Question 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 Days30 Days15 Days90 Days

View 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).

Question 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:

?1 Crore?50 Lakh?10 Lakh?20 Lakh

View Explanation

The pecuniary jurisdiction of DRTs applies to cases where the debt due to any bank or financial institution is ?20 Lakh or above.

Question 3

Lok Adalats can handle bank recovery cases where the amount involved is up to:

?1 Crore?10 Lakh?20 Lakh?50 Lakh

View 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.

Question 4

What is the limitation period for filing a suit for the enforcement of a Mortgage (Foreclosure or Sale of mortgaged property)?

12 Years30 YearsNo Limitation3 Years

View 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.

Question 5

Lok Adalats have jurisdiction to settle banking disputes where the amount involved is:

Up to ?50 LakhAny amountUp to ?10 LakhUp to ?20 Lakh

View Explanation

For bank recovery cases, the monetary ceiling for Lok Adalat jurisdiction is ?20 Lakh . Cases above this limit usually go to DRT.

Question 6

An "Acknowledgment of Debt" (AOD) in writing obtained from the borrower before the expiry of the limitation period:

Extends the limitation period by another fresh term (e.g., 3 years) from the date of AOD.Makes the debt time-barred.Reduces the limitation period.Has no effect on limitation.

View 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.

Question 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 Days30 Days60 Days45 Days

View 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.

Question 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 loan amount exceeds ?1 Crore.Only if the High Court permits.No, only final orders.

View 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.

Question 9

The limitation period for filing a suit on a Demand Promissory Note (DP Note) is:

No limitation.3 years from the date of demand.3 years from the date of the note.12 years from the date of the note.

View 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).

Question 10

For matters falling under the jurisdiction of the Debt Recovery Tribunal (DRT), the jurisdiction of Civil Courts is:

Available concurrently.Available only for appeals.Available if the amount is disputed.Barred (Excluded).

View 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.

Question 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 District Magistrate.The Recovery Officer attached to the DRT.The Bank Manager.

View 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.

Question 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.

View 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.

Question 13

Under the SARFAESI Act, can a bank enforce security interest on "Hypothecated" goods without court intervention?

No, hypothecation is not a security interest.Yes, provided the goods are in the possession of the borrower.Yes, but only if the goods are surrendered voluntarily.No, only mortgaged property is covered.

View 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.

Question 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?

30 Days15 Days90 Days60 Days

View 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.

JAIIB Quiz

Quiz Finished!