Notice u/s 13(2)-sarfaesi sent to wrong addr. physical possession taken u/s 13(4).what's the remedy?
Siva
(Querist) 20 November 2013
This query is : Resolved
Dear Experts,
A Borrower borrows an amount of Rs.10 Lacs from a Bank by mortgaging a property of his Guarantor in the yr. 2007. The Borrower repays the loan amount correctly till 2011; then after, he became Defaulter and the account becomes NPA. Later, the Borrower updates his account and paid Rs.10 Lacs till 2012 and requested the then Manager of that Bank for the OTS (One-Time Settlement) and rescheduling of the Loan. That Manager promised him to get the approval for the same from his higher-ups.
The innocent borrower trusted his speech and waited for his consent. The Borrower has sent many reminders via RPADs, e-mails and Phone Calls to the Bank's Chief Manager. But, he didn't heed or responded to any do that and simply says that he (the Bank Manager) would get back to him (Borrower), shortly. Simply, the Manager dragged this matter and later, he got transferred to some other place. This ‘delay of action’ and ‘breach of Promise’ of the Manager makes the innocent Borrower to wait for a long period and proportionally, it piled up the interest amount of the loan a/c, as well. So, who will be liable for this? Without knowing this, the Borrower called up the Manager's no. but the other guy picked up and told that he is appointed as the new Chief Manager…!
Then, the borrower narrated the whole story again and said that he's ready for OTS. The new Manager says that he'll listen to him and will do the needful. Also, the Borrower sent couple of e-mails as reminder and followed him on the phone as well. But to the surprise, the new Manager has initiated the process of Physical possession and served the notice to the Borrower and the Guarantor u/s 13(4) of SARFAESI Act. The shocked Borrower asked the Manager... why he has done so? For that, the Manager replied that he had already served the Notice of Symbolic Possession u/s 13(2) of SARFAESI and called upon the Borrower / Guarantor to close the loan a/c within 60 days. Since they failed to regularize he said that he has initiated the physical possession of the Guarantor's property.
But, the Symbolic Possession notice has not been served to the Borrower / Guarantor since the Banker has mentioned an incorrect / wrong address. However, the Borrower has paid around Rs. 13 Lacs (Rupees Thirteen Lakhs) up-to-date. So far, the Borrower had paid the Principal amount of Rs. 10 Lacs as well as the Interest amount Rs. 3 Lacs. But, the Banker says that they are not satisfying with this amount and threatening the Borrower to pay the entire amount immediately to avoid the Auction / Sale of the said mortgage property.
Above all, now, they locked up the Guarantor's property and taken physical possession when the Guarantor had gone out of station and forcibly vacating the tenants. The Guarantor is a very honest, retired Govt. Officer. Now, the Banker creates defamation to the Guarantor with their rude approach. The Guarantor asked the Bank Manager that how the Bank initiated the physical possession for a minimum amount due and too without the Order of Court / District Magistrate (DM) / CMM? Moreover, the Baker has appointed a private security to the possession property. Is this kind of possession legal or illegal because, sometimes, the Banker initiates the possession falsely?
Can the Guarantor and/or the Borrower approach the DRT or CIVIL court or Lok Adalat or any other appropriate legal forum to challenge the Banker against his possession actions since they are very genuine and honest and intend to pay-off the outstanding dues but the Banker creates defamation to them unwarrantedly?
Need some clarifications on the following queries. So, pls help out them by giving your valuable comments:
(1) I believe that the Banks and Financial Institutions are required to file their claims in DRT / DRATs in respect of alleged Debts above Rs.10 Lacs. And even if, the Debt is less than Rs. 10 Lacs, are they able to approach the DRT? Are DRTs accepting their pleas?
(2) Suppose, if their pleas were rejected, what will they do to recover the dues from the Borrowers / Guarantors? And, what they would do with SARFAESI ACT (for debt lesser than Rs.10 Lacs)?!
(3) Similarly, are the Banks & FIs (Secured Creditors) able to initiate the Physical Possession of the Guarantor's Property u/s 13(4) of SARFAESI ACT, 2002, against an outstanding loan amount of the Borrower is very meager, say Rs. 3 Lacs only, and whereas the worth / current market value of the mortgaged property is about Rs. 1 CRORE?!
(4) Can the Borrower or the Guarantor approach the “DRT” and file an appeal (Securitization Application) against the Bank or Recovery Officer u/s 17 of SARFAESI Act (even if the Debt is less than 10 Lacs) ? Is there any time-frame to file the suit? What will be the Fee for SA for amount less than Rs.10 Lacs?
(5) Else, the Borrower or Guarantor can approach the “CIVIL Court” rather than DRT since the Debt is less than 10 Lacs?
