to an offense under the Act, and
both the company and the person in charge
of its business are deemed guilty and liable
for prosecution and punishment.
➢ There is provision for a person acting for the
company to prove that the offense was
committed without their knowledge or that
they had taken due diligence to prevent it,
thus avoiding punishment.
➢ If the offense is committed with the consent
or connivance of any director or officer of
the company, the director or officer will be
deemed guilty of the offense along with the
company.
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➢ The penal provisions are applicable to all
categories of borrowers including
individuals, partnership firms, and
companies incorporated under the
Companies Act or any other association of
individuals.
➢ The SARFAESI Act has conferred jurisdiction
on many matters to the debt’s recovery
tribunal or the appellate tribunal.
➢ Similarly, any Court or authority cannot
grant injunction in such matters and actions
taken, or to be taken, under this Act as well
as under Recovery of Debts Due to Banks
and Financial Institutions Act, 1993.
➢ The Central Government has the authority
to frame rules for implementing the
SARFAESI Act and notify them in the Official
Gazette or the Electronic Gazette as defined
in the Information Technology Act, 2000.
➢ Rules made under the Act must be
presented before each House of Parliament,
while in session for a total period of thirty
days.
➢ The validity of the rules is determined by
the decision of both Houses of Parliament,
and any act done under the existing rule is
not affected if the rules are subsequently
modified or cancelled.
➢ This process ensures that rules made under
the SARFAESI Act undergo parliamentary
scrutiny and approval, contributing to
transparency and accountability in the
implementation of the Act.
Chapter 18 A : THE RECOVERY OF DEBTS
AND BANKING ACT, 1993 (DRT ACT
1993)
Section 31 gives the details of excluded
securities to which the SARFAESI Act is not
applicable If outstanding is up to one lakh
rupees, any security interest created in
agricultural land and Any case, in which the
amount due is less than 25% of the principal
amount and interest.
➢ The Reserve Bank or the Central Registry or
any secured creditor or any of its officers are
protected for actions taken in good faith by
the provisions made in the Act.
➢ Section 33 of the SARFAESI Act specifies the
punishment for offenses committed by a
company and its officers under the Act,
holding them accountable for statutory
obligations.
➢ Non-observance of statutory obligations
amounts to an offense under the Act, and
both the company and the person in charge
of its business are deemed guilty and liable
for prosecution and punishment.
➢ There is provision for a person acting for the
company to prove that the offense was
committed without their knowledge or that
they had taken due diligence to prevent it,
thus avoiding punishment.
➢ If the offense is committed with the consent
or connivance of any director or officer of
the company, the director or officer will be
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deemed guilty of the offense along with the transparency and accountability in the
company. implementation of the Act.

➢ The penal provisions are applicable to all

categories of borrowers including
individuals, partnership firms, and
companies incorporated under the
Companies Act or any other association of
individuals.
Chapter 18 B : THE RECOVERY OF DEBTS
AND BANKING ACT, 1993 (DRT ACT
1993)

➢ The SARFAESI Act has conferred jurisdiction

➢ Section 3 of the Recovery of Debts and
on many matters to the debt’s recovery
Bankruptcy Act, 1993 empowers the Central
tribunal or the appellate tribunal.
Government to establishes the Debts
➢ Similarly, any Court or authority cannot Recovery Tribunal (DRT).
grant injunction in such matters and actions
➢ Sub-Section 1(A) specifies that the Central
taken, or to be taken, under this Act as well
Government shall, by notification, establish
as under Recovery of Debts Due to Banks
the number of Debt Recovery Tribunals and
and Financial Institutions Act, 1993.
their benches.
➢ The Central Government has the authority
➢ The purpose of establishing these DRTs is to
to frame rules for implementing the
exercise the jurisdiction, powers, and
SARFAESI Act and notify them in the Official
authority of the Adjudicating Authority
Gazette or the Electronic Gazette as defined
conferred on such Tribunals under the
in the Information Technology Act, 2000.
Insolvency and Bankruptcy Code, 2016.
