Physical possession - null and void after updating the loan a/c? can the possession be restored ?!
Siva
(Querist) 20 November 2013
This query is : Resolved
Dear Law Experts,
Pls answer the following Query:
A year ago, the Banker has sent the Symbolic Possession u/s 13(2) to the Borrower / Guarantor (Parties) 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, actually, 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/Guarantor. 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 intention of selling the property and published in the News Papers, too, about the physical possession. 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. Isn't it?!
My view is that both the recent notices (Symbolic & Physical) 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 (Banker) 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 / regularize the loan 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 / INSIST 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.
Advocate M.Bhadra
(Expert) 20 November 2013
You should file an application u/sec.17(1) of the SARFEASI ACT in the DRT,not Civil Court.
17. Right to appeal.--(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application along with such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken.
Section 34 of the said Act deals with the ouster of the jurisdiction of the Civil Court, the same being relevant is reproduced below:
“Civil Court not to have jurisdiction.-- No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted to any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 (51 of 1993).”
Rajendra K Goyal
(Expert) 21 November 2013
Repeated, already asked in the following query:
http://www.lawyersclubindia.com/experts/Notice-u-s-13-2-sarfaesi-sent-to-wrong-addr-physical-possession-taken-u-s-13-4-what-s-the-remedy--435706.asp#.Uo2R3-KLq_I
ajay sethi
(Expert) 21 November 2013
repeated query no reply
Siva
(Querist) 21 November 2013
Thanks, Mr. Bhadra, for your kind reply.
Others:
The content has been emphasized with more new points. So, it won't be a repeated one. Kindly read the paragraphs added (last para) and answer, if you you any suggestions. Else, kindly refrain from posting back. Thanks!
T. Kalaiselvan, Advocate
(Expert) 21 November 2013
If the borrower started paying the amount?, 13(4)(8) states that 'If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset'. So once the entire amount has been settled what is the necessity for the bankers to send a notice u/s 13(2) once again? What is your question?, 13(4) begins 'In case the borrower fails to discharge his liability in full within the period specified in sub-section2, the secured creditor may take recourse to one or more of the measures mentioned to recover his secured debt' So where is the question of part payment in NPA? Please be specific in your query.
Siva
(Querist) 22 November 2013
Dear Mr. Kalaiselvan,
Thanks for your reply.
Here, it seems that the secured creditor has not mentioned any specific time in the possession notice u/s 13(4). Usually, what's the time-frame to issue a sale notice by the Banker (after taking physical possession), in case, borrower didn't approach the DRT within 45 days of possn. notice issuance ? Can you pls let me know.
One of the Expert Mr. K.K.Ganguly has mentioned as below in the earlier post:
"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."
By taking his point, I would like get some clarification for the following query:
Since the Borrower has paid part payment and the balance amt has been changed from the outstanding amount mentioned in the possession notice, then how the notice will be treated? It will go for toss. Isn't it? Or else, it will be applicable only to Demand Notice u/s 13(2) and not for Possession notice u/s 13(4)? In case, if the Borrower didn't come to know about the Demand Notice served u/s 13(2) (as the Banker sent to incorrect address) but later, got the possession notice u/s 13(4) in the correct address, how the borrower should react to the secured creditor? Pls clarify.
Siva
(Querist) 22 November 2013
Dear Mr. Kalaiselvan,
Thanks for your reply.
Here, it seems that the secured creditor has not mentioned any specific time in the possession notice u/s 13(4). Usually, what's the time-frame to issue a sale notice by the Banker (after taking physical possession), in case, borrower didn't approach the DRT within 45 days of possn. notice issuance ? Can you pls let me know.
One of the Expert Mr. K.K.Ganguly has mentioned as below in the earlier post:
"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."
By taking his point, I would like get some clarification for the following query:
Since the Borrower has paid part payment and the balance amt has been changed from the outstanding amount mentioned in the possession notice, then how the notice will be treated? It will go for toss. Isn't it? Or else, it will be applicable only to Demand Notice u/s 13(2) and not for Possession notice u/s 13(4)? In case, if the Borrower didn't come to know about the Demand Notice served u/s 13(2) (as the Banker sent to incorrect address) but later, got the possession notice u/s 13(4) in the correct address, how the borrower should react to the secured creditor? Pls clarify.
