Legal Glossary — Debt Recovery
Law Dictionary India — Plain English

A loan agreement provision that makes the entire outstanding loan balance immediately due and payable upon the occurrence of a specified event — typically default. Upon acceleration, the creditor does not need to wait for the scheduled repayment dates and can immediately initiate recovery proceedings under SARFAESI or RDDB Act.

If a borrower defaults on 3 consecutive EMIs, the bank may invoke the acceleration clause, making the entire ₹10 crore loan immediately recoverable.

A written or oral admission by the borrower that the debt exists. Under Section 18 of the Limitation Act, 1963, a fresh acknowledgement before a court or in writing signed by the debtor extends the limitation period for filing a recovery suit by 3 years from the date of acknowledgement.

A letter from a borrower acknowledging outstanding dues and requesting a repayment schedule constitutes an acknowledgement of debt.

Latin for "according to value." Court fees in DRT and civil court proceedings are typically calculated ad valorem — as a percentage of the amount claimed. Under the Court Fees Act, 1870, and respective State Court Fee Schedules, the court fee is proportional to the debt recovery amount.

Under the Insolvency and Bankruptcy Code, 2016, the National Company Law Tribunal (NCLT) is the Adjudicating Authority for corporate persons. It admits or rejects CIRP petitions, approves resolution plans, and passes liquidation orders.

A written statement made under oath or solemn affirmation, used as evidence in court proceedings. In DRT proceedings, the evidence is primarily adduced through affidavits-in-chief, with cross-examination conducted on the affidavit. Affidavits are also required for SARFAESI Section 14 CMM/DM applications.

The transfer of ownership of property from one person to another by sale, gift, mortgage, or other means. In the context of debt recovery, alienation of property by a borrower after default (to defeat creditor claims) may be challenged under Section 53 of the Transfer of Property Act, 1882, or under PMLA provisions.

A company registered with the Reserve Bank of India under the SARFAESI Act, 2002, that acquires Non-Performing Assets from banks at a discount and attempts to recover value from them through enforcement, restructuring, or sale.

A court order restraining a judgment debtor from transferring, disposing, or encumbering property. Under the DRT regime, an interim attachment may be sought at the time of filing an Original Application under Section 19(7) of the RDDB Act.

Before the DRT hears the case on merits, a bank may seek attachment of the borrower's properties to prevent dissipation of assets.

A loan or receivable that is unlikely to be recovered and is written off as a loss by the creditor. Under the Income Tax Act, banks can claim deduction for bad debts written off in their accounts. Under RBI norms, accounts classified as "Loss Assets" are treated as bad debts. A bank writing off a debt does not extinguish the legal liability of the borrower — the bank retains its right to sue.

The delivery of goods by one person to another for a specific purpose, with a condition to return them. In banking, hypothecation and pledge involve bailment-like relationships. Under a pledge, goods are physically delivered to the bank (bailment), giving the bank a right to sell on default without court order. Under hypothecation, goods remain with the borrower (no bailment).

A statement from the bank to the borrower confirming the outstanding loan balance as of a particular date. An acknowledgment by the borrower of the balance constitutes an Acknowledgement of Debt under Section 18 of the Limitation Act, 1963, extending the limitation period for filing a recovery suit by 3 years from the date of confirmation.

A written commitment by a bank (guarantor bank) to pay a specified sum to the beneficiary if the principal debtor (on whose behalf the guarantee is issued) fails to fulfill their obligation. Bank guarantees are commonly used in corporate transactions, government contracts, and as collateral. Invocation of a bank guarantee triggers payment regardless of underlying disputes — courts rarely grant stay orders on BG encashment.

A transaction in which property is held by one person but the real beneficial owner is another — typically used to conceal assets from creditors or tax authorities. The Benami Transactions (Prohibition) Amendment Act, 2016 criminalises benami transactions and allows the Adjudicating Authority to confiscate benami properties.

Under SARFAESI, a person or entity that has obtained credit facilities from a secured creditor and against whom a security interest has been created. Includes guarantors in respect of the secured debt.

In personal insolvency under the IBC or the Presidency Towns Insolvency Act/Provincial Insolvency Act, the insolvent's estate (all property) vests in the Resolution Professional or Official Assignee. The debtor effectively "cedes" their assets to the insolvency estate for distribution to creditors. Certain properties (tools of trade, personal effects up to a prescribed limit) are exempt from cession.