➢ Rules made under the Act must be
➢ The tribunal is made up of only one person
presented before each House of Parliament,
called 'Presiding Officer' and the
while in session for a total period of thirty
appointment is done by the Central
days.
Government by issuing a notification.
➢ The validity of the rules is determined by
➢ A person is qualified for appointment as a
the decision of both Houses of Parliament,
presiding officer of a tribunal if he possesses
and any act done under the existing rule is
the qualifications required to be appointed
not affected if the rules are subsequently
as a District Judge or He is currently serving
modified or cancelled.
as a District Judge or He has previously
➢ This process ensures that rules made under served as a District Judge.
the SARFAESI Act undergo parliamentary
➢ The presiding officer of a tribunal holds
scrutiny and approval, contributing to
office for a duration of five years,
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commencing from the date on which they
assume office Or The term may end if the
presiding officer attains the age of sixty-five
years, whichever comes earlier. [5 years/65
years]
➢ Appellate Tribunal: It is a body established
for the purpose of preferring an appeal
against the order passed by the tribunal
(DRT).
➢ Section 10 of the Act outlines the
qualifications required for the appointment
of a chairperson of an appellate tribunal.
➢ The individual must be, or must have been,
or be eligible to become a Judge of a High
Court or The candidate must have been a
member of the Indian legal service and have
held a post in the Grade of that service for a
minimum period of three years or The
person should have served as the presiding
officer of a tribunal for at least three years.
➢ The chairperson's term in office lasts for a
period of five years, starting from the date
they assume their position or until the
chairperson attains the age of seventy years
whichever is earlier. [5 years/70 years]
➢ Presiding officer or chairperson can, by
three months written notice, resign his
office. They cannot be removed, except by
an order of the Central Government, on the
ground of proved misbehaviour or
incapacity after inquiry.
Chapter 18 C: JURISDICTION, POWERS &
AUTHORITY OF TRIBUNALS
➢ Tribunals have the authority to entertain
and decide applications or appeals from
banks and financial institutions for the
recovery of debts, including applications
under Part III of the Insolvency and
Bankruptcy Code, 2016.
➢ To invoke the jurisdiction of the Tribunal
and file an application, the claim for debt
recovery must be Rs. 20 lakh or above,
including both principal and interest.
➢ The Chairperson has the authority to
transfer applications from one Presiding
Officer to another within their jurisdiction,
either upon receiving an application for
transfer or on their own initiative.
➢ The Chairperson can direct Tribunals to
provide information, in a specified format
and within specified timeframes, regarding
pending cases under this Act (DRT) and the
Securitization and Reconstruction of
Financial Assets and Enforcement of
Security Interest Act, 2002, or any other
applicable law.
➢ The Chairperson has the authority to
convene periodic meetings of Presiding
Officers to review their performance.
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Chapter 18 D: PROCEDURE OF
TRIBUNALS
➢ The institution can, with the DRT’s
permission, withdraw the application to
take action under the SARFAESI Act 2002
(Securitization and Reconstruction of
Financial Assets and Enforcement of
Security Interest Act).
➢ The DRT must process withdrawal
applications promptly, ideally within 30
days from the date of application.
➢ Refusals require recorded justifications.
➢ Certain multi-state co-operative banks have
the option to initiate debt recovery
proceedings under the Multi-State Co-
operative Societies Act, 2002, instead of the
DRT route.
➢ If a bank or financial institution files an
application under Section 19(1) for debt
recovery, another bank or financial
institution can join the proceedings at any
stage before the final order by making an
application.
➢ Applications filed under Sections 19(1) or
19(2) must comply with prescribed forms,
documents, evidence, and fees.
➢ Upon receiving the application, the tribunal
issues summons to the defendant with
directions:
➢ Show cause within thirty days of summons
service as to why the relief should not be
granted.
➢ Disclose details of properties or assets not
specified by the applicant.
➢ The defendant, upon receiving the
summons, cannot transfer assets with
security interest or those disclosed without
Tribunal approval.
