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Lesson ID 261016
Version 1/29092018
Filing of Suit in Civil-Court

Introduction:

 Legal recourse is the ultimate measure to be taken for recovery of Bank’s dues. When all
possible measures fail to yield any satisfactory outcome, the Bank proceeds for adoption of
legal measures.
 NPA accounts having Suit amount of below Rs.10.00 Lac has to be filed in the Civil Court
having jurisdiction. Permission from competent authority must be taken before filing.
 It may be noted that if any order declaring moratorium under the Insolvency and Bankruptcy
Code, 2016 has been passed by the NCLT/DRT against the borrower and is in operation,
filing of such suit should be deferred till such moratorium period cease to exist.
 Suits can be filed if the limitation in the account has not expired.
 For filing suit in Govt accounts/Govt Guarantee notice of minimum 2 months is essential.

Types of Suit: It is of 3 types

1) Mortgage Suit: Where recovery is to be made from sale of mortgaged immovable

property.
2) Money Suit: Where bank proceeds against borrower personally.
3) Summary Suit: Where there is no security & suit is to be filed on the basis of negotiable
instruments

Procedure:

 After obtaining permission from the Competent Authority branch has to engage competent
lawyer in consultation with Zonal Head.
 Draft Plaint prepared by dealing advocate is to be properly checked by Branch Head & has
to be vetted by Officials of Law Department of ZO/ Law Retainer of ZO and also confirm that
details incorporated regarding jurisdiction, Limitation, Brief of the case, Prayer for Interim
Relief , fees paid are correct as per details of the account.
 Side by side branch has to search / find out personal assets / uncharged assets of Borrower
& Guarantor & refer to Credit Reports if required.
 The branch with the permission of the ZO, may engage the services of Recovery Agent
/Enforcement agent (Empanelled) to find out such assets for obtaining attachment before
judgment by the Competent Court.
 Branches should try to settle maximum number of suit filed/decreed cases through Lok
Adalat.
 Branch should file execution of decree, if compromise approved in Lok Adalat, is failed.
 Branches should file Application for refund of court fee before respective court, if case is
settled in Lok Adalat, at the earliest.
 Branches should file Application for issuance of appropriate order for Final Decree.

Service of Summons: When suit is filed it has to be got numbered & the court issues
summons to the defendants within 30 days.

Written statement: The defendant is given 30 days period from the date of service of summon
to file his defence by way of written statement. It can be extended upto maximum of 90 days
by the court.

Death of Defendant: Application for impleading legal heirs can be made within 90 days from
the date of death.
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Attachment before judgement: Where the plaintiff apprehends disposal of a property by the
defendant, application for attachment can be made before judgement u/s 38 of CPC (Civil
Penal Code) and Defendant can be restricted from disposal of assets as per u/s 39 of CPC.
Appointment of Receiver:
Where some assets belonging to defendant are earning some income, application can be
made for appointment of receiver to collect income
Appointment of court commissioner:
If assets are in bank`s possession application can be made for appointment of court
commissioner for sale.

Preparation of Decree:
 Court is required to prepare the decree within 15 days of judgement.
 Bank is required to get a certified copy of decree.
 In case of mortgage, preliminary decree is passed & on non-payment by the defendant,
application for final decree is required to be made within 3 years.

Execution of Decreed Cases in Civil Court

 Branches should file application for execution of decree in all cases where Decretal order
has been issued and security / asset is available.
 Branch should calculate the upto date claim as per Decretal terms as awarded by the Court
including interest and expenses for deciding fees for execution in the competent Court.
 Branches should file execution of decree in Court, if decreed amount is below Rs. 10.00 lacs
 Branches should follow up the matter with the Court for issuance of notice and seizure of the
property.
 After seizure of property follow up the matter for sale of the assets at the earliest.

Note:
Where the defendant fails to pay, application for execution proceedings can be made within
12 years from the date of decree.

Recovery of Expenses:-
Banks can recover as part of the cost, no of expenses as court fee, service charges,
payment to court commissioner, expenses for protection of securities etc.

Reference for further study:

S. No. Cir. Date Description

No.
1. 15074 27.06.2017 Recovery Management Policy