A caveat (Latin: "beware") is a formal notice filed in court by a party warning the court not to pass any order without giving that party an opportunity to be heard. Under Section 148-A of the CPC, a caveat can be filed if the caveator has a right to appear before the court when an application may be made against their interest.

A security interest created on immovable property or other assets as collateral for a loan. A registered charge on assets gives the creditor a right to have the assets sold to satisfy the outstanding debt in the event of default. Charges must be registered with the Registrar of Companies (for companies) or under registration laws.

The formal document filed by police (also called a "challan" or police report under Section 173 CrPC / Section 230 BNSS) after completing investigation of a cognisable offence. The charge sheet sets out the offences alleged, evidence gathered, names of accused, and list of witnesses. A copy is served on the accused. The Magistrate takes cognizance on the charge sheet and the trial begins.

The time-bound insolvency resolution process under the IBC triggered when a Corporate Debtor defaults on a financial or operational debt of ₹1 crore or more. The CIRP must be completed within 180 days (extendable to 330 days). A moratorium is imposed during CIRP, and a Committee of Creditors takes over decision-making.

Under Section 14 of the SARFAESI Act, a secured creditor may apply to the CMM (in metropolitan areas) or DM (in non-metropolitan areas) to obtain physical possession of a secured asset. The CMM/DM must pass an order within 30 days of the application (extendable to 60 days for recorded reasons).

The governing body of financial creditors constituted during CIRP under the IBC. The CoC has commercial decision-making authority over the resolution process, including approval of the Resolution Plan by a 66% majority vote. Operational creditors with aggregate dues of at least 10% of total debts can participate but without voting rights.

Additional security provided to a lender besides the primary security. In banking, collateral often includes personal guarantees of directors/promoters, fixed deposits, insurance policies, or additional immovable property pledged alongside the primary asset. SARFAESI enforcement can proceed against all charged assets simultaneously.

An offence that can be settled between the accused and the victim/complainant, with court permission. NI Act Section 138 (cheque bounce) is a compoundable offence — the drawer and payee can settle the matter out of court even during appeal, and the court will acquit the accused. Most serious banking fraud offences under IPC S.409 and S.420 are non-compoundable.

A court decree passed with the consent of both parties — typically as part of an out-of-court settlement ratified by the court. In debt recovery, banks and borrowers sometimes agree to a One-Time Settlement (OTS) which is then recorded as a consent decree in the DRT, providing the bank with an executable decree if the borrower defaults on the OTS terms.

Wilful disobedience of a court order, or conduct that scandalises or interferes with the administration of justice. In debt recovery, contempt petitions are filed when borrowers refuse to comply with DRT attachment orders, fail to disclose assets as ordered, or transfer properties in defiance of court orders. Punishment: imprisonment up to 6 months or fine up to ₹2,000, or both.

A security document in which a borrower creates a charge over movable assets (stock, plant, machinery, book debts) in favour of the lending bank, without transferring possession to the bank. The borrower retains possession and use of the hypothecated assets. Upon default, the bank can invoke SARFAESI Section 13 to take possession.

Failure to repay loan installments or interest as per the repayment schedule. Under SARFAESI, default triggers the NPA classification process. For SARFAESI enforcement, a "default" means failure to discharge a liability under a security agreement; under IBC, a "default" means non-payment of a debt that is due, payable, and not being disputed.

The shortfall between the amount recovered by a secured creditor after enforcement (sale of secured assets) and the total outstanding debt. If the sale proceeds are less than the outstanding loan, the residual amount is the "deficiency." The creditor may file a fresh DRT application for the deficiency amount.

If the outstanding debt is ₹5 crore but the secured asset sells for ₹3.5 crore, the deficiency of ₹1.5 crore can be separately recovered through a DRT application.

An order by a court discharging an accused person from the charge against them, before or during trial, when the court finds insufficient grounds to proceed. Distinguished from acquittal: an acquittal is after evidence is considered; a discharge is before full trial. Discharge petitions under CrPC Section 245 / BNSS Section 261 are filed when the charge sheet is weak.

The appellate forum for orders passed by the Debt Recovery Tribunal (DRT). An appeal to DRAT must be filed within 30 days of the DRT order. A pre-deposit of 50% of the debt amount is mandatory for borrowers who wish to appeal (this threshold may be reduced by the DRAT for good cause). DRAT orders are challenged before the High Court.