➢ Sale proceeds from secured assets must be
deposited into the account of the bank or
financial institution holding security
interest.
➢ Section 5(i) The defendant must present a
written statement of defence within thirty
days of summons service, including any
claim for set-off or counter-claim.
➢ Hearing for admission or denial of
documents produced by parties is done
under sub-section 5A.
➢ If a defendant admits a debt, they are
ordered to pay within 30 days.
➢ Failure to comply may result in the Tribunal
issuing a recovery certificate for the
admitted debt amount.
➢ Tribunals can issue conditional attachment
orders on properties, wholly or partially, as
necessary.
➢ Attachment orders must comply with the
requirements stated in Sub-Section 13.
➢ Failure to do so renders the order void.
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➢ Breach of tribunal orders may result in
property attachment and civil detention for
up to three months.
➢ Tribunals can appoint receivers, remove
property custodians, and confer various
property management powers to ensure
debt recovery.
➢ Recovery Certificate and Amendments
(Section 19(22) and (22A)): The Presiding
Officer issues a recovery certificate for debt
payment. These certificates are considered
as court orders for various legal
proceedings.
➢ Affidavits may be accepted as evidence;
witness cross-examination is only required if
deemed necessary by the tribunal.
➢ Property transfers violating court
injunctions are considered void and confer
no rights or interests.
➢ Anyone affected by a Tribunal's order or a
deemed order under the DRT Act has the
right to appeal. Appeal to Appellate Tribunal
allowed unless the original order was made
with the parties' consent Within 30 days of
receiving the order.
➢ Strives to resolve the appeal within six
months from the receipt of the appeal.
➢ Writ Petition to High Court: Under Article
226, and supervisory jurisdiction of High
Court under Article 227.
➢ Defendant, subject to a recovery order by
the Debt Recovery Tribunal, requires
depositing 50% of the determined amount
for an appeal to the Appellate Tribunal.
➢ Tribunal holds the discretion to decrease or
waive the payment, but not below 25% of
the determined amount, with a written
rationale.
➢ The Tribunal and the Appellate Tribunal are
deemed to hold the status of a Civil Court in
accordance with Section 195 and Chapter
XXVI of the Code of Criminal Procedure,
1973.
Chapter 18E: RECOVERY OF DEBTS
DETERMINDED BY TRIBUNAL AND
MISCELLANEOUS PROVISIONS
➢ Under the Act, specialized recovery officers
are appointed and attached to the tribunal.
➢ The Act includes provisions for the transfer
of cases from the Civil Court to the Tribunal.
➢ A recovery certificate is a decree that can be
used to lodge a claim under the IBC.
➢ The holder of a recovery certificate is
entitled to initiate CIRP under the IBC within
three years from the date of issuance.
➢ The Act grants the Tribunal various
miscellaneous powers that may include
actions related to the recovery process,
dispute resolution, and related matters.
➢ Section 25 of the Act outlines the
procedures and modes of recovery for the
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specified amount as per the recovery
certificate issued under Section 19(22).
➢ The Recovery Officer is responsible for
executing these recovery proceedings.
➢ The Recovery Officer can attach and sell
both movable and immovable property
owned by the defendants.
➢ The Act allows for the arrest of the
defendant, but its use is subject to judicial
scrutiny and must be in line with the
Supreme Court's decision.
➢ The Recovery Officer has the authority to
appoint a receiver for the management of
the movable and immovable properties of
the defendant.
➢ 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.
➢ One of the Rules framed under the Act (5A)
states that 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.
➢ Section 26 imposes restrictions on the
defendant from questioning the correctness
of the amount mentioned in the recovery
certificate before the Recovery Officer.
➢ Section 30 addresses this concern by
providing an avenue for appeal to the
Tribunal for any person aggrieved by the
Recovery Officer's order.
➢ Section 30A stipulates that for appeals
against the Recovery Officer's order, the
appellant must deposit 50% of the
determined debt amount with the Tribunal.
➢ Section 31(1) of the Act addresses the
transfer of suits or other proceedings
pending before any court to the Tribunal
established under the Act.
