Section 37 : Rights of person obtaining collateral or deposit

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1) In case a credit has been obtained by pledging any property as collateral and the debtor fails to repay the credit or interest thereon, if any, within the prescribed period, the person who has taken the collateral may initiate action according to law and realise the amount to be realised in consideration of that credit by selling or auctioning the collateral according to current market price or transfer the title to such collateral subject to the law in case it can not be sold or auctioned.

2) In case the property kept as collateral is sold at a price lesser than the amount to be realised from the debtor by the person who has the collateral under sub-section (1), the shortfall may be recovered from other assets of the debtors. In case the collateral is sold at a price higher than the amount to be recovered, the excess amount shall be refunded to the debtors.

3) Notwithstanding anything contained in sub-sections (1) and (2), in case the property kept as collateral has not yet been sold or the title to it has not yet been transferred, the person who has pledged the property as collateral may clear his property by repaying the credit and interest thereon and any other amount payable at any time.

Provided that the person pledging the property as collateral shall also bear the additional liability emerging on the property kept as collateral owing to his failure to repay the amount within the stipulated period.

4) In case anyone has been entrusted with the responsibility of performing any work by obtaining any property as a deposit, and the concerned person fails to complete the concerned work or the concerned work fails to be completed within the stipulated period, the property kept as a deposit may be used to complete the work or to recover the expenses incurred thereupon. In case the work can not be completed with the property kept as a deposit, the amount in shortfall may be recovered from the other assets of the person who has furnished the deposit.

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Section 37 : Rights of person obtaining collateral or deposit

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