A specialised quasi-judicial tribunal established under the Recovery of Debts and Bankruptcy Act, 1993 (RDDB Act) for the adjudication of claims by banks and financial institutions for recovery of debts above ₹20 lakhs. DRTs have jurisdiction over Original Applications filed by creditors, Section 17 SARFAESI challenges filed by borrowers, and applications related to the IBC.

An online public auction conducted through a designated e-auction platform for the sale of secured assets seized under SARFAESI or by the DRT Recovery Officer. RBI guidelines mandate that banks conduct SARFAESI auctions through e-auction platforms to ensure transparency and wider participation. The e-auction notice must be published in two leading newspapers and on the bank's website at least 30 days before the auction date.

Any charge, lien, mortgage, or claim on property that affects its free and clear title. Before a bank creates a mortgage, it verifies the title to ensure there are no prior encumbrances. An Encumbrance Certificate from the Sub-Registrar's office shows all registered charges and mortgages on a property.

An Encumbrance Certificate showing a prior mortgage in favour of SBI would alert a subsequent lender to the prior charge.

Also called "mortgage by deposit of title deeds" under Section 58(f) of the Transfer of Property Act, 1882. Created by depositing original title deeds of property with a bank in a notified town, with the intention of creating a security interest. No formal written deed or registration is required — the deposit itself creates the mortgage. Widely used by banks for quick security creation.

The process of enforcing a court decree by attaching and selling the judgment debtor's assets. Under the DRT Act, the Recovery Officer executes the Recovery Certificate by attaching and selling the borrower's assets. Under the CPC, execution courts have wide powers to attach movable property, immovable property, and debts owed to the judgment debtor.

Under the IBC, a person to whom a "financial debt" (money borrowed with interest) is owed by the corporate debtor. Banks, NBFCs, bondholders, and debenture holders are financial creditors. Financial creditors form the Committee of Creditors and have voting rights on the resolution plan. Distinguished from operational creditors (suppliers, employees) who have limited IBC rights.

A debt along with interest disbursed against the consideration for the time value of money. Includes money borrowed against payment of interest, bonds and debentures, hire purchase and finance lease, receivables sold or discounted, amounts raised under any other transaction having commercial effect of a borrowing, and derivative transactions.

A charge over a company's fluctuating assets (stocks, receivables, cash) that "floats" over the assets until it "crystallises" upon default, at which point it attaches to the specific assets then in existence. Banks often take a floating charge alongside a fixed charge (mortgage) to capture all assets of a company.

The legal process by which a mortgagee (lender) acquires clear title to mortgaged property upon the mortgagor's (borrower's) default, extinguishing the borrower's right to redeem. Under the Transfer of Property Act, foreclosure is a mortgagee's remedy in addition to sale. SARFAESI Section 13 provides a similar statutory remedy for secured creditors without court process.

An examination of financial records with the specific purpose of detecting fraud, misrepresentation, or financial crime. RBI guidelines require banks to conduct forensic audits in all cases where fraud is suspected. Forensic audit reports are used as evidence in FIRs and DRT proceedings. The SFIO (Serious Fraud Investigation Office) conducts forensic audits in cases involving company law violations.

A person who has left India or refuses to return to India to face criminal prosecution for an economic offence involving ₹100 crore or more, and has been declared a "Fugitive Economic Offender" by a Special Court under the Fugitive Economic Offenders Act, 2018. Their properties in India and abroad are subject to confiscation and vesting in the Central Government.

A court order directing a third party (the "garnishee") who owes money to the judgment debtor to pay that money directly to the decree holder instead. Under Order XXI Rule 46 CPC, a bank where the judgment debtor holds a deposit can be served a garnishee order and required to pay the balance to the creditor.

After obtaining a Recovery Certificate from DRT, the bank applies for a garnishee order against the borrower's accounts maintained at other banks.

A person who gives a guarantee to repay a debt if the principal borrower defaults. In banking, personal guarantees of directors and promoters are typically required for corporate loans. Under SARFAESI, guarantors can be proceeded against — their properties can also be attached under the SARFAESI Act if they are mortgaged or charged as security.

