Notices to Obligor and Discharge of Obligation of Such Obligor in Asset Reconstruction Company

Here are some notes on Notices to Obligor and Discharge of Obligation of Such Obligor in Asset Reconstruction Company (ARC) with MCQs and answers:

What are the notices that an ARC can issue to an obligor?

The notices that an ARC can issue to an obligor are as follows:

  • Notice of demand: This is a notice that is issued by the ARC to the obligor demanding payment of the outstanding debt.
  • Notice of intention to take possession: This is a notice that is issued by the ARC to the obligor informing them of its intention to take possession of the secured assets.
  • Notice of sale of secured assets: This is a notice that is issued by the ARC to the obligor informing them that the secured assets will be sold if the outstanding debt is not paid.
  • Notice of discharge of obligation: This is a notice that is issued by the ARC to the obligor informing them that their obligation has been discharged.

What is the effect of a notice of demand?

The effect of a notice of demand is that the obligor is legally required to pay the outstanding debt. If the obligor does not pay the outstanding debt, the ARC may take further action, such as taking possession of the secured assets or selling the secured assets.

What is the effect of a notice of intention to take possession?

The effect of a notice of intention to take possession is that the ARC is entitled to take possession of the secured assets. Once the ARC has taken possession of the secured assets, it may sell them to recover the outstanding debt.

What is the effect of a notice of sale of secured assets?

The effect of a notice of sale of secured assets is that the ARC will sell the secured assets to recover the outstanding debt. The obligor will be entitled to any surplus proceeds from the sale of the secured assets.

What is the effect of a notice of discharge of obligation?

The effect of a notice of discharge of obligation is that the obligor’s obligation to the ARC is extinguished. This means that the obligor is no longer legally required to pay the outstanding debt.

MCQs on Notices to Obligor and Discharge of Obligation of Such Obligor in Asset Reconstruction Company (ARC)

  1. Which of the following notices is not issued by an ARC to an obligor?
    • Notice of demand
    • Notice of intention to take possession
    • Notice of sale of secured assets
    • Notice of discharge of obligation
    • Notice of default
    • The correct answer is (d). Notice of default is not issued by an ARC to an obligor.
  2. What is the effect of a notice of demand?
    • The obligor is legally required to pay the outstanding debt.
    • The ARC is entitled to take possession of the secured assets.
    • The ARC may sell the secured assets to recover the outstanding debt.
    • All of the above.
    • The correct answer is (a). The effect of a notice of demand is that the obligor is legally required to pay the outstanding debt.
  3. What is the effect of a notice of intention to take possession?
    • The ARC is entitled to take possession of the secured assets.
    • The obligor is no longer legally required to pay the outstanding debt.
    • The ARC may sell the secured assets to recover the outstanding debt.
    • All of the above.
    • The correct answer is (a). The effect of a notice of intention to take possession is that the ARC is entitled to take possession of the secured assets.