SECTION 7

FILING OF SUITS & THEIR FOLLOW UP

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 CONTENTS

7.1. Filing of Suits before Civil Courts ....................................................................................... 783

7.2. At the time of issuing calling up notice ............................................................................... 783

7.3. Precautions to be taken while taking possession of the hypothecated stocks/ pledged
machinery ............................................................................................................................. 785

7.4. At the time of filing the suit ................................................................................................. 786

7.5. After the filing of Suit - Service of Summons to Defendants .............................................. 788

7.6. When Summons are served on Defendants .......................................................................... 788

7.7. Where Defendant/s file Petition to set aside the Ex-parte Order ......................................... 789

7.8. When Petition is filed by Defendant asking for Internal Correspondence/ Inspection
Reports etc............................................................................................................................ 789

7.9. What steps can be taken when filing of Written Statement is delayed by the
Defendants after service of summons .................................................................................. 789

7.10. What is to be done after Written Statement is filed ............................................................. 789

7.11. Framing of Issues ................................................................................................................. 790

7.12. When Borrower/ Guarantor(s) dies during the pendency of the suit ................................... 790

7.13. Defence that Branch Manager is not competent to file the suit ........................................... 790

7.14. Defence that tractors/ residential house of an agriculturist is exempt from attachment
and sale ................................................................................................................................ 790

7.15. Attendance of persons in whose presence the documents were executed............................ 791

7.16. Interest.................................................................................................................................. 791

7.17. Stages in Mortgage Suits...................................................................................................... 791

7.18. Within what time should a final decree application be filed ................................................ 792

7.19. Whether condonation of delay is possible if a final decree application is filed

after 3 years ........................................................................................................... 792

781
7.20. Scope of the Final Decree application ................................................................................. 792

7.21. Steps to be taken after Judgement is passed......................................................................... 792

7.22. What is to be done after Decree is granted? ......................................................................... 793

7.23. What is a Caveat and when is it to be filed? ........................................................................ 793

7.24. Filing of Appeals by the Bank ............................................................................................. 794

7.25. Appeals filed by Borrowers ................................................................................................. 794

7.26. Limitation for filing Appeals ............................................................................................... 794

7.27. How to compute Period of Limitation?................................................................................ 795

7.28. Limitation for filing Mortgage suits..................................................................................... 795

7.29. Getting back the Title Deeds after Preliminary Decree is granted ....................................... 795

7.30. Delay in Filing of Suit: Documentation ............................................................................... 795

7.31. Government Approval for Mortgage in Case of Mortgage of Agricultural Land

for Advances/Loans For Industrial Purposes ......................................................... 797

7.32. Lacunae/Check List For Civil Suits ..................................................................................... 797

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 SECTION 7

FILING OF SUITS & THEIR FOLLOW UP

7.1 Filing of Suits before Civil Courts

The importance of proper filing, monitoring and follow up of the law suits filed by the Bank requires no
emphasis. This has a vital role in reducing the Bank's NPAs and in helping the Bank to recover its bad
debts which would have a direct impact on the profitability of the Bank.

The salient points to be remembered and important guidelines to be followed by the operating officials
before filing of a law suit, at the time of filing of the suit and for follow up after filing of the suit are
given hereunder. These would help in safeguarding the Banks interests and facilitate speedier recovery of
the bad debts. However, before taking a decision to file civil suit all other available recourses as
mentioned in chapters on Compromise, action under SRESI Act and RBI-OTS should be considered
because the process of legal action is time consuming and slow moving.

7.2 At the time of issuing calling up notice

(a) Check the enforceability of documents and keep them in order.

(b) Get one set of the documents and title deeds xeroxed to be kept on file, as the originals
will have to be handed over to the Advocate at the time of filing of the suit.

(c) The correct names and addresses of the borrower/ guarantors to be ascertained.

7.2. Aspects to be considered before filing the suit

(a) The nature of the suit to be filed?

(Whether summary suit, ordinary suit or mortgage suit)

A summary suit is filed where there is no security and no interim orders are being sought
at the time of filing of the suit. A ordinary suit is filed where the advance is not backed
by any security but attachment orders are being sought while filing the suit. A mortgage
suit is filed where a mortgage is available to the Bank.
(b) Where the sale of the hypothecated goods/ stocks is being sought through intervention of
the Court, it is necessary to incorporate the same in the schedule of the plaint for seeking
interim sale. At the same time it should be stated that the relief for interim sale is without
prejudice to the right to sell the same without intervention of the Court during pendency
of suit.