Following the Supreme Court's decision in Pioneer Urban Land & Infrastructure Ltd v. Union of India (2019), home buyers (allottees) in real estate projects are classified as financial creditors under the IBC, allowing them to file CIRP petitions against defaulting real estate developers. The Insolvency and Bankruptcy (Amendment) Act, 2020 codified this by inserting Explanation to Section 5(8)(f) of the IBC.

A charge created on movable assets (machinery, vehicles, stock, receivables) as security for a loan, without transfer of possession to the lender. The borrower retains physical possession and use of the hypothecated assets. On default and classification as NPA, the secured creditor can enforce the hypothecation by taking possession and selling the assets under SARFAESI.

India's comprehensive insolvency legislation that consolidates and amends laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms, and individuals. Provides time-bound CIRP, promotes entrepreneurship, availability of credit, and balances interests of all stakeholders.

In personal insolvency proceedings under Part III of the IBC, an automatic moratorium comes into effect from the date an application is filed against an individual or partnership. This protects the debtor from debt enforcement during the resolution process. Distinguished from the corporate moratorium under Section 14 IBC which applies only to corporate debtors.

The insolvency professional appointed by the NCLT when it admits a CIRP petition under the IBC. The IRP serves during the initial 30-day period before the Committee of Creditors appoints a Resolution Professional. The IRP takes over management of the corporate debtor and calls for claims from all creditors.

An insolvency professional appointed by the NCLT upon admission of a CIRP petition to manage the corporate debtor's affairs during the resolution process. The IRP constitutes the Committee of Creditors (CoC), manages the affairs of the corporate debtor as a going concern, invites expressions of interest for resolution plans, and facilitates the CoC's decision-making.

A court order restraining a party from doing a particular act (prohibitory injunction) or compelling a party to do a specific act (mandatory injunction). In debt recovery disputes, borrowers often seek injunctions to restrain banks from proceeding under SARFAESI. Courts are reluctant to grant injunctions against SARFAESI enforcement given the specific alternative remedy under Section 17 of the Act.

A legal arrangement where multiple borrowers or guarantors are each individually responsible for the entire debt. If two persons are jointly and severally liable, the creditor can recover the full amount from any one of them. In banking, co-borrowers and guarantors are typically jointly and severally liable for the loan.

The process by which banks verify the identity and background of their customers before providing financial services. Mandated by RBI guidelines under the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, KYC involves verifying: identity documents, address proof, source of funds, and business purpose. KYC violations by banks can expose them to regulatory penalties.

A bank instrument guaranteeing payment to a seller upon presentation of specified documents (invoice, bill of lading, insurance). If the buyer (applicant) defaults, the issuing bank pays the seller. LCs are widely used in trade finance. Fraudulent LCs (where documents are forged) are a major banking fraud category and attract IPC S.420/S.467 and BNS S.320/S.340 charges.

The right of a creditor to retain possession of a debtor's property until a debt is paid. A banker's lien (under Section 171 of the Indian Contract Act) is a general lien — it allows a bank to retain securities deposited with it for any dues owed by the customer, not just dues linked to the specific deposit. Distinguished from a pledge (specific) and mortgage (registered security on immovable property).

The time period within which a legal action must be commenced. Under the Limitation Act, 1963, civil suits for money recovery must be filed within 3 years of the cause of action. DRT Original Applications under the RDDB Act must be filed within 3 years of the debt becoming due. SARFAESI enforcement has no separate limitation — it follows the bank's own NPA classification process.

The process of winding up a company's affairs by selling assets and distributing proceeds to creditors. Under the IBC, liquidation is triggered when the NCLT rejects a resolution plan, the CoC decides to liquidate, or the corporate debtor contravenes the resolution plan. The distribution waterfall under Section 53 of IBC gives secured creditors priority over unsecured creditors.

A court decree ordering payment of a specific sum of money by the judgment debtor to the decree holder. In debt recovery, a money decree from a DRT can be executed by the Recovery Officer. A money decree from a civil court is executed through the execution court under Order XXI CPC. Recovery Certificate issued by DRT has the force of a money decree.

Under Section 14 of the IBC, upon admission of a CIRP petition, an automatic moratorium is imposed. During moratorium, no suits, proceedings, or enforcement actions (including SARFAESI proceedings) can be initiated or continued against the corporate debtor. The moratorium does not affect criminal proceedings against individuals. Duration: from NCLT admission order until the resolution plan is approved or liquidation is ordered.

