CAIIB Paper 4 Module C Quiz 7

Article 39A directs the State to promote equal justice and free legal aid. The Legal Services Authorities Act operationalises legal services for eligible persons under prescribed criteria.

A sound recovery strategy maps the debt and security, limitation, applicable statutory remedy, forum jurisdiction and pending proceedings before action is taken.

The secured creditor’s remedies against a guarantor depend on the guarantee, applicable statutes and judicial principles. A demand notice does not automatically void the guarantee.

Section 14 is a statutory assistance mechanism for taking possession of secured assets. The creditor must comply with prescribed affidavit and procedural requirements.

The approved plan binds stakeholders and provides finality within the Code’s framework. The exact treatment of claims depends on the plan, statutory requirements and binding judicial interpretation.

The IBC’s preamble emphasises time-bound reorganisation/resolution, value maximisation, promotion of entrepreneurship and credit availability, and balancing stakeholder interests.

The Code defines default in relation to a debt becoming due and payable and remaining unpaid in whole or part. Whether the statutory threshold and other conditions are met must also be considered.

IBC applications are subject to the applicable minimum default threshold and other statutory conditions. The threshold should be verified against the current law and notifications.

The application depends on statutory definitions and the facts. Guarantee-related claims may raise questions of financial debt, default, limitation and the relationship between borrower and guarantor.

The section 14 moratorium generally restricts enforcement of security interests against the corporate debtor during CIRP. The IBC’s overriding provision and specific exceptions must be considered.

Classification turns on the substance of the claim and the statutory definitions, not the creditor’s label. It affects filing route and CoC rights.

Section 53 places government dues in a specified category below several prior-ranking claims, including insolvency resolution and liquidation costs and certain secured/worker claims, as set out in the waterfall.

Permanent Lok Adalats have a distinct statutory role in public utility service disputes and may decide merits in specified circumstances after conciliation fails, unlike ordinary Lok Adalats.

Eligible pending cases may be referred to Lok Adalat under the Act, including through the court’s process, to facilitate settlement.

Lok Adalats do not have jurisdiction over matters relating to offences that are not compoundable under law. Eligible civil and compoundable matters may be settled.

Section 14 permits exclusion of time spent prosecuting with due diligence and in good faith a civil proceeding against the same party in a court unable to entertain it due to jurisdictional or similar defect, subject to conditions.

Section 14 is conditional. The party must establish due diligence and good faith and that the earlier proceeding concerned the same matter and failed due to a jurisdictional or similar defect.

Section 4 provides that if the prescribed period expires when the court is closed, the proceeding may be instituted on the day the court reopens, subject to the section’s conditions.

A signed acknowledgment by a properly authorised officer may satisfy section 18, but the bank should verify authority, the content of the acknowledgment and that it predates expiry of limitation.

An acknowledgment’s scope depends on its text and surrounding circumstances. It may not necessarily cover every separate facility or liability; authority and timing are critical.