(c) Where the mortgage is common to two or more loan accounts and all the loans have been
called up, a common suit is to be filed for recovery

(d) A mortgage suit is to be filed before the court within whose jurisdiction the mortgaged
property is situated.

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(e) Decide the interim applications to be filed at the time of filing the suit. (Interim
applications like injunction, attachment, appointment of receiver, prohibitory order
restraining third party from parting funds to the Borrower/ Guarantor, interim sale of the
hypothecated assets etc. can be filed at the time of filing the suit itself depending upon
the result it is likely to yield. The filing of an interim application also helps in ensuring
that the suit is immediately numbered and summons are sent.)

(f) Statutory notices have to be issued before a suit is instituted against the Government, Co-
operative Society or the Railways. Hence, it should be ensured that the statutory notices,
are given before the suit is instituted.

(g) The cause of action is mentioned in the plaint as commencing from the date when the
loan was advanced till the calling up notice is issued. Where different sets of documents
are obtained from time to time, it is advisable to rely on the latest set of documents as the
beginning of the cause of action instead of the earliest set of documents to avoid any
defense being taken of missing links in the documentation.

(h) Set-off is a right which may be exercised by a banker, where it is practicable

to do so, when any deposits / other funds of the Borrower are available for
exercising such right. However, the following precautions are to be observed
before such right of set-off is exercised.

i) The deposit should be maintained in the name of the Borrower only.

ii) The loan account should have been called up.

iii) The deposit should also be due for payment to the Borrower.

iv) A notice is to be given to the depositor/ borrower stating that the Bank
will exercise its right of set-off and appropriate the amount under
deposit towards the outstanding dues under the loan account in the
event of the borrower failing to pay within the prescribed time. The
depositor/ borrower may be put on notice that the Bank will not honour
cheques issued by him in the mean time.

v) In case of deposits maturing at a future date, a specific prayer is to be

incorporated in the plaint for a declaration that the Bank is entitled to
set-off the amounts held in deposit after maturity.

vi) Under Section 171 of the Indian Contract Act, a banker has a general
lien over all the goods and securities which come into his hands in the
regular course of business, in the absence of any contract to the
contrary and where such retention is disputed, please instruct the
Advocate to incorporate in the plaint that the Bank is entitled to retain
and sell the articles in exercise of its rights of general lien and a relief
of declaration to that effect.

784
7.3. Precautions to be taken while taking possession of the hypothecated stocks/ pledged
machinery

(a) Apart from following the procedure prescribed under the extant instructions the
following additional precautions may be taken while taking possession of the
hypothecated stocks/pledged machinery viewed in the light of the legal angle.

(b) In the first instance, it is necessary to examine whether the hypothecated stocks/
machinery is capable of being sold for the price at which it may have been valued
recently and there are intending purchasers, before the decision is taken to take
possession thereof, as otherwise; mere taking possession without sale is likely to
adversely affect our interests.
(c) After the above issue is examined and it is found that the hypothecated stocks/machinery
is saleable, a notice is to be served on the Borrower that the Bank is exercising its rights
to take possession of the hypothecated stocks/ machinery and arrange for its sale in view
of the default committed by the Company without prejudice to other modes of realisation
of the outstandings as against the Borrower and the Guarantors. The notice should
stipulate the time which is given for payment failing which further steps will be taken.

(d) Where it is apprehended that the stocks will be screened if time is given, the notice may
be given simultaneous with the taking of possession of the stocks.

(e) After the time stipulated in the notice, the following precautions are to be observed:

i) A panchanama should be recorded in the presence of at least two

independent witnesses while taking inventory of the stocks/ machinery,
which has been taken into possession.

ii) The valuation of the stocks/ machinery of which possession is taken

(on that date of its proximity) is a must.

iii) The subsequent precautions of proper preservation and insurance

should be taken care of.

iv) A notice of intention to sell the stocks/ machinery should be given to

the Borrower simultaneously with the Public Notice.

v) The stocks/ machinery should be sold as expeditiously as possible after

it is taken possession of.

vi) After the sale, it is necessary to give notice to the borrower/ Guarantors
of the balance amount still due from them, if any, and calling upon
them to pay the same.