(6) I came to know that once the account becomes NPA, then the interest will not be applied and/or levied. But, the Bank has levied some PENAL / ACCRUED INTEREST of Rs. 3 Lacs (apart from outstanding loan amount of 3 Lacs) plus some legal charges for the NPA ACCOUNT, which is exaggerated and exorbitant, and harass the Borrower / Guarantor to repay the dues(Rupees Six Lacs Only) in full, immediately. Is there any way out to waive-off the exorbitant ACCRUED INTEREST, at least?
(7) Irrespective of the debt, Whether DM / CMM order is mandatory to take Physical Possession of the mortgaged property?!
What will be your advise & recommendations to the Borrower as well as the Guarantor, in this case, and how to deal further?
Summary: Borrower borrows Rs.10 Lacs as Mortgaged Loan from the Bank and repaid Rs.13 Lacs (Principal plus Interest) till date to the Secured Creditor. The Outstanding Loan Amt. is less than Rs.3 Lacs but the Accrued Interest of the NPA a/c is 3 Lacs. So, the total dues mentioned as Rs.6 Lacs by the Banker and initiated physical possession of the mortgaged property of the Guarantor under SARFAESI Act.
Furthermore, a year ago, the Banker has sent to the Symbolic Possession u/s 13(2) to the Borrower / Guarantor and the parties gave representation u/s 13(3A) to the Bank by raising some mistakes done by the Lender. Further, the Banker has sent Physical possession notice u/s 13(4) and at that time, the Parties paid a fair amount (almost the principal amount of the loan) and make the notices “NULL & VOID”. Later, they asked for the OTS & tenure extension. The then Manager of the Bank agreed to do so but there is no proper response for about a year and, the parties were in faith of getting OTS. But, without serving notices properly to the parties, the Banker has now taken Physical Possession, saying that they had sent notices afresh and the parties didn’t act upon to that.
But this time, the Symbolic Possession notice u/s 13(2) has not been served to the Borrower / Guarantor properly since the Banker has mentioned an “incorrect / wrong correspondence addresses”. Also, they are saying that they had sent to the mortgaged property address where only the tenants are living in that mortgaged property but the Borrower / Guarantor lives in some other address and they already given that living address as correspondence address but the Banker didn’t sent the Notice to the correspondence address which makes the Borrower / Guarantor non-receipt of the Symbolic Possession Notice. So, the Borrower / Guarantor unable to give objection to that notice u/s 13(3A). This shows that the Banker didn’t give time to the Borrower & Guarantor to give their representation, and tactfully, cunningly invoked the Physical Possession u/s 13(4) in the intension of selling the property. Now, the Banker locked up the Guarantor's property when the Guarantor had gone out of station and also forcibly vacating the tenants? If asked the tenants about the notice, they are saying that they were not aware of those notices and the postman didn’t tell anything about the notices. I believe it is not the tenant’s or postman’s job to notify the party as they may not aware the subject but it is the Ban
ker’s duty to serve proper notices. My view is that both the recent notices were NULL & VOID. Isn’t it? But, how come the Banker has taken the PHYSICAL POSSESSION? Can the Parties sue the Banker and give police complaint against Banker for trespassing the Mortgaged Property? Whether the Parties to approach the DRT or CIVIL Court in this matter? What is your suggestion and how to deal with this matter, further?!
What will be the remedy for this matter? Pls advise. Also, kindly answer for the above said Queries.
Thanks a lot…!
Nadeem Qureshi
(Expert) 20 November 2013
file an appeal before DRT against the bank and attach all the documents regarding deposit the payment.
apart from this you can file a consumer court case against bank for deficiency of service & illegal act before consumer court or file a civil suit against the bank for suit for damage of reputation or loss as the case may be.
Feel Free to Call
ajay sethi
(Expert) 20 November 2013
you have stated that amount due and payable as per bank is Rs 6 lakhs . what is value of mortgaged property . ?if value of mortgaged property is more better pay outstanding loan amount . since bank has sufficient security to cover the loan amount it would be reluctant to settle for lesser amount .
in case debt amount is less than Rs 10 lakhs recovery proceedings will lie in court s not DRT
Rajendra K Goyal
(Expert) 20 November 2013
The primary duty to repay any loan lies with the borrower and if Bank does not reschedule the loan it does not entitle the borrower to stop repayment. Nothing has prevented him to repay as per his offered repayment even if his proposal was pending. Borrower has written agreement to repay the loan.
If the Banker has mentioned incorrect address in SERFEASI notice intentionally, the matter should be taken accordingly. Matter need to be reported to higher authorities also. If it was as per recorded address it was OK.
The borrower has paid 13 lacs , what was total liability it should have been more than doubled. What about overdue and penal interest if any. As per agreement it was also to be paid and was liability.
Bankers are legally authorized to take action as per SARFAESI Act and take physical possession of the mortgaged property (of guarantor in this case.) The Guarantor is equally liable to repay the loan and interest and legally can recover from borrower afterwards.
