The step-wise procedure to be followed in Civil Recovery proceedings, in all eligible NPA accounts:
1: Preparation of plaint - It should be ensured that the Plaint is made in the manner and as per legal requirements, it contains material facts, documents etc. Once the Bank files a Plaint, it will be known as a Plaintiff.
2: Remittance of court fees & filing the plaint - Court fee is calculated as per the Court Fees Act of each State. Court Fees Act prescribes the Court Fee depending on the subject matter of the litigation.
3: To complete process of service upon the Defendant/Defendants - The Court allots a serial number to the case once the case is filed, with a prefix indicating the type of the case, (Like "O.S" for "Original Suit"). The judge directs that a notice be issued to the Defendant/Defendants and also designates the next date. The Court then issues a "notice" to the Defendant/Defendants informing him that the Plaintiff has filed a case against him and instructing him to appear in the Court personally/through a lawyer on the appointed date.
4: Preliminary hearing - On the preliminary hearing when the Defendant/Defendants appears before the Court, then time is given to him to file the written statement, and next date of hearing is fixed for the Defendant/Defendants to file the written statement. Usually, a period of 30 days is allowed to the Defendant/Defendants. However, requests for grant of more time by the Defendant/Defendants are generally granted up to 30 days subject to a maximum of 90 days.
5: Filing written statement by the Defendant/Defendants - When the Defendant/Defendants files his written statement in the Court, he/they would deny all the assertions in the Plaint and compel the Plaintiff to prove every claim. This is also another way to prolong the outcome of the case, which may not be in favour of the Defendant/Defendants if the Plaintiff happens to have a bonafide case.
6: Framing of issues - A list of disputed questions of fact and law are called issues framed by the court which the Plaintiff has to prove through evidence. The points mentioned by the Plaintiff in his plaint, which is not expressly disputed by the Defendant/Defendants, need not be proved.
7: Defendant/Defendants (both borrower as well as guarantors) take steps to dispose of most of their assets (including hypothecated assets)
The following steps should be taken immediately after the suit is filed;
(a) Appointment of interim receiver and application for a temporary injunction
(b) Interim attachment or injunction and interim sale.
8: Evidence After the Issues are framed, the case is then posted for evidence -
(a) Filing documents & leading Evidence - The evidence of the Plaintiff is first taken for consideration. Next, other witness/witnesses, if any, on behalf of the Plaintiff are examined, and such witness/witnesses can also step into the witness/witnesses box to narrate the facts to the judge. This is called "leading evidence". All the witness/witnesses of the Plaintiff will be cross-examined by the Defendant/Defendants (i.e. by the Defendant/Defendants lawyer).
(b) Evidence by the Defendant/Defendants - After the case of the Plaintiff is closed, the evidence on behalf of the Defendant/Defendants are taken up. The Defendant/Defendants is allowed to file any documents from his side, and these are also marked as records of the case. The witness/witnesses on behalf of the Defendant/Defendants are cross-examined by the Plaintiff (i.e. by the Plaintiff's lawyer). After the evidence of both sides is completed, the case is adjourned for final arguments.
(c) Closing Arguments - Since the judge may not be able to read and assimilate lengthy documents covering evidence on both sides, but he is accustomed for the quick perception of what is stated in the arguments. Documents are not read during the proceedings, and they have to be studied leisurely by the Judge, after court hours.
9: Pronouncement of Judgment & Passing of Decree: After the conclusion of arguments, the judge may reserve his Judgment to be pronounced on a later date or may deliver the same immediately as said earlier. Both parties may apply to the Court for a copy of the Judgment, and it is provided to them on their application.
10: Execution of the Decree - The party in whose favour the Decree is passed is called the decree-holder. The other party is called the Judgment Debtor. The Judgment debtor has to implement the Court's decree. If he fails to implement, the decree-holder can file an execution petition in the Court. When a decree has been obtained by the Bank in its favour in the suit filed against the borrower and the guarantor, prompt steps should be taken for execution of such decree for recovery of the Bank’s dues.
11: Filing of Appeal - Where the suit is decreed in favour of either of the party, the aggrieved party may prefer an appeal, if there are valid grounds of law and/or facts to prefer an appeal. The Court, immediately higher in the hierarchy to the Court which passed the final judgment, is the Court to which an appeal will be filed. The appeal has to be filed within 30 days from the date of the decree.
12: Execution of Money Decree - Even if the Judgment debtor files an appeal against the Bank before the Appellate Court challenging the money decree passed by the lower Court in Bank’s favour, the Bank should nevertheless proceed to apply for the execution of the decree passed by the lower Court notwithstanding the pendency of such an appeal unless a stay order or injunction order is granted by the Appellate Court restraining the Bank from executing the decree.
The process as above appears very simple, but in real life, the litigation is dragged for several months and even years. This is not only on account of the delaying tactics adopted by the Defendant/Defendants but also due to an enormous backlog of litigations piled up and pending in civil courts.