Chapter 19: Resolution of Stressed
Assets under Insolvency and
Bankruptcy Code 2016 (PART-I)
➢ The Insolvency and Bankruptcy Code, 2016
came into effect from 1st December 2016.
➢ Insolvency is a situation where liabilities of
an individual or an entity exceed its assets
and is unable to pay debt obligations.
➢ Bankruptcy is the legal recognition of the
insolvency as beyond resolution.
➢ A bankrupt person or entity is a debtor who
has been adjudged as bankrupt by a due
Adjudicating Authority by passing a
bankruptcy order.
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➢ LEGAL ELEMENTS OF THE CODE: Insolvency
& Bankruptcy Board of India (IBBI, the
Regulator), Insolvency Professional Agencies
Insolvency Professionals (Interim Resolution
Professionals, Resolution Professionals)
National Company Law Tribunal (NCLT -
Adjudicating Authority for Corporate)
➢ National Company Law Appellate Tribunal
(NCLAT - Appellate Authority for Corporate)
➢ Debt Recovery Tribunals (Adjudicating
Authority for individuals and partnerships
➢ Regulatory Authority (IBBI): The Insolvency
and Bankruptcy Board of India is entrusted
with the task of regulating both the
profession and process of IBC.
➢ Insolvency Professionals (IPs) are the
frontline warriors implementing IBC.
➢ They are professionals licensed/registered
by IBBI to undertake the role of the Interim
Resolution Professional (IRP), Resolution
Professional (RP), liquidator and/or
bankruptcy trustee under any resolution
process initiated under the Code.
➢ IPAs are bodies or entities registered with
IBBI and are responsible for promoting the
best professional standards among
Insolvency Professionals (IP).
➢ As of now there are three IPAs, namely,
Institute of Company Secretaries of India,
Institute of Chartered Accountants of India
and Institute of Cost Accountants of India
➢ IUs are reservoirs of financial information of
all entities under the Code.
➢ It is a pooling centre of information from
entities like banks, FIs, NBFCs, ARCs,
Corporates, firms, individuals, utilities on
any financial or other credit transaction
with them.
➢ The information available with the IUs are
accessible through a Central Application
Programming Interface (CAPI).
➢ Financial Creditors are those who have lent
money to the Corporate Debtor (CD), meant
for paying back, without any trade
transaction.
➢ Operational creditors are those who have
supplied goods or services on credit or those
who have made advance payment of money
to the CD in consideration of receiving back
goods or service.
➢ The Committee of Creditors (CoC) is a
committee of, normally, only financial
creditors and is formed by the Interim
Resolution Professional based on the claims
received from the creditors.
➢ Operational creditors have only observatory
role in CoC except where there are no
financial creditors.
➢ The National Company Law Tribunal (NCLT)
is the adjudicating authority for insolvency
resolution process of corporate entities,
namely, Companies, LLPs or other corporate
entities incorporated under any law in force.
➢ The Debt Recovery Tribunal (DRT) is the
adjudicating authority for non-corporate
entities (Individuals, Proprietors, Partners of
a Partnership).
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➢ Insolvency and bankruptcy resolution
process can be initiated when a Corporate
Debtor commits a default of Rs. one crore or
more.
➢ The NCLT will declare moratorium from the
date of commencement of insolvency till the
completion of the same against institution
of suits, transfer of assets, foreclosure,
recovery or enforcement under SARFAESI,
recovery by owner of property or assets in
possession of CD (kind of Stay Order).
➢ The time available is for entire process is
hundred and eighty days (180).
➢ The powers of the board of directors shall
stand suspended from the date of initiation
of CIRP.
➢ Within three days of appointment, the IRP,
has to make a Public Announcement of
commencement of CIRP, published on the
websites of IBBI as well as CD and also in
two newspapers including one in regional
language to invite all creditors for
submission of claims and proof of claims
(PoC) within 11 days from the date of the
announcement.