Banks does not book interest on the NPA accounts but it does not mean that Bank will never recover this pending interest. On NPA accounts Bank applies interest when it is recovered.
The amount is small, better pay the same and get the property of the guarantor released.
R.K Nanda
(Expert) 20 November 2013
query too long to reply.
K.K.Ganguly
(Expert) 20 November 2013
1. This is the longest query I have seen so far.
2. You have wronng information. The Bank can not file Original Application under Section 19 of Recovery of Debts Due to Banks & Financial Instition Act,1993 for recovery of the outstanding amount from the Borrower if the outstanding is less than Rs.10 Lakhs. SARFAESI Proceeding can be initiated on any outstanding amount above rs.1 Lakh,
3. In your case the Bank can initiate SARFAESI Proceedings with the outstanding of Rs.6 Lakhs under SARFAESI Act,2002,
4. Bank is not bound to reply or accept your OTS proposal & you can not blame them for that,
5. If the Notice u/s13(2) of the Act has wrong address of the Borrower then how the Borrower has sent the representation?
6. However, if the said representation has not been replied, you have a chance to get a stay order on further SARFAESI Proceeding,
7. If the property is sold at an amount more than the outstanding amount, then the Borrower will be paid back the residual amount after adjusting the legal & other charges & expenses,
8.File a Sarfaesi Application (S.A.) under Section 17 of SARFAESI Act,2002 within 45 days from the date the Bank has taken measures under Section 13(4) of the Act.
9. It is a specialised area. Engage an Advocate having expertise in this field.
V R SHROFF
(Expert) 20 November 2013
Query too long; better consult in person to your nearby lawyer.
Siva
(Querist) 20 November 2013
At the outset, thanks for those who replied back and give their valuable suggestions.
Those who unable to read or don't have time or patience, kindly refrain from replying back. No issues.
Again now, am sending the same subject matter by summarizing as follows:
Kindly read the content carefully & answer:
A Borrower (my Brother) borrows Rs.10 Lacs as Mortgaged Loan from the Bank and repaid Rs.13 Lacs (Principal plus Interest) till date to the Secured Creditor. The Outstanding Loan Amt. is less than Rs.3 Lacs but the Accrued Interest of the NPA a/c is 3 Lacs. So currently, the total dues mentioned as Rs.6 Lacs by the Banker and initiated physical possession of the mortgaged property of the Guarantor under SARFAESI Act.
Furthermore, a year ago, the Banker has sent to the Symbolic Possession u/s 13(2) to the Borrower / Guarantor and the parties gave representation u/s 13(3A) to the Bank by raising some mistakes done by the Lender / Banker. Further, the Banker has sent Physical possession notice u/s 13(4) and at that time, the Parties paid a fair amount (almost the principal amount of the loan) and make the notices “NULL & VOID”. Later, they asked for the OTS & tenure extension. The then Manager of the Bank agreed to do so but there is no proper response for about a year and, the parties were in faith of getting OTS. However, started repaying some amount genuinely. But now, without serving notices properly to the parties, the Banker has now taken Physical Possession, saying that they had sent notices afresh and the parties didn’t act upon to that.
But this time, the new Symbolic Possession notice u/s 13(2) has not been served to the Borrower / Guarantor properly since the Banker has mentioned an “incorrect / wrong correspondence addresses”. Also, they are saying that they had sent to the mortgaged property address where only the tenants are living in that mortgaged property but the Borrower / Guarantor lives in some other address and they already given their living address as correspondence address(mentioning Change of Address) but the Banker didn’t sent the Notice to the correspondence address which makes the Borrower / Guarantor non-receipt of the Symbolic Possession Notice. So, the Borrower / Guarantor unable to give objection / representation to that notice u/s 13(3A) or to act upon that notice. This shows that the Banker didn’t give time to the Borrower & Guarantor to give their representation, and tactfully, cunningly invoked the Physical Possession u/s 13(4) in the intension of selling the property and published in the News Papers, too. Now, the Banker locked up the Guarantor's property when the Guarantor had gone out of station and also forcibly vacating the tenants? If asked the tenants about the notice, they are saying that they were not aware of those notices and the postman didn’t tell anything about the notices. I believe it is not the tenant’s or postman’s job to notify the party as they may not aware the subject but it is the Banker’s sole duty to serve proper notices.
My view is that both the recent notices were NULL & VOID as they didn't post to the Correct address and/or didn't given time to act upon that notice served. But, how come the Banker has taken the PHYSICAL POSSESSION? Thus, the Banker creates defamation to the Guarantor / Borrower with their rude approach. Can the Parties sue the Banker and give police complaint against Banker for trespassing the Mortgaged Property? Whether the Parties to approach the DRT or CIVIL Court in this matter? Can the Borrower right to break the lock which was put illegally by the Banker and enter into the property? Because, they didn't get the DM / CMM order till now. Will there be any legal implications by doing so? Or, can the parties take photo / video of the locked property and handover the same to Policemen and take action against the Banker for their illegal act?
