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

The Recovery Officer serves a notice on Deccan Finance, which holds money for a defendant. Deccan files a statement on oath that it holds no money for the defendant. Later it is found that the statement was false in a material particular, and Deccan in fact owed Rs 8 lakh to the defendant on the date of notice, while the defendant's debt under the Act is Rs 20 lakh. What is Deccan's liability to the Recovery Officer?

Deccan is personally liable for Rs 8 lakh. For a materially false statement on oath, liability equals its own liability to the defendant on the date of notice or the defendant's debt, whichever is less, and Rs 8 lakh is less than Rs 20 lakh.

  1. ANil, as the oath statement protects it
  2. BRs 20 lakh, the whole debt
  3. CRs 8 lakh, being the lesser of its own liability and the defendant's debtCorrect
  4. DRs 12 lakh, the difference between the two

Explanation

If the oath statement is false in a material particular, the person is personally liable to the extent of own liability to the defendant on the notice date or the defendant's liability under the Act, whichever is less. Lesser of 8 and 20 lakh is Rs 8 lakh.

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