Section 25 of RDDB Act : Section 25: Modes Of Recovery Of Debts

Explanation using Example

Imagine a scenario where a business, ABC Pvt. Ltd., has defaulted on a loan provided by XYZ Bank. The bank files an application for the recovery of debt with the Debt Recovery Tribunal (DRT). After proceedings, the DRT issues a recovery certificate against ABC Pvt. Ltd. for the outstanding debt amount.

The Recovery Officer, upon receiving this certificate, initiates action to recover the debt. He first attempts to attach and auction the company's factory land, a piece of immovable property, to recover part of the funds. However, the sale proceeds are insufficient to cover the entire debt.

Next, the Recovery Officer takes over a warehouse under the company's name, which was pledged as a security interest, and appoints a receiver to manage and eventually sell the property. The sale of the warehouse covers the remaining debt, and the recovery process is completed successfully.