However, now the Party (Borrower) started paying the dues to the Bank and updates the account. Recently, the Borrower paid around Rs. 2 Lacs (Rupees Two Lacs) towards his Loan A/C in the span of one week time and asked the Bank to restore the possession. But, the Banker did not oblige to restore the physical possession or to revoke the legal actions and not soft to the Borrower. HERE, MY QUESTION IS WHETHER THE SERVED DEMAND NOTICES 13(4) / RULE (8), ETC., BECOMES “NULL & VOID” SINCE THE BORROWER STARTED PAYING THE OUTSTANDING AMOUNT AND UPDATES THE ACCOUNT? IF SO, HAS THE BANKER TO INITIATE THE SARFAESI ACT AFRESH BY SENDING THE DEMAND NOTICE U/S 13(2) AGAIN AND GIVES 60 DAYS MORE AS IN THE SAID ACT? OR, THEY CAN PROCEED WITH THE EARLIER NOTICES? IF THE BANKER IS NOT SENDING THE NOTICE U/S 13(2) AFRESH, CAN THE BORROWER SUE THE BANKER AND COMPEL THEM TO RESEND THE NOTICE U/S 13(2)? IN THIS CASE, WHETHER THE BORROWER HAS TO APPROACH DRT OR CIVIL COURT?
Siva
(Querist) 20 November 2013
Dear K.K Ganguly Sir,
At the outset, thanks a lot for your reply. I kindly request you to read the content carefully and answer back.
5. If the Notice u/s13(2) of the Act has wrong address of the Borrower then how the Borrower has sent the representation?
Ans. to ur Query is as follows:
A year ago, the Banker has sent the Symbolic Possession u/s 13(2) to the Borrower / Guarantor and the parties gave representation u/s 13(3A) to the Bank by raising some mistakes done by the Lender / Banker. Further, the Banker has sent Physical possession notice u/s 13(4) and at that time, the Parties paid a fair amount (almost the principal amount of the loan) and make the notices “NULL & VOID”. Later, they asked for the OTS & tenure extension. The then Manager of the Bank agreed to do so but there is no proper response for about a year and, the parties were in faith of getting OTS. However, started repaying some amount genuinely. But now, without serving notices properly to the parties, the Banker has now taken Physical Possession, saying that they had sent notices afresh and the parties didn’t act upon to that.
But this time, the "(new) Symbolic Possession notice" u/s 13(2) has not been served to the Borrower / Guarantor properly since the Banker has mentioned an “incorrect / wrong correspondence addresses” of the Borrower. Also, they are saying that they had sent to the mortgaged property address where only the tenants are living in that mortgaged property but the Borrower / Guarantor lives in some other address and they already given their living address as correspondence address to the bank(mentioning Change of Address) but the Banker didn’t sent the Notice to the correspondence address which makes the Borrower / Guarantor non-receipt of the Symbolic Possession Notice. So, the Borrower / Guarantor unable to give objection / representation to that notice u/s 13(3A) or to act upon that notice. This shows that the Banker didn’t give time to the Borrower & Guarantor to give their representation, and tactfully, cunningly invoked the Physical Possession u/s 13(4) in the intension of selling the property and published in the News Papers, too. Now, the Banker locked up the Guarantor's property when the Guarantor had gone out of station and also forcibly vacating the tenants? If asked the tenants about the notice, they are saying that they were not aware of those notices and the postman didn’t tell anything about the notices. I believe it is not the tenant’s or postman’s job to notify the party as they may not aware the subject but it is the Banker’s sole duty to serve proper notices.
However, now the Party (Borrower) started paying the dues to the Bank and updates the account. Recently, the Borrower paid around Rs. 2 Lacs (Rupees Two Lacs) towards his Loan A/C in the span of one week time and asked the Bank to restore the possession. But, the Banker did not oblige to restore the physical possession or to revoke the legal actions and not soft to the Borrower. HERE, MY QUESTION IS WHETHER THE SERVED DEMAND NOTICES 13(4) / RULE (8), ETC., BECOMES “NULL & VOID” SINCE THE BORROWER STARTED PAYING THE OUTSTANDING AMOUNT AND UPDATES THE ACCOUNT? IF SO, HAS THE BANKER TO INITIATE THE SARFAESI ACT AFRESH BY SENDING THE DEMAND NOTICE U/S 13(2) AGAIN AND GIVES 60 DAYS MORE AS IN THE SAID ACT? OR, THEY CAN PROCEED WITH THE EARLIER NOTICES? IF THE BANKER IS NOT SENDING THE NOTICE U/S 13(2) AFRESH, CAN THE BORROWER SUE THE BANKER AND COMPEL THEM TO RESEND THE NOTICE U/S 13(2)? IN THIS CASE, WHETHER THE BORROWER HAS TO APPROACH DRT OR CIVIL COURT?
