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NBFC V. Business Owner

Date of Claim raised:15/02/2022 Date of Conciliation: 23/02/2022 Date of Settlement: 15/03/2022
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary:

This is a dispute between an NBFC and its borrower based in Uttar Pradesh. The Claimant is a private NBFC in the business of providing unsecured loans to individuals. The borrower, in this case, is an individual who was salaried and working for a manufacturing house. The loan was for a period of 5 years, and the principal amount lent was Rs. 3,00,000/-. The EMIs were paid on time for about two years, and then there was a default with a total outstanding amounting to Rs. 1,77,156. The loan was marked NPA and became substandard in January 2022. While the loan was to be marked as bad debt and assigned to litigation, the claimant approached PrivateCourt for mediation.

The Issue

The issue was that the respondent had lost his job and was employed at a much lower salary and could not manage all his debts as he focused on paying off the secured loans. Despite repeated reminders and personal visits from the Claimant's representatives, the respondent did not respond, and the case had to be sent for litigation.

The Process

After understanding the case, the mediator concluded that the respondent had not taken paying this unsecured loan seriously, and needed to be reminded of his responsibilities. During the course of the negotiations, the guarantors of the loan were also invited and were explained the repercussions of such default. The parties were made to understand that the claimant was willing to waive the penal interest if the respondents were ready to settle immediately. A time for discussion was allowed between the respondent and the guarantors and a settlement was arrived at.

The Settlement Terms

Between the respondent and the guarantors, it was agreed that they would pay an amount of Rs. 1,20,000/- on or before 15th March 2022, in lieu of the total outstanding of Rs. 1,77,000/-, and this would be considered a full and final settlement. Failure to adhere to this would invoke legal action, which may amount to a lien on the accounts of the respondent, and the guarantors' bank accounts through a court order.

The Inference

At times, a third party with a legal understanding of the responsibilities of all individuals to a contract helps in resolving issues quickly.