A transfer of interest in immovable property as security for the repayment of money. The Transfer of Property Act recognises six types: simple, mortgage by conditional sale, usufructuary, English, mortgage by deposit of title deeds (equitable mortgage), and anomalous mortgage. Banks most commonly use equitable mortgage (deposit of title deeds) and English mortgage for home loans.

A company registered under the Companies Act and regulated by the RBI under the RBI Act, 1934, that provides financial services (loans, leases, investments) but is not a bank. NBFCs with assets ₹100 crore+ are entitled to use SARFAESI enforcement for secured loans. Microfinance NBFCs and Housing Finance Companies are special categories of NBFCs.

A loan or advance where interest or principal payment has been overdue for more than 90 days. NPAs are classified as Sub-Standard (up to 12 months NPA), Doubtful (12–36 months), or Loss Assets (recovery unlikely). RBI's Prudential Norms require banks to make provisions against NPAs. SARFAESI enforcement can only be initiated after an account is classified as NPA.

The mandatory 60-day demand notice that a secured creditor must issue to the borrower before initiating enforcement action under SARFAESI. The notice demands repayment of the outstanding secured debt within 60 days. If the borrower fails to repay, the secured creditor can proceed with taking possession, management takeover, or sale under Section 13(4).

A loan or advance where: (i) interest and/or instalment of principal remains overdue for more than 90 days in respect of a term loan; (ii) the account remains "out of order" for more than 90 days in respect of an overdraft/cash credit; or (iii) the bill remains overdue for more than 90 days in case of bills purchased/discounted. NPA classification is a prerequisite for SARFAESI enforcement.

Under the IBC, a person to whom an "operational debt" (arising from supply of goods, services, employment, or government dues) is owed. Operational creditors can trigger CIRP by filing under Section 9 of the IBC after issuing a 10-day demand notice. They are not members of the CoC but can attend CoC meetings without voting rights if their aggregate dues exceed 10% of total debt.

A petition filed before the DRT Recovery Officer under Section 30 of the RDDB Act challenging the execution proceedings. A borrower may file an objection if the attachment or sale is improper, the property attached is not the borrower's, or the amount claimed is incorrect. Also, a Section 17 application under SARFAESI is an objection petition to the DRT challenging the secured creditor's enforcement actions.

A negotiated settlement between a bank and a defaulting borrower where the bank agrees to accept less than the full outstanding dues in final settlement of the loan account. OTS is governed by each bank's RBI-approved OTS policy. Once an OTS is agreed and the settlement amount is paid, the bank must withdraw all civil and criminal proceedings. OTS amounts are typically 60-80% of outstanding dues, but vary based on the asset quality and negotiation.

The initial application filed by a bank or financial institution before the Debt Recovery Tribunal seeking recovery of debts above ₹20 lakhs. The DRT adjudicates the OA and if satisfied, issues a Recovery Certificate (RC) authorising the Recovery Officer to recover the amount.

The Prevention of Money Laundering Act, 2002 — the primary anti-money laundering legislation in India, enforced by the Enforcement Directorate (ED). The ED can attach properties that are "proceeds of crime" regardless of whether a criminal case is pending. Banks' NPAs involving fraud are frequently referred to the ED. Attachment under PMLA can complicate SARFAESI enforcement as PMLA attachments take priority in some circumstances.

A guarantee provided by an individual (typically a director or promoter) to repay a borrower company's loan obligations. Upon company default, the bank can proceed against the guarantor's personal assets. Under the IBC (Section 95), a financial creditor can file an insolvency application against a personal guarantor of a corporate debtor, without waiting for the CIRP of the corporate debtor to conclude.

The delivery of movable goods (shares, FDRs, gold, commodities) by a borrower (pledgor) to a lender (pledgee) as security, retaining ownership but giving possession to the lender. Upon default, the pledgee can sell the pledged goods without court intervention under Section 176 of the Indian Contract Act. More secure than hypothecation because possession is with the bank.

In DRT proceedings, when the borrower's loan is the primary account, related accounts or guarantors may be added as "proforma" parties for the purpose of the recovery proceedings. Proforma defendants are parties against whom the decree will run but who are not the primary defendant.