785
7.4. At the time of filing the suit

(a) Original documents, papers need not be entrusted to the advocates. Instead, copies of
relevant documents may be given to them for preparing the plaint etc., Original
documents, together with a certified extract of ledger accounts of the borrower under all
credit facilities sanctioned by the Bank from the date of original sanction /initial
disbursement of the advances, can be produced before the court at the time of filing the
plaint or as permitted by the respective civil rules applicable in a State.

(b) The following documents may be handed over to the Advocate to be filed
along with the plaint:

i) Arrangement Letter

ii) Loan Agreements (Main and Supplemental, if any)

iii) Revival Letters / Balance Confirmations

iv) Confirmation Letter of creation of mortgage/ Registered Mortgage

Deed/ ROC Certificate
v) Certified Extract of Account Sheet signed by the Branch Manager with
the caption.

vi) "Certified to be a true extract/ copy of the Statement of Account

maintained in the usual and ordinary course of business."

vii) Office copy of Demand/ Legal Notice served on Borrowers/

Guarantors. The reply(ies), if any, received from them.

(c) Furnish the correct names and addresses of the defendants, which will enable service of
summons on them.

(d) Calculate the correct suit amount by taking into account the further debits/ credits after
the transfer of the account to PB/ RD by applying interest at agreed rate to avoid income
leakage.

(e) Instruct the Advocate to seek for contractual rate of interest from the date of suit till the
date of realisation at quarterly rests or half-yearly rests, as may be applicable, in the
prayer portion of the plaint.

(f) Instruct the Advocate to file the suit along with an Out of Order Petition seeking the
interim relief appropriate to the facts of the case. In all cases, injunction restraining the
mortgagor from dealing with the mortgaged property may be sought at the time of filing
the suit. Interim sale of hypothecated assets may be sought wherever applicable.

786
 (g) Pay the following expenses to the Advocate for the purposes of filing the suit after
obtaining his Bill of Costs:

i) Court Fee
ii) Process for Service of Summons
iii) Typing / Clerkage
iv) Miscellaneous Expenses
v) 1/4th of Advocate's Fee

7.5. After the filing of Suit - Service of Summons to Defendants

(a) Obtain the plaint copy from the Advocate and keep it on record with the xerox
copy set of documents and acknowledgment obtained from the Advocate on
file.

(b) The summons have to be served on the Defendants, which is usually the delaying factor.
It is necessary to concentrate at this stage and take appropriate steps in consultation with
the Advocate to cut short the time involved in service of summons. It is here that the
correctness of the addresses of the Defendants is very relevant.

(c) When efforts fail to serve notices by Post/ Court, publication in newspaper becomes
necessary which is known as Substituted Service.

(d) Substituted service is done as per the orders of the Court as per Order 5 Rule 20 of C.P.C.
Publication can be done in the newspaper as ordered by the court.

7.6. When Summons are served on Defendants

(a) After service of summons, the case is posted for filing of Written Statement of the
Defendants.

(b) This is another stage where delay occurs and requires attention to expedite the case.

(c) When Written Statement is not filed despite repeated adjournments, either some or all of
the Defendants are set ex-parte and the case is posted for evidence of the Bank.

7.7. Where Defendant/s file Petition to set aside the Ex-parte Order

(a) The Advocate should be instructed to insist for depositing some part of the suit claim
before the Defendant is allowed to come back and contest the case, instead of costs.

(b) Normally, the Bank's Advocate contests the Petition filed by Defendant vehemently and
if the Defendant does not succeed, it will enable him to file a Revision before the High
Court and get a stay of entire suit proceedings. Hence, this should be avoided.

787
7.8. When Petition is filed by Defendant asking for Internal Correspondence/
Inspection Reports etc.

When a Petition is filed by the Borrower for internal correspondence/ Inspection Files which is unrelated
to the trial of the Suit, the Advocate is to be specifically instructed to oppose the petition.

7.9. What steps can be taken when filing of Written Statement is delayed by the
Defendants after service of summons

When the defendant fails to file written statement within the stipulated time the court shall pronounce the
judgment against him" as provided in Order 8 Rule 10 of C.P.C.

