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Small Business Proprietor V. NBFC

Date of Claim raised: 20/01/2020
Date of Conciliation: 02/02/2020
Date of Settlement: 02/02/2020
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary:

This is a case where the borrower of a loan has approached for meditation. The proprietor of a small restaurant borrowed an amount of Rs. 5,00,000/- from an NBFC at the beginning of 2018. The fund was procured to make modifications and increase the seating capacity of the restaurant. As an unsecured loan, this was serviced efficiently for two years until the pandemic hit in 2020. Unlike many restaurants, the proprietor could not pivot to an online or delivery model and had to shut shop for six months. Coming back from such a setback is generally difficult for most small enterprises, and the individual in question faced the same issues. The NBFC went into hard recovery mode post the moratorium period, and the proprietor was now being harassed by collection agents. The debt was apparently sold to a third party as bad debt. The proprietor approached PrivateCourt in this matter.

The Issue:

The debt, in this case, was given to a 3rd party collection company, which started using hard collection tactics with the individual.

The Resolution:

PrivateCourt stepped into this matter and initiated a dialogue with the NBFC in question. What had also transpired was that the collection agency had used questionable methods for recovery, and proof for the same was made available to the NBFC in the form of Voice recordings and messages. The first resolution that was demanded was that these tactics be stopped immediately, which was agreed upon. The situation of the client and his payment history was also explained. PrivateCourt asked for a waiver of penal interest as a consideration and for the loan to be restructured as the loan was not NPA as of 31st March 2020. The NBFC agreed to the same, and a new EMI structure was created.

The Settlement:

With a waiver of Rs. 32,000/- towards penal interest, the loan was to be restructured with an additional Rs. 5,000/- PM for a period of 2 years.

The Inference:

The technical understanding of the legal rights of a party and the know-how of current rules helped in not only resolving a dispute but to put both parties at ease.