1. Before taking possession of the secured asset under the SARFAESI Act, the secured creditor must issue a demand notice to the borrower under Section 13(2), giving them how much time to discharge the liability?
60 Days
30 Days
90 Days
15 Days
Explanation:
Section 13(2) notice is the first step. It gives the borrower a period of 60 days to pay the dues. If they fail, the bank can take possession under Section 13(4).
2. Banks can file an application for recovery of dues in the Debt Recovery Tribunal (DRT) only if the debt amount due is not less than:
?10 Lakh
?20 Lakh
?1 Crore
?50 Lakh
Explanation:
The pecuniary jurisdiction of DRTs applies to cases where the debt due to any bank or financial institution is ?20 Lakh or above.
3. Lok Adalats can handle bank recovery cases where the amount involved is up to:
?20 Lakh
?1 Crore
?10 Lakh
?50 Lakh
Explanation:
Lok Adalats are an effective forum for settling smaller NPA cases (suit-filed or pre-litigation) up to a ceiling of ?20 Lakh, offering a quick and low-cost resolution.
4. What is the limitation period for filing a suit for the enforcement of a Mortgage (Foreclosure or Sale of mortgaged property)?
No Limitation
30 Years
3 Years
12 Years
Explanation:
Article 62 of the Limitation Act, 1963 provides a limitation period of 12 years for suits relating to payment of money secured by a mortgage or charge upon immovable property, calculated from when the money becomes due.
5. Lok Adalats have jurisdiction to settle banking disputes where the amount involved is:
Up to ?50 Lakh
Up to ?20 Lakh
Any amount
Up to ?10 Lakh
Explanation:
For bank recovery cases, the monetary ceiling for Lok Adalat jurisdiction is ?20 Lakh . Cases above this limit usually go to DRT.
6. An "Acknowledgment of Debt" (AOD) in writing obtained from the borrower before the expiry of the limitation period:
Makes the debt time-barred.
Has no effect on limitation.
Reduces the limitation period.
Extends the limitation period by another fresh term (e.g., 3 years) from the date of AOD.
Explanation:
Under Section 18 of the Limitation Act, a written acknowledgment of liability signed by the borrower before the expiration of the prescribed period starts a fresh period of limitation from the time of signing.
7. Any person aggrieved by the measures taken by a secured creditor under Section 13(4) of the SARFAESI Act can file an appeal to the Debt Recovery Tribunal (DRT) within:
90 Days
30 Days
45 Days
60 Days
Explanation:
Under Section 17 of the SARFAESI Act, an appeal against the bank's enforcement action (like taking possession) must be filed with the DRT within 45 days from the date on which such measure was taken.
8. Does the Debt Recovery Tribunal (DRT) have the power to pass an interim order of injunction/stay against the borrower?
Yes, it can issue interim orders to prevent the borrower from disposing of assets.
Only if the High Court permits.
Only if the loan amount exceeds ?1 Crore.
No, only final orders.
Explanation:
The DRT Act empowers the Tribunal to pass interim orders (like attachment before judgment or injunction) to protect the interests of the bank and prevent the borrower from selling assets during the pendency of the case.
9. The limitation period for filing a suit on a Demand Promissory Note (DP Note) is:
3 years from the date of demand.
3 years from the date of the note.
12 years from the date of the note.
No limitation.
Explanation:
For a DP Note (payable on demand), the limitation is 3 years from the date of the note , not from the date of demand (Article 35, Limitation Act).
10. For matters falling under the jurisdiction of the Debt Recovery Tribunal (DRT), the jurisdiction of Civil Courts is:
Barred (Excluded).
Available only for appeals.
Available if the amount is disputed.
Available concurrently.
Explanation:
The RDDBFI Act bars Civil Courts from entertaining any matter which the DRT is empowered to determine, to ensure speedy recovery through the specialized tribunal.
11. Once a Recovery Certificate is issued by the Presiding Officer of a DRT, who is responsible for its execution (recovery of money)?
The High Court Registrar.
The Bank Manager.
The District Magistrate.
The Recovery Officer attached to the DRT.
Explanation:
The Recovery Officer (RO) is the statutory authority within the DRT framework empowered to execute the Recovery Certificate by attaching and selling the debtor's assets.
12. The limitation period for filing a suit against a Guarantor is 3 years from:
The date of the loan agreement.
The date of default by the principal borrower.
The date when the guarantee is invoked (demand is made) by the bank.
The date of the guarantee deed.
Explanation:
For a continuing guarantee, the liability arises only when the guarantee is invoked. The limitation period starts running from the date the bank issues a demand notice to the guarantor invoking the guarantee.
13. Under the SARFAESI Act, can a bank enforce security interest on "Hypothecated" goods without court intervention?
Yes, but only if the goods are surrendered voluntarily.
No, hypothecation is not a security interest.
Yes, provided the goods are in the possession of the borrower.
No, only mortgaged property is covered.
Explanation:
The SARFAESI Act definition of "Security Interest" includes hypothecation. Banks can take possession of hypothecated movables (like vehicles, stock) directly after issuing the Section 13(2) notice and waiting for 60 days.
14. After taking possession of the secured asset under SARFAESI, how much notice period must the bank give to the borrower before selling the asset?
60 Days
30 Days
90 Days
15 Days
Explanation:
Under the Security Interest (Enforcement) Rules, the authorized officer must serve a 30-day notice to the borrower informing them of the sale of the immovable property.