7.10. What is to be done after Written Statement is filed.

(a) Copy of the Written Statement filed by the Defendant/s is to be obtained from the
Advocate and kept on record.

(b) The Written Statement is to be verified to see what are the nature of admissions or
denials.

(c) The verification of the Written Statement is important for the following reasons:

i) What is the stand of the Defendants.

ii) Whether the suit claim is admitted in whole or in part.

iii) Whether any decree on admission of claim is possible.
iv) What is the evidence to be led by the Bank and helps to decide the
witnesses to be produced.
v) What are the issues to be framed.

vi) The issues are framed by the court.

7.11. Framing of Issues

(a) After filing of Written Statement, the case comes up for framing of issues.

(b) The framing of issues would depend on what is stated in the Plaint and Written
Statement.

(c) The issues are those which are required to determine the points of contest and what relief
the Plaintiff is entitled to.

(d) There is no necessity to frame an issue when it is admitted in the Written Statement.

(e) After framing of issues and receiving a copy thereof from the Advocate, the next 1/4th of
the fee may be paid to the Advocate.

7.12. When Borrower/ Guarantor(s) dies during the pendency of the suit.

(a) When the defendant(s) dies during the pendency of the suit, it is necessary to bring his/
their legal representatives on record within a period of 90 days from the knowledge of
death.

788
 (b) If the legal representatives of the deceased defendant are not brought on record within the
aforesaid period, the suit abates (i.e. comes to an end) as against him/ them.

7.13. Defence that Branch Manager is not competent to file the suit.

(a) Unlike in other Banks, the authority to file suits is contained in SBH Act 1956. A Gazette
Notification is published under the above Regulations as to who is empowered to sign
vakalatnamas and sign plaints.

(b) The Advocate may also be requested to refer to the decision in SBI Vs
Haryana Rubber Industries reported in AIR 1983 P&H 189 wherein the SBI
General Regulations and the Notifications have been reproduced.

7.14. Defence that tractors/ residential house of an agriculturist is exempt from

attachment and sale
(a) The exemption from attachment of tractors/ residential house of an agriculturist does not
apply when they are charged in favour of the Bank.

(b) Thus, where there is a charge in favour of the Bank by way of hypothecation in case of
tractor or mortgage of the house, no plea of exemption from sale thereof can be raised by
the Borrower.

7.15. Attendance of persons in whose presence the documents were executed.

(a) It is not necessary that the Official in whose presence the documents were executed
should give evidence for proving the documents, when there is no denial of execution of
documents. The present incumbent/ any other Field Officer can depose on the basis of
record.

(b) Where production of the Official before whom the documents were executed is
absolutely essential, the Advocate should be asked to represent to the Court/ file a
petition praying that his evidence should be completed on the day for which hearing is
fixed without any adjournment.

7.16. Interest

(a) The entitlement to contractual rate of interest in commercial transactions has since been
decided by our High Court as well as the Supreme Court.

(b) The stages in the matter of grant of interest are

i) Upto the date of filing of suit.

ii) From the date of suit till date of decree.

iii) From the date of decree till realisation.

(c) The Advocate should be instructed to plead for contractual rate of interest
(with quarterly rests) from the date of the suit till realisation so that such rate
will be granted at least till the date of decree.

789
7.17. Stages in Mortgage Suits

In a mortgage suit there are two stages.

(a) Preliminary Decree: In the first instance a preliminary decree is passed directing the
Judgement Debtors/ Defendants to pay the decreed amount within a certain time (maximum
6 months) failing which the Bank will be entitled to apply for a Final Decree seeking for the
sale of the mortgaged property. The time granted to the Judgement Debtor for paying the
amount is called "Period of Redemption".

(b) Final Decree: If the Judgement Debtors fail to pay within the time stipulated in the
Preliminary Decree, a Final Decree application will have to be filed seeking for sale of the
mortgage property. It is only after obtaining the Final Decree that an Execution Petition (EP)
can be filed.

7.18. Within what time should a final decree application be filed

Though the time to file a Final Decree application is 3 years from the date of expiry of the period of
redemption, it is advisable to file the Final Decree application immediately after the expiry of the Period
of Redemption, as any delay will be prejudicial to our own interests.

7.19. Whether condonation of delay is possible if a final decree application is filed

after 3 years.

