Study Notes for JAIIB/DBF Exams

Consumer Protection Act, 1986

➢ It is an Act of the Parliament of India enacted in 1986 to protect the interests of consumers in India.
➢ It is made for the establishment of consumer councils and other authorities for the settlement of
consumer's grievances and for matters connected there with it

Central Consumer Protection Council:

➢ Minister in charge of consumer affairs in the Central Government, who shall be its Chairman in consumer
protection

Procedure for meetings of the Central Council:

➢ Central Council shall meet as and when necessary, but at least 1 meeting of the Council shall be held every year

Jurisdiction of the National Commission

➢ complaints where the value of the goods or services and compensation, if any, claimed exceeds Rs. 10 crore
➢ Any person, aggrieved by an order made by the National Commission appeal against such order to the
Supreme Court within a period of 30 days from the date of the order
➢ No appeal by a person who is required to pay any amount in terms of an order of the National Commission
shall be entertained by the Supreme Court unless that person has deposited the 50% of that amount or Rs.
50000, whichever is less

State Consumer Protection Councils:

➢ Minister incharge of consumer affairs in the State Government who shall be its Chairman
➢ Other official or non-official members, not exceeding 10, as may be nominated by the Central Government
➢ State Council shall meet as and when necessary but not less than 2 meetings shall be held every year

Jurisdiction of the State Commission:

➢ Complaints where the value of the goods or services and compensation, if any, claimed [exceeds Rs. 1 crore but
does not exceed Rs.10 crore]
➢ Any person aggrieved by an order made by the State Commission in exercise of its powers may prefer an
appeal against such order to the National Commission within a period of 30 days from the date of the order
➢ No appeal by a person, who is required to pay any amount in terms of an order of the State Commission, shall
be entertained by the National Commission unless the appellant has
deposited the 50% of the amount or Rs.35000, whichever is less
➢ An appeal filed before the State Commission or the National
Commission shall be heard as expeditiously as possible and an
endeavour shall be made to finally dispose of the appeal within a
period of 90 days from the date of its admission

District Consumer Protection Council:

➢ Collector of the district (by whatever name called), who shall be its
Chairman
➢ District Council shall meet as and when necessary but not less than
2 meetings shall be held every year.

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Composition of the District Forum
➢ A person who is, or has been, or is qualified to be a District Judge, who shall be its President
➢ 2 other members, 1 of whom shall be a woman
➢ Every member of the District Forum shall hold office for a term of five years or up to the age of sixty-five
years, whichever is earlier
➢ It can be re-appointment for another term of five years or up to the age of sixty-five years, whichever is earlier
Jurisdiction of the District Forum:
➢ Complaints where the value of the goods or services and the compensation, if any, claimed [does not exceed Rs.
1 crore]
➢ Admissibility of the complaint shall ordinarily be decided within 21 days from the date on which the complaint
was received
➢ Any person aggrieved by an order made by the District Forum may prefer an appeal against such order to the
State Commission within a period of 30 days from the date of the order
➢ No appeal by a person, who is required to pay any amount in terms of an order of the District Forum, shall be
entertained by the State Commission unless the appellant has deposited in the prescribed manner 50% of that
amount or 25 thousand rupees, whichever is less
Limitation period
➢ District Forum, the State Commission or the National Commission shall not admit a complaint unless it is filed
within 2 years from the date on which the cause of action has arisen.
Penalties
➢ Where a trader or a person against whom a complaint is made fails or omits to comply with any order made by
the District Forum, the State Commission or the National Commission shall be punishable with
imprisonment for a term which shall not be less than 1 month but which may extend to 3 years, or with
fine which shall not be less than Rs. 2000 but which may extend to Rs. 10,000, or with both

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 DRT & DRAT
DRT- DEBT RECOVERY TRIBUNAL
✓ Debt Recovery Tribunals DRTs are special types of courts for effecting recovery of dues of banks and financial
institutions.
✓ DRTs are established under the Recovery of Debts due to banks and financial institutions Act 1993
✓ Established by GOI
✓ 24 June 1993
✓ Quasi Judiciary
✓ Type of Cases: Cases involving recoverable dues of banks and Fls of Rs 20 lacs and above only are filed with
DRTs.
✓ Such cases can not be filed in the normal civil courts.
Presiding Officer
Term- 5 years or Age- 62 years whichever is earlier
➢ DRT is headed by a Presiding Officer.
➢ He is assisted by a Recovery Officer and one Registrar.
➢ Once the case is decided in favour of the Bank or Fl, the DRT issues a Recovery Certificate.
➢ Recovery Officer who has powers such as attachment etc.
➢ helps in recovery of dues through execution of the decree passed by DRT.
➢ For being appointed as DRT, a person should qualify to be District Judge
Chairperson
Term- 5 years or Age- 65 years whichever is earlier
➢ DRAT is headed by a Chairperson.
➢ Chairperson appointed by GOI.
➢ The person should qualify to be a Judge of the High Court.
➢ India legal service- Grade-I- at least 3 years
➢ Presiding officer- at least 3 years
DRT
➢ Appeal against the order of the Recovery Officer can be made to DRT within 30 days of passing the order.
DRAT
➢ Any appeal against the judgement of DRT can be preferred with Debt Recovery Appellate Tribunal.
➢ The appeal is made within 45 days of the date of receipt of the order.
➢ If borrower wants to appeal, 75% of the judgment amount is required
to be deposited which an be waived or reduced by the Chairperson of
the DRAT even to nil.
DRT- DEBT RECOVERY TRIBUNAL
➢ COVERS LOANS OF RS 20.00 LACS AND ABOVE
➢ Presiding officer appointed by Central Govt for 5 years maximum age of
62
➢ Disposal of application within 180 days from the date of receipt.
➢ Appeal can be made to DRAT(DEBT RECOVERY APPELATE TRIBUNAL)
within 45 days from the date Order subject to deposit of 75% of the due
amount.
➢ DRAT to dispose the case within 180 days