➢ Based on the claims received from Financial
Creditors, the IRP shall constitute a
Committee of Creditors (CoC) consisting of
all those financial creditors (who are not a
related party to the Corporate Debtor).
➢ The CoC has to meet within seven days of its
constitution.
➢ The Adjudicating Authority can allow the
withdrawal of CIRP on an application made
by the applicant with the approval of 90%
voting share of the CoC, but before
publication of expression of interest (EoI)
for submitting the resolution plan.
➢ An Expression of Interest (EOI) is one of the
initial transaction documents shared by the
buyer with the seller in a potential M&A
deal.
➢ The EOI indicates a serious interest from the
buyer that their company would be
interested to pay a certain valuation and
acquire the seller's company through a
formal offer.
➢ Information memorandum is a compilation
of the entire information on CD. It is
prepared by the Resolution Professional
(RP) incorporating information such as
Assets and liabilities as on insolvency
commencement date, Latest annual
financial statements and Audited financial
statements for last two financial years.
➢ Evaluation Matrix is the criteria for
evaluating Resolution Plan and is prepared
by the RP in consultation with CoC.
➢ An invitation for expression of interest from
interested and eligible prospective
resolution applicants to submit resolution
plans shall be published by RP, in the same
way of publication of notification, not later
than seventy-fifth day (75) from the
insolvency commencement date.
➢ Resolution Applicant is a person, who
individually or jointly with any other person,
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submits a resolution plan to the Resolution
Professional, subject to the eligibility.
➢ On receipt of EOI, and within five days of
issue of provisional list to all prospective
resolution applicants, the RP shall issue
copies of Information Memorandum,
evaluation matrix and a request for
resolution plans. The time limit allowable to
RA for submission of resolution plan is
minimum 30 days.
➢ After inspecting all the resolution plans, the
RP, on satisfying himself about their
compliance to the Act and Rules, shall
submit them to the CoC.
➢ The CoC shall evaluate each resolution plan
strictly as per the evaluation matrix to
identify the best resolution plan.
➢ The Adjudicating Authority will order
liquidation of the Corporate Debtor and
issue order of liquidation of the company
with appointment of RP as liquidator in case
no resolution plan is received by RP or the
received ones does not get the required 66%
votes from CoC.
Chapter 20: THE BANKERS’ BOOKS
EVIDENCE ACT 1891
➢ The Bankers' Books Evidence Act, 1891, is an
important legal rule in India that deals with
the admissibility of bank documents as
evidence in court proceedings.
➢ Under this Act, a certified copy of any entry
in a banker's book is considered as prima
facie evidence of the existence of such an
entry, and it can be produced as evidence in
court without the need for further proof.
➢ The Act extends to the whole of India except
the State of Jammu & Kashmir as there is a
similar Act exists in Jammu & Kashmir.
➢ Bankers' book: It includes ledgers, day
books, cash books, account books and all
other records used in the ordinary business
of a bank.
➢ A copy of any entry in such books together
with a certificate written at the foot of such
copy mentioning that it is a true copy of
such entry and that such entry is contained
in one of the ordinary books of the bank.
➢ If maintained in the electronic form:
Consists of printouts of data stored in a
floppy, disc, tape or any other
electromagnetic data storage device. Or
➢ If maintained in the mechanical form: A
printout of any entry in the books of a bank
stored in a microfilm, magnetic tape or any
other form of mechanical or electronic data
retrieval mechanism obtained by
mechanical or other process, it should
contain the certificate having all the
applicable contents detailed as above in sub
para (i).
➢ A certificate by the principal accountant or
the manager to the effect that it is a
printout of such entry or a copy of such
printout.
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➢ A certified copy of any entry in a bankers'
book shall, in all legal proceedings, be
received as prima facie evidence of the
existence of such entry.
➢ According to Section 5 of the Act in any
proceeding where the bank is not a party,
no officer of a bank shall be compellable to
produce any bankers' book, contents of
which can be proved, under this Act by
production of certified copies.