A final decree application is an application to which Sec 5 of the Limitation Act applies and, therefore, in
cases where the final decree application has not been filed after expiry of a period of 3 years from the date
of expiry of the Period of Redemption, it may be filed with an application to condone the delay.

7.20. Scope of the Final Decree application

(a) The scope of the Final Decree application is only to determine whether the amount has
been paid or not as directed in the preliminary decree.

(b) No other pleas are permissible and, therefore, care is to be taken to ensure that the matter
is not prolonged at this stage.

7.21. Steps to be taken after Judgement is passed

(a) After the Judgement is passed, there is a requirement to file costs memo setting out the
expenses incurred by the Bank which includes the Court Fee, Fee on Vakalatnama,
Advocate Fee paid and other expenses incurred (viz. insurance premia, DICGC fee etc.)

(b) A Calculation Memo is required to be filed showing the amount due as per the
Judgement i.e. the suit amount + interest at the rate awarded by the Court upto the
Judgement. This aspect assumes importance in view of the concept of Principal Sum
Adjudged on which future interest is granted. To avoid loss, it is necessary to show the
Principal Sum Adjudged as the suit amount + the interest awarded by the Court till the
date of judgement.

790
 (c) A decree is drawn up after filing of costs memo and calculation memo.

(d) Pay the next 1/4th of the fee to the Advocate.

7.22. What is to be done after Decree is granted?

(a) Verify whether the decree is in accordance with the Judgement.

(b) Apply for two certified copies of the Judgement and Decree immediately.

(c) Diarise the date of the period of redemption, if it is a preliminary decree for the purposes
of filing an application for final decree immediately after the expiry of the period of
redemption.

(d) After receipt of the copies of the Judgement and Decree pay the last 1/4th of the fee to
the Advocate.

7.23. What is a Caveat and when is it to be filed?

(a) The purpose of filing a Caveat is that in case of any appeal/ revision being filed by the
borrower against a Judgment/ Order granted in favour of the Bank by a Lower Court, no
ex parte orders of stay will be granted by the Appellate Court when a Caveat is filed by
the Bank.

(b) A caveat is filed when it is apprehended that the Borrower is likely to file an appeal
against a favourable Judgement/Order granted in favour of the Bank by the Lower Court.
It can be safely presumed that if the Borrower is applying for Certified Copies of the
Judgement / Order passed by the Lower Court, he is going to prefer an appeal and it
would be necessary for us to file the Caveat in such Appellate Court so that no orders of
stay will be passed without first hearing us.
(c) A Caveat Petition will be alive for 3 months and if any appeal is filed within that period,
notice will be first served on our Advocate who filed the Caveat Petition and it is only
after hearing our side of the case that any orders will be passed.

7.24. Filing of Appeals by the Bank

(a) An appeal may have to be preferred by the Bank where the Court has totally dismissed
our suit claim or partially granted our claim.

(b) In cases where an appeal is to be preferred, the Branch should immediately contact the
Advocate and obtain his opinion in writing on what grounds an appeal could be preferred
and the time available for preferring the appeal, as this will help in filing the appeal in
time.

(c) Where the Court has reduced the interest, the question of filing an appeal will have to be
on cost-benefit analysis viz the approximate loss to the Bank by reduction of interest
weighed with the costs to be incurred in preferring the appeal. Where there is an
advantage to the Bank on such consideration, an appeal may be preferred.

791
7.25. Appeals filed by Borrowers

(a) Where the Defendant prefers an appeal, the Advocate should be instructed to insist for
deposit of at least V2 the decretal amount with costs within a specified time before
granting any stay of execution of the decree granted in favour of the Bank.

(b) Where the Defendant files an appeal against the Preliminary Decree and no stay is
granted, the Final Decree application may be filed without waiting for the disposal of the
appeal.

7.26. Limitation for filing Appeals

Care: In case of any doubt, the branch should first seek clarification/guidance from the
Law Office through the Controlling Authority.

The period of limitation for filing an appeal is:

(a) 30 days for an appeal to the Sub Court.

(b) 90 days for an appeal to the High Court.

(c) 90 days for filing a revision to the High Court.

7.27. How to compute Period of Limitation?

(a) The date of the Decree/ Order to be appealed from is excluded.

(b) The delay in filing application for furnishing Certified Copies is included. Therefore, the
Copy Application is to be filed immediately on the very next day of the Decree.