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Tribunal Jurisdictions
There are 39 DRTs and 5 DRATs, which are single Member Tribunals.
Jurisdiction of DRATs
➢ DRAT Allahabad (Jurisdiction over 6 DRTs)
✓ DRT Allahabad, DRT Dehradun, DRT Jabalpur, DRT Lucknow, DRT Patna and DRT Ranchi.
➢ DRAT Chennai (Jurisdiction over 9 DRTs)
✓ DRTs at Chennai (1, 2, 3), DRTs at Bengaluru (1, 2), DRT Coimbatore, DRTs at Ernakulam (1, 2), and DRT Madurai.
➢ DRAT Delhi (Jurisdiction over 7 DRTs)
✓ DRTs at Delhi (1, 2, 3), DRTs at Chandigarh (1, 2, 3) and DRT Jaipur.
➢ DRAT Kolkata (Jurisdiction over 9 DRTs)
✓ DRTs at Kolkata (1, 2, 3), DRT Cuttack, DRT Guwahati, DRTs at Hyderabad (1, 2), DRT Siliguri and DRT
Visakhapatnam.
➢ DRAT Mumbai (Jurisdiction over 8 DRTs
✓ DRTs at Mumbai (1, 2, 3), DRTs at Ahmedabad (1,2), DRT Aurangabad, DRT Pune, DRT Nagpur.
Recent Developments in DRT &DRAT
➢ e-DRT project has been implemented in all DRTs and DRATs.
➢ This project aims to bring in improved access, efficiency and transparency.
➢ e-DRT provides access to e-filing, e-payment of fees, cause list generation and a case information system that
enables viewing of case status, orders and judgments.
Types of Charges on Securities
Pledge
➢ Pledge is defined in section 172 of Indian Contract Act.
➢ Pledge is the bailment of goods as a security for payment of a debt or performance of a promise.
➢ Bailment is defined in Indian Contract Act.
➢ Bailment means delivery of goods with some purpose and with the condition that when the purpose is
accomplished the goods will be delivered back to the bailor.
➢ Pledge can be only in respect of movable goods like stocks. On Railway receipt also charge is created by pledge.
➢ In the case of pledge, ownership remains with the borrower; only possession is transferred to the banker.
➢ The bank as a pledgee must take care of the goods pledged as a person of ordinary prudence would take of his
own goods of the same value.
➢ Bank can sell the goods without intervention of the court in case the pledgor fails to repay the bank loan. But
the sale can be done only after giving reasonable notice to the pledgor.
➢ Bank as a pledgee has priority in right over the goods and Bank’s right of sale under pledge cannot be
extinguished even by lawful seizure of goods pledged to it.
Hypothecation
➢ Hypothecation is defined in Section 2 of SARFAESI Act 2002.
➢ Hypothecation is also done on moveable property like stocks.
➢ In case of hypothecation both ownership as well as possession
remains with the borrower i.e. neither ownership nor possession is
transferred to the bank.
➢ The charge created in Hypothecation is equitable charge.
➢ When stocks are hypothecated to the bank, the charge is floating
charge.
➢ Basic difference between pledge and hypothecation is on account of
possession.

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Assignment
➢ Provisions relating to Assignment in section 130 of Transfer of Property Act 1882.
➢ Assignment is transfer of right or interest to recover the debt.
➢ The transferor of claim is called as the assignor and the transferee is called the assignee.
➢ Assignment is done on Book Debts, Supply Bills, LIC policy etc.
➢ Assignment is possible through writing only.
➢ Acknowledgment required to be acknowledged by original debtor u/s 131.
➢ Assignor cannot give better title to the assignee than what assignor has
➢ In case of default, the assignee can recover the actionable claim amount from the original debtor without
reference to assignor.
➢ Legal or Equitable assignment

Mortgage
➢ Mortgage is defined in Section 58 of the Transfer of Property Act 1882.
➢ Mortgage is the transfer of interest in a specific immovable property, for the purpose of securing an existing or
future debt.
➢ The person creating the mortgage is called as the mortgagor and the person in whose favour mortgage is created
(bank) is called as the mortgagee. The principal and the interest involved in the transaction is
called mortgage money and the instrument by which the transaction is taking place is called mortgage deed.
➢ Mortgage is created on Immovable property like land and building.

Types of Mortgage

There are six types of mortgages namely

(i) Simple Mortgage
(ii) Mortgage by Conditional Sale
(iii) Usufructuary Mortgage
(iv) English Mortgage
(v) Mortgage by Deposit of title Deeds (Equitable Mortgage)
(vi) Anamalous Mortgage
All mortgages except Equitable Mortgage require registration with the Registrar of Assurances.

Registered Mortgage
In the case of registered mortgage (also called legal mortgage) first
a mortgage deed is written which is stamped as per Stamp Act of the
concerned state. The deed is then executed in the presence of two witnesses.
Thereafter, in terms of the Indian Registration Act 1908, it is to be registered
with the Registrar of Assurances (Sub Registrar) within 4 months of the
execution.

Reverse mortgage
Reverse mortgage enables senior citizens to convert their one big asset —
their home—into a source of regular income without giving up ownership.

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Security Types of Charge

Land & Building (Immovable Property) Mortgage

Book Debts, Life Policies, Money due from Govt. department Assignment

Machinery, Stocks, Gold Pledge

Stocks, Vehicle, Machinery Hypothecation

Shares, Debenture, MF units, Bonds, Deposit/PF which is on bank/FI Lien

custody

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