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Legal ReviewATTACHMENT PROCEEDINGS FOR NEGOTIABLE INSTRUMENTS

February 24, 20150

The attachment proceeding for negotiable instruments is a specific enforcement proceeding without judgment. It is necessary for a creditor to have a negotiable instrument in order to apply this proceeding. The limited numbers of negotiable instruments are indicated in the Code of Commerce which is promissory note, bill of exchange and cheque. It should be noted that creditor could not operate this way through claiming that he has a commercial paper or bill ( as debenture bond, negotiable paper) different than promissory note, cheque or bill of exchange. At the time creditor requests to issue enforcement proceedings (written or orally) the procedure will be started. After that, the procedure continues with finalization of payment order, attachment, and forced sale by auction and apportion of money. In this bulletin, we are going to examine the objection opportunities of debtor against payment order and its consequences.

In an attachment proceedings for negotiable instrument debtor can object to payment order in 5 days after it has been served to him. The debtor may object the signature or debt amount to the enforcement court where at the enforcement office takes place.

However, this objection only stops the sale of attached goods/properties. If debtor wants to prevent the sale of goods or money to be paid to the debtor by the enforcement office, he may claim temporarily the enforcement proceeding to be stopped from the enforcement court.

Additionally, if the necessary conditions exist and also the judge is convinced of these conditions the judge may also decide to stop the proceeding temporarily as ex officio. Since, that judgment is an injunction; it is not possible to appeal against it. After that judgment, the court should also decide on merits of the objection. In this case the enforcement court has to conduct a hearing for the objection related to the payment order.

If the enforcement court refuses the objection of the debtor, the creditor could continue enforcement proceedings before reasoned decision. That decision is a definite judgment therefore the debtor’s rights to take a negative declaratory action or restitution action against that judgment are reserved.

If the court accepts the objection of the debtor, the execution proceeding will stop. After the reasoned decision delivered the enforcement proceeding is cancelled. Moreover, if the amount of subject matter exceeds the appeal limitation then it could be appealed against the judgement.

A) Objection Against Signature

It is when the debtor denies the signature on the negotiable instrument subjected to the enforcement proceeding. Objection to the signature should be done explicitly in five (5) days to the enforcement court through a petition after a payment order has been served.

Otherwise the signature presented at the negotiable instrument would be accepted as it belongs to the debtor. The objections like; “I have not had a debt”, “I did not give any commercial paper” or “the commercial paper or bills are fraudulent” are not same with objecting of the signature. In addition, the 12th Civil Chamber of the Courts of Appeal decided in the same way in its decision which states “The debtor’s objection is not denying the signature. It is an objection where the debtor stated that he was not the company’s authorized person. The said objection has a characteristic of the objection to the debt…” (1998/4574 E. 1998/4971 K. Dated 5.5.1998).

The enforcement court conducts a hearing for deciding on an objection against signature. In that type of case, deciding through just examining documents is against law. The court invites the creditor, the debtor and an attorney of the debtor to the hearing.

The debtor should be present at the first hearing; if he is absent and does not make an excuse, the court refuse the objection without making any other examination. Besides that, the court imposes him to a penalty which equal to %10 of the debt amount.

However, if a payment of order is served to the debtor in a place outside of the judicial district of the enforcement office which operates the enforcement proceeding, he does not need to attend the hearing. Instead, his attorney can attend the hearing on behalf of him. Moreover, in this case, both debtor and his attorney do not attend the hearing and the hearing would take place in the absence of the debtor. Following that the court gives an instruction to a court which takes place where the debtor lives in order to the debtor to be listened. Additionally, if both sides do not attend the hearing or an attorney of the creditor denotes that they are not going to pursue lawsuit at the hearing, the court file would be cancelled in accordance with the 409th article of the Code of Civil Procedure.

In the case, the objection is accepted, and if the creditor is malicious or he has a gross negligence, he is imposed to pay not less than 20% of the debt as compensation; and imposed to pay amount of money equal to 10% of debt as a pecuniary penalty. After that, the pecuniary penalty is suspended if the creditor can take an action in courts and if a creditor wins that case the penalty is cancelled.

If the objection has been rejected the debtor is imposed to pay amount of money not less than 40% of debt as a disaffirmation compensation and imposed to pay amount of money equal to 10% of debt as a pecuniary penalty. After that, if a debtor takes a negative declaratory or restitution action the pecuniary penalty is suspended until the end of lawsuit. Moreover, in the case the debtor wins this action, the penalty is cancelled. If the enforcement court refused the objection of the signature, it could be appealed against it.