Thanks in advance.
malipeddi jaggarao
(Expert) 21 November 2013
Dear Mr.Siva
You have not revealed vital information and posted a long query and asking the honourable experts refrain to reply.
1. You have not given the date of sanction of loan.
2. You have not given the details of purported mistakes committed by the Bank enlisted in your reply to their notice for symbolic possession.
3. Who has made the notices "null and void"? It is your view only.
4. Is there any written assurance from the Bank that they would consider your OTS proposal?
5. What do you mean by paying "genuinely"?
6. On one hand you say that the property mortgaged is that of guarantor's and on the other hand you say that the notices for symbolic possession are sent to the address of the mortgaged property. Do you mean to say that notices to both borrower and guarantor are sent to the address of mortgaged property?
7. Your view that notices are "Null and void" is your own view. Mere pasting of notice on the premises of the property is treated as notice served legally on the property owner as per the SARFAESI Act.
The vital points missed in this longest query is:
1. The Loan is sanctioned to the borrower looking into his repayment capacity and the capacity of the guarantor in case of failure by the borrower. You have not mentioned anything about the repayment capacity of the borrower. OTS will be entertained if there is decrease in earning/repayment capacity of the principal borrower that too only if the means of guarantor is not sufficient to discharge the debt obligation. While you have not revealed anything about the borrower, the guarantor is having repayment capacity. When initially a notice is served on him, it is his duty to impress upon the borrower to stick to the repayment schedule and bring the account in order. The then Manager might have made false promises only to get instant part-recovery from you. Since you are having good analytical mind, you should have insisted at that time to give assurance in writing, but it appears there no such written commitment.
SARFAESI Act empowers the financial institution to recover the debts by selling away the mortgaged property by following certain procedures as enlisted in the act like serving notices etc., without approaching the courts for decree. As regards your query about charging/not charging interest in NPA accounts, it is the internal matter of the Bank and this is as per the guidelines of RBI that the interest booked is not recovered in 90 days no further booking of interest directly in the account should be implemented as such bookings will effect showing the increased profit of the bank and in reality unless it is recovered, it is not to be treated as profit. The borrower/guarantor can not take a plea that since interest is not directly booked in the account it need not be paid.
In this present case, summarizing the facts given by you, we can not comment on the reasons for failure of making repayment by the borrower as there is no hint in the entire query. But certainly the guarantor failed in his duty to see that the debt is repaid in time. As his property is mortgaged to the Bank, it has initiated action in accordance with the powers conferred on it under SARFAESI Act. As regards not serving notice on the changed addresses etc., are trivial matters and pasting of notice on the mortgaged property itself can be treated as sufficient notice.
Normally courts can not interfere in the recovery process of the financial institutions under SARFAESI Act as long as, prima facie the actions of the FIs are not in violation of the said act.
You do not have no recourse to file defamation suit or seeking police assistance in the given case. It is better to pay-off the entire debt and release the guarantor from the mental agony. The agony is not created by the creditor but by the borrower.
If any one wishes to act too smart the opposite party will also reciprocate in the same way.
If you really require any remission in the liability, let the guarantor meet the higher authorities of the Bank and represent them his difficulties in the process and request for remission. But not in the way of drawing battle lines with the Bank. You have no case to fight a legal battle in the present one.
No more replies from my side on this query.
Siva
(Querist) 21 November 2013
Dear Mr. Jaggarao,
At the outset, Thanks for your reply.
But, I doubt you read the content correctly.Anyways, will answer your queries raised:
1. You have not given the date of sanction of loan.
Ans: It was clearly mentioned that the loan has been availed by Yr. 2007 and the loan amount was Rs. 10 Lacs.
2. You have not given the details of purported mistakes committed by the Bank enlisted in your reply to their notice for symbolic possession.
Ans: The interest amount has been calculated wrongly and the amount paid by the borrower was not updated in the a/c.
3. Who has made the notices "null and void"? It is your view only.
Ans: Yes, it is my view only. Since I'm not a legal expert, I understand from one of an advocate that once the amount get into the a/c, then the a/c will be regularized and automatically the notices will be "NULL & VOID".
4. Is there any written assurance from the Bank that they would consider your OTS proposal?
Ans: NO. But the Borrower (my cousin-brother) asked the then Manager for written asurance via RPAD but no repose from him. Later, manager called up and told that it is in the process.
5. What do you mean by paying "genuinely"?
Ans: The Borrower has paid more than the Principal amount of Rs. 10 Lacs that he borrowed (i.e.) he has paid Rs.13 Lacs till date (as Principal + Interest). He asked some waiver in the compound interest only due to some financial crunch (as he lost his job and job-less now).