(c) Certain time will be given by the Section for depositing folios (i.e. Judicial Stamp Papers
for typing the Judgment and Decree thereon). The delay beyond the time granted is
included.

(d) Thereafter, the time begins to run from the date when the Copy is made ready.

(e) These dates will be appearing on the last page of the Certified Copy and the time
available for appeal can be calculated on the above basis.

7.28. Limitation for filing Mortgage suits.

(a) Till such time the debt is revived by a revival letter, the limitation does not commence to
run. The period of limitation for filing mortgage suits is 12 years from the date of the last
revival.

(b) However, if a personal decree is also to be obtained against the mortgagor and other
defendants, the suit will have to be filed within 3 years of the last revival.

(c) The effect of not filing the suit within 3 years of the last revival is that a suit can be filed
for enforcement of the mortgage but no personal decree will be granted, if the mortgaged
property is not sufficient for realisation of the suit claim.

792
7.29. Getting back the Title Deeds after Preliminary Decree is granted

After the preliminary decree is granted, an application should be filed for return of the Title
Deeds filed in Court. These title deeds are necessary only at the time of seeking sale of the
property. The title deeds may be taken back and kept with the branch documents to avoid their
loss in the Court. Return of title deeds filed in courts is only by way of filing of any application
before the court for substitution of documents.

7.30. Delay in Filing of Suit: Documentation

While filing recovery suits in DRT, it is observed in some instances, that the concerned branch had not
obtained the copies of the security documents executed by the borrowers under consortium arrangement
where other Banks were the lead Banks. This omission results in delay in filing of suits against the
defaulter borrowers as:

i. At the material time the other Banks do not provide us certified copies of the
documents expeditiously.

ii. In the event of the Lead Bank having itself filed a suit and having lodged the
documents with DRT, it becomes extremely difficult to get the certified
legible copies of documents from them, which besides delaying our case puts
our interest in jeopardy.

iii. The copies of documents obtained from them at the last moment are not
legible as these are photocopied from photocopies of documents which are not
accepted by the DRT during scrutiny of documents.

iv. otherwise also, non-obtention of the copies of the security documents is

fraught with usual risks.

To guard against the above risks, the branches/offices are advised to follow the undernoted guidelines:

i) Obtention of certified legible copies (preferably colour photostat) of the loan

documents executed under Consortium Arrangement immediately after their
execution.

ii) Incorporate the details of the documents in the Documentation Register under
the signature of an authorised official.

793
7.31. Government Approval for Mortgage in Case of Mortgage of Agricultural Land
for Advances/Loans For Industrial Purposes

"When agricultural land is to be mortgaged to the Bank for advances/loans granted for industrial
purposes, is it necessary to obtain Govt. approval for mortgage?" The general policy of the law is to
promote free alienation of the property in the absence of any specific provisions of law to the contrary.
When agricultural land is to be mortgaged to the Bank for advances of the loans granted for industrial
purposes it is not necessary to obtain Govt. approval for mortgage, as such, in the absence of any specific
provisions of law requiring such sanction/approval in this regard in the respective areas. Statewise
opinion is as under:

7.32. Lacunae/Check List For Civil Suits

1. Once it is observed that the borrower is making a wilful default, no more time should be lost in
instituting appropriate legal proceedings.

2. Bank must select a good and competent lawyer for the purpose even out of the panel in
consultation with the Law Officer. His experience, reputation and legal acumen should be the
considerations at the time of engagement.

3. Please check up and ensure before the issue of call up notice, that all the documents to be relied
upon in the case are in order because it is only upto this time the borrower may agree to regularise
them if need be.

4. Keep all the relevant papers in the separate file.

5. Please ensure the call-up notices are issued and on borrower(s) and also to the guarantor(s) if any.

6. Notice must be sent by the Registered Post with UPC and preferably on an inland letter or by
hand delivery on the address as on bank's record or last known address of the party.

7. In case of hand delivery, the acknowledgement must be taken from the addressee on the carbon
copy and the person who delivered should write thereon "delivered by me
personally to Shri ______________________ on _______________________ " under his
signatures.

8. In case of Registered Post if the notice is returned unserved, the same should not be opened and
be preserved intact. Another attempt by sending a fresh notice may be made

9. 'Notice refused' is deemed as served under law.

