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CS Professional · Insolvency and Bankruptcy - Law and Practice · Debt Recovery and Securitization

After receiving a section 13(2) notice, Meera Exports sends a written objection to Eastern Bank. The bank finds the objection untenable. What does the Act require the bank to do, and what is the borrower's position?

The bank must consider the objection and, if it rejects it, communicate its reasons within fifteen days of receiving the objection. The proviso states that this communication alone gives the borrower no right to apply to the Debts Recovery Tribunal under section 17.

  1. ACommunicate reasons for non-acceptance within fifteen days of receiving the objection; this communication does not by itself give the borrower a right to apply to the DRT under section 17Correct
  2. BCommunicate reasons within sixty days; the borrower may then apply to the DRT as of right on the strength of the reasons
  3. CSay nothing, as the bank has no duty to respond to objections
  4. DCommunicate reasons within one week; the borrower may then approach the DRT on the reasons alone

Explanation

Section 13(3A) requires the secured creditor to consider the objection and, if rejecting it, communicate reasons within fifteen days of receipt. The proviso says the reasons communicated do not confer a right to apply to the DRT under section 17. One week was the earlier period, now substituted by fifteen days.

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