6. On one hand you say that the property mortgaged is that of guarantor's and on the other hand you say that the notices for symbolic possession are sent to the address of the mortgaged property. Do you mean to say that notices to both borrower and guarantor are sent to the address of mortgaged property?
Ans: Both the Borrower & Guarantor lives in two different cities and the mortgaged property is in another place (which is far away from their places). Only the tenants are there in the mortgaged property. So, there is no demand notice u/s 13(2) has been pasted or sent to the Borrower & the Guarantor. However, in the mean time, both the Borrower & the Bank Manager are regularly in touch with one another via e-mail (in friendly manner) and phone and discussing about the OTS. But, there is no information has been shared to the Borrower regarding Symbolic Possession Notice u/s 13(2) and cautioned him. But suddenly, one day gave an e-mail that the Banker had taken physical possession of the property u/s 13(4).
When the Borrower asked the bank Manager about for not serving the notice u/s 13(2), the manager replied back that they had already sent but it got returned. (Actually, they sent to a wrong address where is not recorded in Borrower's a/c database). So, the shocked borrower asked why they didn't sent the notices to the correct updated address or even sent an e-mail or phone or SMS to the details that already furnished in the KYC form (the same are reflecting in the on-line a/c profile details). But there is no proper reply from the Banker until now and saying that they might not aware of those details. This is absolutely ridiculous.
If any mode of communication failed, then pasting in the property is correct. Anyone can accept it. Suppose, If they pasted the symbolic possession notice, then the tenant surely will give an alarm to the Guarantor / Borrower. But that also not done by the Banker instead they are bluffing. This shows their cunning plans and tactful move towards selling the hot property.
I believe their ultimate intention to sell the property but not to pacify the matter or to help out the Customers. I heard from my real-estate friends that now-a-days, some Bank officials are acting as agents for Real-Estate people for commission and get a good property to them for a cheaper amount. Moreover, they might get incentives from the Employer as well, for closing a loan a/c. So they are inhumane to the Borrowers. This is the kind of service some are rendering in the Bank (but not all).
However, the Borrower (now job-less) and the Guarantor (retired Govt. Official) approached the higher-ups of the Bank but there is no fruitful solution as outcome. They are totally broken now. That's why to safeguard the property and to render my service (like you) to the innocent Borrower / Guarantor, I seeks help of this public forum.
So, any experts feel that it is a too long query, I asked only them to refrain to post me back. Others are most welcome...! Also, am getting valuable suggestion from them. THANKS ALL...!!
Biswanath Roy
(Expert) 21 November 2013
As a Senior Advocate of 57 years practice in the different High Courts in India my opinion is as follows:-
1.SARFAESI ACT stands as unconstitutional and I challenged this Act before the Hon'ble High Court at Calcutta which is pending.
2. In another case I challenged legality of a notice u/s.13[2] of the said Act before the said Hon'ble Court and the Hon'ble court granted injunction.
3. As it transpires from your statement of facts Bank acted illegally and also illegally took possession over the property of the guarantor which can be challenged before the High Court for appropriate relief and redress.
Biswanath Roy
(Expert) 21 November 2013
As a Senior Advocate of 57 years practice in the different High Courts in India my opinion is as follows:-
1.SARFAESI ACT stands as unconstitutional and I challenged this Act before the Hon'ble High Court at Calcutta which is pending.
2. In another case I challenged legality of a notice u/s.13[2] of the said Act before the said Hon'ble Court and the Hon'ble court granted injunction.
3. As it transpires from your statement of facts Bank acted illegally and also illegally took possession over the property of the guarantor which can be challenged before the High Court for appropriate relief and redress.
K.K.Ganguly
(Expert) 21 November 2013
1. By sending the Demand Notice u/s13(2) of the Act, the Bank has demanded from you payment of the full outstanding amount of your account which has become NPA,
2. Since you have paid part of it you can claim that the balance amount shown in the accounts statement of the Bank has changed from the amount mentioned in the demand Notice for which the validity of the Demand notice has gone for a toss. The Bank will answer by saying that your part refund has been kept in a no lien account or they will say that it is a Bank with core Banking system wherein any body can deposit money from any branch located anywhere which can not be stopped. DRTs Presiding Officers are accepting this logic now a days. So, you will not get the benifit from this logic,
3. There is nothing called symbolic possession notice as per the Act. Demand Notice is u/s13(2), Possession Notice is as per section 13(4) and Application to DM for police help to take physical possession is made under section 14 of the SARFAESI Act,2002,
4. In most cases the occupier refuses to give possession to the Bank so they call it symbolic possession & take physical possession through police help after applying to the DM u/s14 of the Act. In your case they have taken the possession without police help which they can do,
5.If you have sent trpresentaion u/s13(3-A) of the Act with in 60 days from the date of receipt of the Demand Notice u/s13(2) of the Act and if the same has not been replied by the Bank then they have violated the provision of the Act for which you can demand setting aside the subsequent Possession Notice isued by the Bank u/s13(4) of the Act,
6. You shall have to file the Application u/s 17 of the Act within 45 days from the date of the bank's taking measures u/s 13(4) of the Act. Here, measures means both issuing the possession notice and also the subsequent Sale Notice. So, if you have already crossed 45 days from the date of the Possession Notice, wait for their sale Notice, a copy of which will be served upon you either manually or by post, will be pasted on the wall of the mortgaged property & photograph takien thereof and also the said notice will be publised in two news papers one being vernacular,
7. If it is with in the said period of 45 days, file the application immediately,
8.Civil Court has no jurisdiction to hear the matter which is dealt with by the Bank as per SARFAESI Act,2002 & DRT is the only forum to knock the door by any party aggrieved by the measures taken by the Bank u/s13(4) of the Act. Latest Judgement of the Apex Court dated 30.10.2013 has cleared the matter conclusively.