10. If action for launching legal proceedings is not taken by the bank within a reasonable time, it will
be advisable to give a fresh short notice before filing the suit.

794
11. Please note after the issue of a call-up notice/filing of suit, payment by the bank can be accepted
after making an endorsement that it is accepted without prejudice to demand notice/ legal
proceedings.

12. In case of pledge accounts, suits should be instituted after the sale of the pledged goods stocks.
This will save the property from further depreciation, watching expenses and quicken recovery to
the extent of sale proceeds. Litigation expenses as to court fees, lawyer's fee over the suit will
also be reduced proportionately.

13. The service of notice to the borrower before effecting the sale in case of pledge is mandatory
under Section 176 of the Contract Act. It cannot be waived.

14. The pawner is still liable to pay the balance amount if the sale proceeds are less than the amount
due from him.

15. If the proceeds are more than the amount due the bank shall pay the surplus amount to the
pawner.

16. The Supreme Court in 1967 SC AIR 1322 has laid down that the pledgee is entitled to receive
expenses from the pledger as might be incurred for preservation on and safety of the goods.

17. In our view, Bank's right to sell the property is not lost even after filing of the suit. It may be sold
with the permission of the court in pending suit (AIR 1963 Cal. 132).
18. A list of all documents such as revival letters, balance confirmation, title deeds, demand notice
etc. which in the opinion of the lawyer are useful and necessary to support the case should be
prepared.

19. Thereafter 4 sets of such papers should be prepared. The original be filed with the plaint, second
copy should be entrusted to the counsel for his record, third be kept in the record of the Branch
and fourth copy should be sent to the controller.

20. Upto date interest should be calculated and added in amount and a statement of account duly
certified under Banker's Books of Evidence Act should be prepared and filed along with the
plaint. The draft plaint should be checked thoroughly whether proper type of suit viz. mortgage
suit or ordinary suit has been filed. It should also be ensured that the necessary parties have been
impleaded. Figures and facts in the plaint should be checked to ensure correctness as per record.
If during pendency of suit a defendant dies the fact should be brought to the knowledge of your
lawyer to enable him to proceed further in the matter.

21. Where we have mortgaged property as security, we should try to file a mortgage suit under Order
34 Rule 4 of C.P.C. instead of a simple suit for recovery. In mortgage suits, courts has no power
to grant facility of instalment.

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22. While filing a suit, it should be ensured that the appropriate interim/interlocutory orders, such as
attachment before judgement, appointment of receiver, orders for custody, preservation of sale of
the secured assets, issue of ad interim injunction etc., as per the requirement of the case should be
applied in consultation with the Local Lawyer and these should be followed-up and appropriate
order obtained expeditiously to safeguard bank's interest.

23. The delay initially taking place in the service of summons can be curtailed if registered AD
envelopes with address of the person to be summoned are given in the court in addition to routine
process.

24. In exceptionally hard cases of service, the assistance of court for servicing the summons Dasti
can be requested. Our field staff can accompany/help the process server in Dasti summons served
and expedite the service.
25. Despite aforesaid methods of service if it is not effected steps should be taken to service through
'munadi' or proclamation in the newspapers under the orders of the court.

26. Generally out of the two processes, the munadi is cheaper remedy than publication in the
newspapers. After the service of the summons, the defendant files his written statement in the
court with a copy to opposite party. If the defendant remains absent, the case is proceeded ex
parte.

27. Very often the case is delayed as the authority of Branch Manager to file the suit is challenged.
Authority of the branch manager to file the suit and sign the plaint is as per the Govt.
Notification. And hence the same can be produced before the court.
28. When the case is fixed for Bank's evidence, all efforts should be made out to produce all evidence
on the date fixed. The lawyer should be advised to make efforts to get the same recorded in the
court on the same day instead of getting recorded it partially, and seeking adjournment for this
purpose.

29. Similarly our lawyer should be advised to seriously oppose the seeking of frequent adjournments
in this regard by the borrower/ defendant.

