The Debt Recovery Tribunal (DRT), Patna, declared Bank of India’s loan recovery proceedings illegal after the bank issued a recovery notice in the name of a guarantor who had died two years earlier despite being informed of his death. The tribunal cancelled the recovery action and imposed a penalty of ₹50,000 on the bank for negligence.
A case of alleged negligence by the Bank of India has reached the Debt Recovery Tribunal (DRT) in Patna. The tribunal found that the bank had started loan recovery proceedings by issuing a notice in the name of a person who had died two years earlier. The tribunal declared the bank’s action illegal, cancelled the recovery proceedings, and imposed a fine of ₹50,000 on the bank.
Loan Taken by Baba Someshwar Automobiles
The case is related to Baba Someshwar Automobiles and the Bank of India. According to reports, Shambhu Prasad Singh and Abhishek Singh took a Cash Credit (CC) loan of ₹60 lakh from the Motijheel branch of Bank of India between 2017 and 2019. In 2022, the bank classified the loan account as a Non-Performing Asset (NPA).
Recovery Notice Issued to Deceased Guarantor
After declaring the account as an NPA, the bank issued a recovery notice in September 2022 in the name of the property guarantor, Satyanarayan Singh. However, Satyanarayan Singh had passed away on October 26, 2020, nearly two years before the notice was issued.
His son, Shambhu Prasad Singh, had already informed the bank in writing about his father’s death. Despite receiving this information, the bank continued the recovery proceedings against the deceased guarantor.
Petition Filed Before Recovery Tribunal
In November 2022, Shambhu Prasad Singh filed a petition before the Debt Recovery Tribunal in Patna. He argued that the bank had wrongly declared the loan account as an NPA and had also made errors in calculating the outstanding loan amount.
Tribunal Declares Bank’s Action Illegal
After hearing both sides, the tribunal ruled that the bank’s recovery proceedings were illegal. It cancelled the recovery action and directed the bank to pay a fine of ₹50,000 for its negligence.