B) Objection against Debt

All the rejection of debtor except the objection against signature, are the objection of the debt. A debtor could claim that there is no debt or it has already paid off or it has suspended; or he could reject the debt, since an expiration of its time limit or it has bartered. Moreover, interest rate and competence of the enforcement office could be a reason for the objection.

The judge of the enforcement court invites both sides to the hearing in thirteen (30) days for examining the file. If a creditor or his attorney does not attend the hearing, the court would decide to stop enforcement proceeding temporarily for the objected debt amount. After that decision, if the creditor wants to continue the proceedings, he should prove at the enforcement court that the signature situated on the commercial bill or paper is not his.

If the creditor proves this, the court should decide to the enforcement proceeding to be continued. In order to the said decision to be given, a notice indicating that effect should be written on the invitation which has been sent to the creditor. If the debtor does not attend the hearing and the creditor requests that the hearing should be continued then the judge could examine the objection in the absence of the debtor. On the other hand, if both side do not attend the hearing or if the creditor attends and does not want to examination of the objection, the court file would be cancelled. However, the judge decides about the objection related to the enforcement office’s competence.

C) Objection against the enforcement office’s competence

An objection against the enforcement office’s competence can be made solely, or with an objection against debt. However, if the debtor only objects to the competence, he could not object to anything else. Moreover, the debtor has to indicate the competent enforcement office in his petition.

If the indicated debt enforcement office is not the competent one; the enforcement court would reject the objection without examining the competent enforcement office. The court decides on this objection, even the parties do not attend the hearing.

D) Objection related to claims that there is no debt or it has already paid off or it has suspended

The debtor could only prove that there is no debt, it has already paid off or it has suspended through an official document or a document on which there is a signature of the creditor. Moreover, the signature has to be admitted by the creditor.

As the negotiable instrument is a gratuitous or accommodation bill or guaranteed bill or against the agreement or forged could be reasons for objecting a debt. Nevertheless, if a debtor did not have capacity to act at the time of issuing a bill or renounces his inheritance rights, the objection can be based on these reasons as well.

In the case the debt has been already paid, bartered or there is a release of debt, the debtor could object to the debt as it has already paid off. Moreover, if the creditor gives time to a debtor for paying a debt, debtor could claim that the debt has been suspended. As we mentioned above, these kinds of objections can only be proved by official documents like; a document certified by notary public, a receipt taken from a notary or the place of payment, a court order, a remittance letter, a letter of bank remittance or a document sealed and certified according to the 297th article of the Civil Procedure Law.

Moreover, the debtor could prove his claim through a document where the signature has been admitted by a creditor or writings on a commercial bill or paper. However the debtor could not prove that claim through witness or oath.

E) Objection of expiration of time limit

The debtor could object to an expiration of time limit according to the due date, on a commercial bill or paper. Therefore, he could prove that situation through using the date written down on the bill. Moreover, even if a debtor did not object to an expiration of time limit in the enforcement office, he could object to that in the first hearing of the enforcement court.

After that, the court considers that issue through taking into account the date stated on the bill. However, if a creditor claims that an expiration of limit has stopped, he should prove that by an official document or a document on which there is a signature of the creditor. Additionally, that signature has to be admitted by the creditor.

In the case, the enforcement court accepts the objection, the enforcement proceedings would stop. And after a final decision, the proceedings will be cancelled. If the creditor is malicious or he has a gross negligence, he would be imposed to pay amount of money not less than 20% of debt as compensation; but if the proceeding has been stopped temporarily, then through the demand of the debtor the creditor is imposed to pay amount of money not less than 40% of the debt.

On the other hand, in the case the debtor takes restitution or negative declaratory action, the collection of compensation is suspended until these lawsuits are concluded. Additionally, if the creditor wins the action of debt at the court, he could not continue to the enforcement proceeding after that judgment. Thus, a creditor could operate an enforcement proceeding with the judgment.

In the case the enforcement court reject the objection of the debtor; if the court has stopped the proceeding temporarily before then it may impose the debtor to pay amount of money not less than 40% of debt as compensation if the creditor demanded it. Also it should be noted that the enforcement court may also impose the litigation cost on the debtor.

F) OBJECTION OF THE SIGNATURE AND THE DEBT

The debtor could object to a debt and signature within 5 days to the enforcement court through a petition. Also the debtor can declare other consistent reasons in his petition. Thus, the enforcement court firstly examines objections which are not related the substance of the debt before objection of the signature.

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