30. Frequently it happens that an official in whose presence a document was executed stands
transferred but is called to prove the execution of the document. Unless the execution of the
document relied upon by the Bank, is denied (by whom those were purported to have been
executed) it is not necessary for the official who was present at the time of execution of the
documents to attend the court to prove the execution. It is also not necessary to summon the
official who had then taken the documents. Any member of the staff of the Bank who filled up
the documents or was present at the time of execution could be examined. If the execution is not
denied the present Branch Manager as on the date when the suit is taken up for the trial could
depose as per the records and it is not necessary that the previous incumbent should be examined.
However, as per facts advices of local lawyer may be sought for.

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31. If some witnesses are to be summoned by the Bank, the timely steps shall be taken to avoid
adjournment for the same.
32. If the suit is adjourned for more than twice for the same purpose, the Advocate be advised to
inform the Branch Manager who should advise his controlling authority along with his comments
reasons for seeking adjournment.

33. The Branch Manager and counsel should not feel that by obtention of decree their job is over.
Execution of the decree is the logical conclusion of the legal remedy and the only way to release
the locked up funds in the bad accounts.

34. Immediately after pronouncement of judgement, application for obtention of certified copy of
judgement and decree sheet should be moved through the lawyer.

35. The same should be collected as soon as it is prepared by copying agency. This should be pursued
in order to find out if it is in conformity with prayer and the relief claimed in the plaint.

36. In the matter of lost case, the copies along with the case file and local lawyer's opinion should be
forwarded to the controlling authority immediately so that in time decision for availing further
remedy as to filling of appeal, revision/ review etc. may be taken.

37. Before forwarding these copies the Branch should also examine the matter and give its specific
recommendations.

38. In case there is no stay order against the execution of decree or the payment is not being made in
accordance with the terms of the decree, execution petition should be filed immediately.

39. For filling execution petition, list of assets/ property of judgement-debtors movable and
immovable property should be supplied to the lawyer.

40. If the assets are not known, an application under Order 21 Rule 41 that is regarding disclosure of
assets by judgement-debtor may also be filed.

41. The attachment order issued by the court should be got served by taking the bailiff of the court, to
the spot and an officer of the Branch should accompany him so that attachment is not delayed.
42. In case of movable assets, a supurdgar should be arranged by the branch to take custody of the
attached property after the orders are passed by the court to this effect.

43. If this also fails as last resort, the action for civil/ imprisonment should be taken as per facts of the
case in consultation with the local lawyer. The purpose of body warrant is not only to recover the
debt from the individual judgement-debtor, but also to act deterrent to others.

44. A frequent meeting at least once in two months between the Branch Managers and lawyers to
review the development of cases should be there. The difficulties & complication if any should be
brought to the notice of the controlling authority.

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45. Old cases say more than 3 years should be paid special attention and development of each date
should be bought to the notice of controlling authorities.

46. Binder cards in respect of suits should be maintained at branches and Zonal Offices as per the
system devised by the Law Department to watch the progress of the case.

47. No suit should be filed / contested without proper briefing to the lawyer by the concerned staff.

48. The performance of the Branch as well as counsels should be judged by the quantum of recovery
effected.

49. The Advocate who otherwise may be good but does not take interest in execution should not be
retained in the panel.

50. For entrustment of legal work to the person possessing particular knowledge in the specialised
field consultation with Law Department/ Law Sections should be made.

51. For correct opinions, detailed facts specifying the points for reference should be sent to the Law
Deptt./ Law Section instead of sending the whole files.

52. Suits against the Bank filed by other parties should be paid personal attention and as and when a
new case is filed it should be referred to the controlling authority for information and guidance.
53. Where Chances of recovery are bleak, the case may be reviewed in consultation with the
controlling authority and decision taken accordingly.

54. Compromise proposal should be promptly attended to as due to delay the party can change its
mind.

It would be seen from above that the procedure for seizure (which is not an end in itself) has got a large
number of technicalities involved and should be resorted to only to set examples or in deserving cases to
have demonstration effect. And when the borrower has turned notorious, necessary steps should be taken
from the Police/ District Administration to thwart unwarranted moves. The legal machinery should also
be kept ready to contest or get ad-interim orders of injunction, if any, vacated.

The decision to engage outside agency for recovery should be taken only at the controlling office level
with prior approval of the Dy. General Manager.

7.33 Note:
a) In case of any doubt, the branch should first seek clarification/guidance from the Law Officer
through the Controlling Authority.
b) Further, branches should follow the circular instructions in respect of filing and follow-up of suits

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