Vijyant Nigam (09807349001)
(Expert) 22 November 2013
I also challenged legality of a notice u/s.13[2] as well as 13[4] of the SARFAESI Act before the DRT Court AT Lucknow and the Hon'ble court granted injunction.
Modes of recovery by a bank:
Bank can initiate proceedings under SARFAESI Act for dues of Rs.1,00,000/- or above.
Bank can file Original Application before DRT for recovery only if the dues are of Rs.10 Lakhs or above.
If Bank wishes to recover dues below Rs.10 Lakhs through recovery case then Bank has to file Suit for recovery before Civil Court.
rest of your query can be resolved by some lawyer if you talk him personally...
Vijyant Nigam (09807349001)
(Expert) 22 November 2013
Bank can take action as well as possession of porperty under the SARFAESI Act if dues are of Rs.1 Lakhs or above.
appeal against possession under section 13(4) taken by bank can only be challenged before DRT under SARFAESI Act within 45 days from the date of possession. other courts are barred for taking cognizance...
Biswanath Roy
(Expert) 22 November 2013
Dear Mr. Shiva,
You have already bungle up your case. To make physical possession a nullity you shall have to rush to court immediately to file a case against the Banker by adopting a strategic legal action.
RAJU O.F.,
(Expert) 22 November 2013
The Notice u/S.13(2) issued by the bank was not notice for symbolic possession; it was Demand Notice directing to repay entire dues within 60 days. If the borrower or the mortgager can prove that he did not receive any Demand Notice, then all further proceedings in pursuance to tyhe said Notice would be invalid. But bank can also publish the Demand Notice in two local dailies of vide circulation AND affixed the said Notice on the mortgage property and the borrowers place, (if Notice could not be served) then it would be treated as sufficient serve of Demand Notice.
If the due amount is more than Rs1 lakh and also more than 20% of the total loan amount and interest accrued, then bank/FI can initiate SARFAESI proceedings; not more than Rs.10 lakhs. Remedy is only before jurisdiction DRT; hence not in civil court or lok-adalath. Borrower or mortgager can file appeal u/S.17 of the Act before DRT within 45 days from the date of Possession Notice/Sale Notice. Delays may not be condoned. Please meet an expert lawyer practicing in the jurisdiction DRT immediately.
Siva
(Querist) 22 November 2013
Thanks Mr. Roy, Mr. Nigam and Mr. Raju for your reply to my query.
It is damn sure that the Borrower / Guarantor didn't receive the said demand notice and it was not published in the newspapers as well. But, the Banker telling that they had sent demand notices already (where they sent to incorrect address and not to the updated address). Also, they are bluffing that they had pasted the demand notice on the compound wall. Even that was done by them. Because, if they do so, the tenants living in that property or neighbors may alerted the Borrower / Guarantor (as they are living in separate city, which is 300 kms. away from the said mortgaged property).
Two months later, the possession notice is received by the borrower in his updated address. Then how come the Banker missed out to issue the demand notice in the same address?! So, how to deal this is the issue.
(i) However, how come the Banker can prove that they had affixed the demand notice in the property, if they really pasted it?!
(ii) And, how the Borrower can nullify that, if really the said notice was not pasted?!
Biswanath Roy
(Expert) 23 November 2013
Go to the root of this case first are you really a defaulter as defined in the notice u/s13[2] of the SARFAESI ACT MORE PARTICULARLY WHEN YOU MADE PART PAYMENT? Secondly you test the maintainability of the notice u/s.13[4] of the Act and thirdly, you test the liability of the guarantor considering the present demand of the Banker and as to the terms of the Guarantee Deed. Besides, you also think whether or not Sec.13[2] of the Act is ultra virus according to different decisions laid down in different judgements in Indian ,English, and Federal Courts.