➢ In terms of Section 6 of the Act: On the
application of any party to a legal
proceeding the Court or a Judge may order
that such party be at liberty to inspect and
take copies of any entries in a banker's book
for any of the purposes of such proceeding,
or may order the bank to prepare and
produce, within a time to be specified in the
order, certified copies of all such entries.
➢ In terms of the provisions of Section 7 court
may further order such costs or part thereof
to be paid by the bank to the party, if they
have been incurred in consequence of any
fault or improper delay on the part of the
bank.
Chapter 21: THE LEGAL SERVICES
AUTHORITIES ACT, 1987: LOK ADALAT
➢ A Lok Adalat, also known as a "People's
Court" or "Public Court," is an alternative
dispute resolution mechanism in the Indian
legal system.
➢ Lok Adalat have their basis in the Legal
Services Authorities Act of 1987, which was
enacted to promote and ensure equal
access to justice for all citizens.
Voluntary Participation:
Participation in Lok Adalat is usually voluntary,
and parties involved in a dispute can choose to
have their case referred to a Lok Adalat.
Settlement Through Conciliation:
Lok Adalat primarily focus on conciliation and
settlement of disputes.
No Court Fees:
One of the advantages of Lok Adalat is that
they do not charge any court fees or legal
expenses, making it a cost-effective option for
resolving disputes.
Jurisdiction:
Lok Adalat can deal with various types of
cases, including civil, criminal, and family
disputes.
Legally Binding:
Any settlement reached in a Lok Adalat is
legally binding on the parties and has the
same status as a decree of a civil court.
No Appeal:
Once a dispute is settled in a Lok Adalat, there
is generally no provision for filing an appeal in
a regular court, as the settlement is
considered final.
➢ As per Section 19(1) of the Legal Services
Authorities Act 1987, Lok Adalat are
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organized by the State Authority, District Chapter 22: Consumer Protection Act
Authority or the Supreme Court Legal 2019
Services Committee or High Court Legal
Services Committee or Taluka Legal Services
Committee for exercising jurisdiction and
➢ It replaced the previous Consumer
for such areas as it thinks fit.
Protection Act of 1986 and became effective
➢ The monetary ceiling (maximum) of on July 20, 2020.
amounts regarding which civil disputes can
The primary objective of this act is to
be settled under this mechanism is
safeguard the interests of consumers and
presently Rs. 20 lakhs. The jurisdiction of
provide them with a robust legal framework
the Permanent Lok Adalat is up to Rs. 1
for addressing grievances and seeking
Crore.
compensation.
As per Section 22 of this act:
➢ Unfair contracts and unfair trade practices
The Lok Adalat or Permanent Lok Adalat are prohibited under the Consumer
(added w.e.f. 11.6.2002) shall, for the Protection Act in order to protect the rights
purposes of holding any determination under and interests of consumers.
this Act, have the same powers as are vested
➢ According to Section 2(46) of the Consumer
in a Civil Court under the Code of Civil
Protection Act, an unfair contract is a
Procedure, 1908, while trying a suit in respect
contract between a manufacturer, trader, or
of the following matters, namely the
service provider and a consumer that
summoning and enforcing the attendance of
contains terms that significantly change the
any witness and examining him on oath and
rights of the consumer.
the discovery and production of any
document. ➢ Section 2(47) of the Consumer Protection
Act defines unfair trade practices as,
➢ Max amount up to which Lak Adalat can
methods or practices adopted for promoting
settle the case: 20 Lac.
the sale, use, or supply of goods or services
that are unfair or deceptive.

➢ Consumer Protection Councils play a crucial

role in promoting and protecting consumer
rights under the Consumer Protection Act
2019.

➢ There are three Consumer Protection

Council at different stage: Central Consumer
Protection Council, State Consumer
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Protection Council and District Consumer
Protection Council.
➢ The Consumer Disputes Redressal
Commissions in India play a crucial role in
protecting the rights and interests of
consumers, ensuring efficient dispute
resolution, and upholding the principles of
consumer protection as outlined in the
Consumer Protection Act of 2019.