A written unconditional promise by one person (the maker) to pay a certain sum of money to another person (the payee) at a specified future date or on demand. Promissory notes are "negotiable instruments" under the Negotiable Instruments Act, 1881. Banks often require promissory notes for short-term credit facilities. Dishonour of a promissory note is actionable under civil law and under Section 25 of the NI Act.

The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (renamed in 2016 to include "Bankruptcy"), which established the Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs). Banks and financial institutions file Original Applications before DRTs for recovery of debts above ₹20 lakhs. The Act provides a faster alternative to civil court proceedings.

A court-appointed officer who takes possession and management of property under dispute or subject to a decree. Under Order XL CPC, courts can appoint a receiver to manage and preserve a disputed property. In DRT proceedings, a receiver may be appointed to manage secured assets pending enforcement.

An order issued by the DRT Presiding Officer in favour of a bank or financial institution directing recovery of the debt as certified. The RC has the effect of a decree of a civil court and is executed by the Recovery Officer of the DRT, who may arrest the debtor, attach and sell property, appoint a Receiver, and recover the debt by all means available under the RDDB Act.

The right of a mortgagor (borrower) to recover mortgaged property by repaying the outstanding debt. Under Section 60 of the Transfer of Property Act, 1882, the mortgagor's right to redeem is a fundamental right that cannot be extinguished except by court decree or by sale under SARFAESI. The right exists until the property is sold.

A mortgage created by a registered deed under the Registration Act, 1908. A simple mortgage (Section 58(b) TPA) requires registration. Upon default under a registered mortgage, the mortgagee files a mortgage suit in civil court or proceeds under SARFAESI if the mortgage is over the loan threshold. Registration provides priority over subsequent unregistered claims.

The minimum price set for the auction sale of secured assets by a secured creditor under SARFAESI or by the Recovery Officer under the DRT. The reserve price must be fixed based on a valuation report. If no bid is received at or above the reserve price, the auction fails and must be re-conducted.

A plan proposed by a Resolution Applicant (potential acquirer) to resolve the Corporate Debtor's insolvency under the IBC. The plan must be approved by the Committee of Creditors with 66% vote and then confirmed by the NCLT. An approved resolution plan is binding on all creditors, extinguishing claims not covered by it.

The provision under the Negotiable Instruments Act, 1881 that criminalises dishonour of a cheque for insufficiency of funds or if the amount exceeds the arrangement. Punishment: imprisonment up to 2 years, or fine up to twice the cheque amount, or both. Jurisdiction: the payee's bank branch location. Complaint must be filed within 30 days of receiving a notice of dishonour, after a 15-day demand notice to the drawer.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Allows secured creditors (banks, NBFCs, HFCs) to enforce security interests — take possession of and sell secured assets — without approaching a court, upon a borrower's default and NPA classification. The most powerful extrajudicial recovery tool in India.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The primary legislation enabling banks and NBFCs to enforce security interests without court intervention. Allows: taking possession of secured assets (Section 13(4)(a)), sale of secured assets (Section 13(4)(b)), management takeover (Section 13(4)(c)), and appointment of manager (Section 13(4)(d)).

A creditor holding a security interest over the assets of the borrower. Under SARFAESI, "secured creditor" means any bank or financial institution (including qualifying NBFCs and HFCs) that has security interest over any property. Secured creditors have priority in distribution over unsecured creditors in liquidation proceedings.

A right, title, or interest of any kind upon property created in favour of a secured creditor as a security for repayment of any financial assistance. Includes mortgage, charge, hypothecation, assignment, or any other transaction or arrangement securing payment or performance of an obligation.

A defendant's counterclaim against the plaintiff for a debt or damages, which the court may allow to reduce or extinguish the plaintiff's claim. In DRT proceedings, borrowers sometimes plead set-off of claims (e.g., for overcharged interest, wrongful actions) against the bank's recovery claim. Unlike a counter-claim, a set-off must be an existing liquidated claim.

A state-level tax on legal documents including mortgage deeds, sale deeds, and loan agreements, payable under the Indian Stamp Act, 1899 or respective State Stamp Acts. An unstamped or inadequately stamped document cannot be admitted as evidence in court proceedings. Banks must ensure proper stamping of all security documents.