Vijyant Nigam (09807349001)
(Expert) 26 November 2013
SARFAESI Act has granted (inherent) powers to bank.
they have taken (symbolic) possession.
though it is illegal but the bank could sale your property also by taking undue advantage of SARFAESI Act without asking from you or any court.
you have only remedy to file appeal/application under section 17 before DRT of your concerned area to restrain the bank.
seriously try to understand the actual position of your matter.
Siva
(Querist) 28 November 2013
Mr. Vijyant, thanks for your replies.
Dear Law Experts,
All these problems arose to my cousin. So, to help him, I posted the matter in our forum. Thanks all... for your wonderful tips.
Now, my cousin started paying his dues and he almost paid 90% of the outstanding amount and further, he's not willing to approach Court or DRT. He has to pay Rs. 6 Lakhs (outstanding + interest amt) as per the demand notice of SARFAESI. But (even after taken possession by the banker), he had paid around Rs. 5 Lakhs out of Rs. 6 Lakhs, so far. Now, the outstanding is just 1 Lakh only. But, the Balance amount in the Loan account remains unchanged (it shows Rs. 6 Lakhs). Besides, the amount paid by the Borrower is getting reflected in the Account statement. This is strange, isn't it? Also, the Borrower asked the Banker to update his a/c and the Banker replied him that they will do. But, they didn't update yet! So, in this case, how it will be dealt and what is your opinion?!
1) Either, the Borrower to approach DRT even if the outstanding is Rs. 1 Lakh?
2) Or, Will the Banker act according to SARFAESI ACT, even if the outstanding is less than or equal to Rs. 1 Lakh? Will the SARFAESI Act supports this? Or, will they have to approach Lok-Adalat or Civil court, if there is any delay from the borrower?
The Borrower has paid 5 Lakhs out of 6 Lakhs (outstanding)and that too in a month's time (within 30 days). So, he asked the Banker for some 2 month times to pay that remaining 1 lakh by explaining his inability. But, the Baker didn't accept his offer; instead, they torture him to pay-off his entire dues (including that pending amt Rs. 1 lakh) immediately.
However, I guess he has his time to approach DRT since the time-frame (45 days from possession) has not been elapsed, yet? But, is there any way around to solve his issues without approaching DRT (since the outstanding amt is Rs. 1 Lac only, as of now)? Or, to approach DRT is the only solution?
Vijyant Nigam (09807349001)
(Expert) 28 November 2013
This is called:
"Back to Square One"
for further clarifications from Experts... please follow the previous opinions thoroughly...
Thank you
K.K.Ganguly
(Expert) 28 November 2013
1. Actually after the account becomes NPA and Demand Notice u/s13(2) of the Act is issued asking to pay the outstanding dues in full, no amount can be credited into his NPA account & such amount paid should be kept in no lien account,
2. Now due to core Banking system anybody can deposit any amount in the said account from any Branch of the Bank.The programmed software of the Bank will not alter the NPA amount but will reflct the deposit. It is not strange. It has been programmed that way,
3. Since it is only for Rs.1 lakh noe left to be paid, the Bank should take linient view. Talk to the Bank & pay off the dues before Sale Notice is issued by the Bank,
4. I will suggest your cousin to file an application before the DRT also because now a days, land/realestate mafia influence the decisions of the Bank. Your approaching DRT will insulate you from any adverse action from the Bank, if any.
Siva
(Querist) 29 November 2013
Dear Ganguly Sir,
Thanks a bunch for your immediate reply, with care. We will proceed as per your advise.
Regards,
Siva
Siva
(Querist) 04 December 2013
Is that been legally correct to take possession of the mortgaged property by the Banker u/s 13(4) when that the said property is locked up since the landlord (Guarantor) has gone out of station and even without getting a DM Order or proper intimation to the landlord?! If so, how to deal this?!
K.K.Ganguly
(Expert) 04 December 2013
1. The Bank is entitled to take physical possession of the mortgaged property but no occupier hands over peaceful possession of the property for which they take symbolic possession & proceed to take DM's permission for taking over physical possession with the help of police,
2. In your case, the possession of the property has been taken without any resistance & I am sure that they have made list of inventory they have got in the house. Has the occupier lodged a FIR after coming back and taking note of the list of the inventory prepared by the Bank stating that there was Rs.10 Lakhs in cash & ornaments worth Rs.40 Lakhs which has not been mentioned in the list of inventory? These are important points to deal with before the DRT. Criminal case will start against the Bank officials if you can prove the said loss,
3. Normally in Kolkata, under such circumstances, the Bank break open the lock duly putting their pad lock on the door with seal & finally inform the local police station about its taking possession of the vacant property & locking the same.
Siva
(Querist) 05 December 2013
Thanks for the tips, Mr. Ganguly Sir.
RAJU O.F.,
(Expert) 19 December 2013
Prefer an Appeal u/S17 as advised earlier, in DRT, if not yet filed. Agitate all your grievances before DRT and convince the Judge that the measures taken by bank were wrong and illegal. You may get remedy.