➢ The District Consumer Disputes Redressal
Commission (DCDRC), also known as the
District Consumer Forum that deals with
consumer complaints and disputes.
It was established under the section 28 of
Consumer Protection Act 2019.
➢ The State Government is responsible for
establishing a District Consumer Disputes
Redressal Commission, commonly known as
the District Commission, in each district of
the State.
➢ Each District Commission consists of a
President.
The District Commission entertains
complaints where the value of goods or
services paid as consideration does not
exceed one crore rupees. [Now 50 Lac]
➢ State Consumer Disputes Redressal
Commission (SCDRC), is the second level of
dispute resolution, where appeals can be
filed against the decisions of the DCDRC or
directly if the value of the dispute exceeds
the jurisdiction of the DCDRC.
➢ Each State Commission comprises a
President and a varying number of members
prescribed in consultation with the Central
Government.
➢ The State Commission handles complaints
exceeding one crore rupees but not more
than ten crore rupees. [Now 50 Lac + & up
to 2 Cr]
➢ It also considers complaints against unfair
contracts below ten crore rupees.
[Now below 2 Cr]
➢ An appeal against State Commission orders
can be filed with the National Commission
within 30 days from the date of the order.
➢ The NCDRC is the highest level of consumer
dispute resolution in India.
Appeals can be filed against the decisions of
the SCDRC or directly if the value of the
dispute is above a certain limit.
It has been established under the section 53
of Consumer Protection Act 2019.
➢ The Central Government establishes the
National Consumer Disputes Redressal
Commission, known as the National
Commission.
➢ The National Commission handles
complaints where the value of goods or
services paid as consideration exceeds ten
crore rupees. [Now 2 Cr]
➢ It also considers complaints against unfair
contracts exceeding ten crore rupees.
[Now exceed 2 Cr]
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➢ Appeals against National Commission Such case has a conflict between two parties
orders can be filed with the Supreme Court that is plaintiff and defendant.
within thirty days from the date of the
Petitioner:
order.
is a person who files a petition in court.
➢ District Commission handles cases where
the dispute involves relatively lower values, Petitioner is one who invokes the help of a
up to fifty lakh rupees. court to redress his grievances. For e.g. in case
of public interest we file a petition.
➢ The State Commission now has jurisdiction
when the value of the goods or services paid Appellant:
as consideration exceeds fifty lakh rupees
is one who appeals to a higher court than one
but does not exceed two crore rupees.
which has already settled the dispute.
The National Commission's jurisdiction
When the party against whom a decision is
covers complaints where the value of the
pronounced, if is not satisfied by the decision,
goods or services paid as consideration
can further file an appeal in higher court with a
exceeds two crore rupees.
hope to get the decision of laws court
reversed.

Chapter 23: THE LAW OF LIMITATION for e.g. if A is plaintiff against whom decision is
given, can file an appeal in higher court.... then
he will be appellant.
The Limitation Act, 1963: Applicant:
has significant application to the banks and is one who applies in a court.
financial institutions and it is applicable to
Until the court takes the cognizance of a
whole India.
matter a person remains an applicant.
➢ The Recovery of Debts due to Banks and
When it does take the cognizance, the person
financial institutions Act, 1993 and the
becomes plaintiff or petitioner as the case may
Securitization and Reconstruction of
be.
Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI Act Good faith:
2002) specifically state that actions under
nothing shall be deemed to be done in good
those Acts are permissible only if the claim
faith which is done with due care and
is within the period of limitation.
attention.
Plaintiff:

means one who seeks remedy in a civil action.

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➢ He limitation period bars the remedy of
filing a suit and it does not take away the
right of recovery of debt.
There is No limitation period in case of Lien,
Pledge or Right of set off.
➢ Section 3 of the Limitation Act declares that
every suit instituted, appeal preferred, and
application made after the prescribed
period shall be dismissed.
➢ Any appeal or any application other than
execution petitions may be admitted after
the prescribed period, if the appellant or
applicant makes out sufficient cause for not
preferring the appeal or application within
the period of limitation. (Section 5)
➢ The computation of the period of limitation,
for filing appeal, shall exclude the day on
which the judgement was pronounced and
the time taken for obtaining a copy of the
decree, sentence or order appealed.
