NPA Classification & Restructuring

A bank’s entire power to seize property under the SARFAESI Act hinges on one strict prerequisite: a legally valid Non-Performing Asset (NPA) classification. If the initial NPA declaration is legally flawed, every subsequent recovery action—from demand notices to physical eviction—is invalid.

Banks frequently rush this classification, miscalculating interest and blatantly violating mandatory Reserve Bank of India (RBI) directives to aggressively target commercial borrowers. At Khokher Advocates, we make the NPA classification our first line of attack, scrutinizing bank ledgers against RBI Master Circulars to halt the recovery process before it destroys a business.

Challenging Arbitrary NPA Declarations

We conduct rigorous legal audits of bank statements to expose fatal errors in the NPA timeline, challenging the bank’s actions before the DRT when they:

• Violate the 90-Day Rule: Declaring an account an NPA prematurely or manipulating the date of default to trigger SARFAESI action.

• Inflate Debt with Illegal Charges: Capitalizing penal interest (charging interest on penal interest) or failing to account for credits and payments already made by the borrower.

• Ignore Policy Moratoriums: Unlawfully downgrading accounts during state or central government moratorium periods or industry-specific relief windows.

MSME Defense & Mandatory Restructuring

Uttarakhand has a massive manufacturing and MSME sector across hubs like SIDCUL, Pantnagar, and Kashipur. Banks routinely bypass the statutory protections afforded to these industries.

• Enforcing RBI Frameworks: We challenge banks that refuse to consider mandatory restructuring proposals under the RBI’s Revival and Rehabilitation of MSMEs framework.

• Breach of Sanctions: We litigate against financial institutions that arbitrarily withdraw from signed debt restructuring agreements or unlawfully freeze sanctioned working capital limits, choking the industry’s cash flow.

One-Time Settlement (OTS) Litigation

When a borrower attempts to settle the debt cleanly, banks often act arbitrarily, favoring certain accounts over others. We intervene to enforce fairness:

• Arbitrary Rejections: Filing DRT applications or High Court writ petitions when a bank rejects a valid OTS proposal despite the borrower meeting all of the bank’s own published policy criteria.

• Protecting Part-Payments: Defending borrowers when a bank attempts to unlawfully cancel an ongoing settlement and revive the entire debt after significant upfront payments have already been absorbed.

Pre-Emptive High Court Stays

Once a major corporate account is tagged as an NPA, the company’s CIBIL score is ruined, and all working capital is frozen, effectively killing the business. Where genuine disputes exist—such as the bank failing to release promised funds—we do not wait for the bank to act. We invoke the writ jurisdiction of the High Court of Uttarakhand to proactively restrain the bank from downgrading the account, keeping the business operational.