The substitution of one creditor for another, allowing the substituted creditor to take over the original creditor's rights against the debtor. In banking, when an ARC purchases NPAs from a bank, it is subrogated to the bank's rights against the borrower. Similarly, if a guarantor pays the bank's dues, the guarantor is subrogated to the bank's rights against the principal borrower.

A specific type of write-off where a bank removes an NPA from its books at the branch level (for balance sheet presentation) but retains the legal right to recover the debt, which is tracked off-balance-sheet. Distinguished from a full write-off where recovery rights may be more limited. RBI guidelines permit technical write-offs subject to provisions being made. Recoveries from technically written-off accounts are recognised as income.

A legal document evidencing ownership of immovable property. In equitable mortgages, the borrower deposits the original title deeds with the bank, which creates the security interest. On SARFAESI enforcement, the bank takes possession of and eventually sells the property using the title deeds.

An examination of property records (at the Sub-Registrar's office and other government databases) to verify: (i) clear and marketable title; (ii) absence of prior encumbrances; (iii) validity of the seller's or mortgagor's ownership. Banks conduct title searches before accepting immovable property as mortgage security. A defective title can render the mortgage invalid and SARFAESI enforcement unsustainable.

A document used in trade finance (particularly for LCs) where the bank releases documents of title to the borrower to take delivery of goods, subject to the borrower holding the goods or their proceeds in trust for the bank. If the borrower sells the goods and does not remit proceeds to the bank, it constitutes criminal breach of trust (BNS S.316 / IPC S.405).

A person who has been accused of an offence and is in custody pending trial. Section 479 of the BNSS (erstwhile Section 436A of CrPC) provides for bail to undertrials who have served half the maximum period of imprisonment for the alleged offence. For cheque bounce (NI Act Section 138) accused, maximum imprisonment is 2 years, so bail under S.479 BNSS may be sought after 1 year.

A creditor who does not hold any security interest over the debtor's assets. In the priority waterfall under SARFAESI/IBC, unsecured creditors rank after secured creditors. Under the IBC liquidation waterfall (Section 53), secured creditors are paid before unsecured financial creditors, who in turn rank before operational creditors.

The process of determining the fair market value or forced sale value of a secured asset before SARFAESI enforcement. RBI guidelines require banks to obtain valuations from empanelled valuers before initiating enforcement. The reserve price for auction must be based on the lower of the two independent valuations obtained. Inflated valuations are a major cause of banking fraud — Section 340 BNS (forgery of valuable security) and IPC S.467 are applied when valuers collude with borrowers.

The process of closing down a company by liquidating its assets, paying off creditors, and distributing the surplus (if any) to shareholders. Under the Companies Act, 2013 (Sections 270–375), courts can wind up companies for various reasons including inability to pay debts. The IBC now provides an alternative insolvency-based liquidation process through the NCLT that has largely replaced winding up for insolvent companies.

The power of the Supreme Court (Article 32) and High Courts (Article 226) to issue writs — including habeas corpus, mandamus, prohibition, quo warranto, and certiorari. In debt recovery, the Supreme Court has held that writ petitions challenging SARFAESI enforcement should not be entertained when the alternative remedy of a Section 17 DRT application is available.

The accounting process by which a bank removes an NPA from its books by treating it as a loss. A write-off does not mean the bank has waived the debt — it is purely an accounting entry. The bank continues to have the legal right to recover the written-off amount. Technical write-offs are used to clean bank balance sheets while recoveries from these accounts are treated as income when received.

A borrower classified by a bank as having the ability to repay but deliberately not doing so, or having diverted/siphoned off funds. RBI's Master Circular on Wilful Defaulters prescribes strict consequences: no new credit facilities, criminal proceedings under applicable IPC/BNS provisions, and publication of names. Directors of wilful defaulter companies are debarred from being directors of other companies.

eXtensible Business Reporting Language — the electronic format mandated by the RBI and MCA for submission of financial data by banks and listed companies. In debt recovery proceedings, XBRL-filed financials of corporate borrowers serve as authentic evidence of the borrower's financial position. Courts admit XBRL-based financial statements as primary evidence of the borrower's net worth and loan utilisation.

An FIR registered at a police station that does not have territorial jurisdiction over the offence, which must then be transferred to the appropriate police station. Introduced by the BNSS 2023 (Section 173) formally, though it was directed by the Supreme Court in earlier decisions. Ensures that banking fraud complaints are registered immediately regardless of which police station a bank approaches.