➢ There are two instances which will give rise
to fresh period of limitation.
➢ Some of the important aspects that are required to be noted for filing suits of different types are
given:
➢ Where before the expiration of the
prescribed period for a suit or application in
respect of any property or right, an
acknowledgement of liability in respect of
such property or right has been made in
writing signed by the party against whom
such property or right is claimed, or by any
person through whom he derives his title or
liability, a fresh period of limitation shall be
computed from the time when the
acknowledgement was so signed.
➢ Where payment on account of a debt or of
interest on a legacy is made before
expiration of the prescribed period by the
person liable to pay the debt or legacy or by
his agent duly authorized in this behalf, a
fresh period of limitation shall be computed
from the time when the payment was
made.
In this case 'debt' does not include money
payable under a decree or order of a court.
(Limitation period can be extended by
acknowledgement of debt or part payment)
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Chapter: 24: TAX LAWS
➢ The Income Tax Act 1961 came into force
from April 1, 1962, and extends to the
whole of India to govern the law relating to
taxation on Income of individuals,
corporates, etc.
➢ Section 2(24) of the Income Tax Act 1961
elaborately defines "income" to include
various components such as salary, rent,
profits and gains, dividend, Lottery winning,
voluntary contributions received by trusts
for charitable purposes or any other gains
from any sources.
➢ 'Assesses' is those people or corporate who
pays tax based on the 'Assessment Year,'
which represents a 12-month period
beginning on April 1 each year.
➢ The 'Previous Year' is called FY which is
immediately preceding the Assessment
Year.
➢ Example: Financial year 2018-19 starts from
1st April 2018 and ends on 31st March 2019.
On the other hand, Assessment Year for FY
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2018-19 will begin from 1st April 2019 till
31st march 2020.
➢ You would qualify as a resident of India if
you satisfy one of the following two
conditions: Stay in India for 182 days or
more during the financial year or Stay in
India for at least 365 days during the 4 years
preceding that year AND at least 60 days in
that year.
➢ ‘Corporates' residential status is determined
by their location of control and
management and also the place of
registration.
➢ You will be considered Resident but Not
Ordinarily Resident (RNOR) for the year if
you satisfy one of the two conditions for a
Resident, and also If you have been an NRI
in 9 out of 10 financial years preceding the
year OR During the past 7 financial years,
have been in India for a period of 729 days
or less.
➢ PAN stands for Permanent Account Number,
a unique identification number for
individuals and entities in India.
➢ PAN is required when opening a bank
account, specifically when the amount of
fixed deposit/time deposit purchased
exceeds Rs. 50,000. If the person does not
have a PAN, they can file a declaration in
Form No. 60.
➢ Commodity Transaction Tax (CTT) was
introduced under Chapter VII of the Finance
Act, 2013. CTT is a tax imposed on taxable
commodities transactions that take place in
recognized stock exchanges.
➢ The collected CTT must be paid to the
Central Government by the seventh day of
the following month. Failure to collect CTT
as required by law makes the seller liable
for payment to the Central Government.
➢ GST is an indirect tax system in India,
implemented on 1st July 2017, following
enactment on April 12, 2017.GST allows for
the credit of input taxes paid at each stage
of production, reducing the burden on the
end consumer.
➢ There are three components of GST in India:
Central GST (CGST) levied by the Central
Government on intra-state supplies, State
GST (SGST) or Union Territory GST (UTGST)
levied by State/UT governments on intra-
state supplies, Integrated GST (IGST) levied
by the Central Government on inter-state
supplies.
➢ Advantage of GST: For Businesses and
Industry: Easy compliance, Uniform tax
rates and structures, Removal of cascading
of taxes and Improved competitiveness
➢ For Central and State Governments: Simple
and easy administration, Better controls on
leakage, Higher revenue efficiency.
➢ For Consumers: Single and transparent tax