K.K.Ganguly
(Expert) 22 November 2013
1. You have selectively quoted what I have mentioned in the same paragraph,
2. I had also mentioned therein that if you give the above argument, the Bank may either say that the said amount has been kept in No Lien Account or that their's being a CBS complied Branch, any body can deposit any amount to his/her account from any other Branch on which they have no control & now a days the Presiding Officers of DRTs are buying the said argument of the Defending Bank,
3. I wonder why the whole paragraph was not mentioned.
K.K.Ganguly
(Expert) 22 November 2013
1. You have selectively quoted what I have mentioned in the same paragraph,
2. I had also mentioned therein that if you give the above argument, the Bank may either say that the said amount has been kept in No Lien Account or that their's being a CBS complied Branch, any body can deposit any amount to his/her account from any other Branch on which they have no control & now a days the Presiding Officers of DRTs are buying the said argument of the Defending Bank,
3. I wonder why the whole paragraph was not mentioned.
Siva
(Querist) 22 November 2013
Dear Mr. Ganguly sir,
Thanks for your reply.
Here, the query raises about "part payment in NPA" by Mr. Kalai sir. So, taking that point I mentioned that statement and more specific on that. But am not coming to the other posint that "Bank may either say that the said amount has been kept in No Lien Account or that their's being a CBS complied Branch.....".
Here, my question is "suppose if they didn't say that the said amount has been kept in No Lien Account or that their's being a CBS complied Branch....and takes the said amount into the account and change the balance amount, what will be the scenario then?
Since the Borrower has paid part payment and the balance amt has been changed from the outstanding amount mentioned in the possession notice, then how the notice will be treated? It will go for toss or not?
Or else, the part payment adjustments will be done only to Demand Notice u/s 13(2) and not for Possession notice u/s 13(4)?! In case, if the Borrower didn't come to know about the Demand Notice served u/s 13(2) (as the Banker sent to incorrect address) but later, got the possession notice u/s 13(4) in the correct address, how the borrower should react to the secured creditor? Pls clarify.
Ms.Nirmala P.Rao
(Expert) 23 November 2013
You can file a Civil Suit for Mandatory injunction commanding the bank to restore your possession and also give due credit to the loan amount to the extent it's re-paid; you can even even file a Writ in the State High court directing the
bank if it's a public sector bank- to restore your possession and also give credit to the extent of loan amount being repaid.The Bank can't arbitrarily act and violate principles of natural justice or Audi alterem partem by not serving due notice to you before dispossessing you etc. If you wish to thank me for this reply please click the thank you button on my profile.
Advocate M.Bhadra
(Expert) 23 November 2013
One judgment in brief may please note:
Madras High Court
M/S.State Bank Of India vs Minor Krithaanyaa on 16 August, 2011
Dated 16.08.2011
The Honourable Mr.Justice R.SUBBIAH
Civil Miscellaneous Appeal No.3005 of 2010
and M.P.No.1 of 2010
M/s.State Bank of India
Vadavalli Branch,
Coimbatore,
Now at State Bank of India,
Stressed Assets Management Branch. ..Appellant
..vs..
Minor Krithaanyaa
rep.by its mother/guardian
G.Rekha ..Respondent
"A reading of the above judgments would show that the proceedings under section 17 of the SARFAESI Act are in lieu of the civil suit which remedy is ordinarily available, but for the bar under section 34 of the SARFAESI Act. In the instant case, the main contention of the respondent is that minor's interest is involved in the suit properties and, therefore, they sought for an order of injunction against the appellant bank since the 8th defendant bank is taking steps for the sale of the entire suit properties under the SARFAESI Act. Per contra, it is the submission of the learned senior counsel for the respondent that the relief sought for by the minor is a remedy under common law and therefore, bar under section 34 will not apply.
In my considered opinion, though the relief sought for by the minor in the suit is for partition of the suit properties, the Debts Recovery Tribunal can decide the issue as to, whether the minor's interest is involved in suit properties or not ? and in the event of the Debts Recovery Tribunal coming to the conclusion that the minor's share over the mortgaged properties is affected, it could grant appropriate relief to the respondent so far as her share is concerned with regard to the SARFAESI proceedings. Under such circumstances, in my considered opinion, the civil court has no jurisdiction to grant an order of injunction as against the appellant bank, that too, after the bank had initiated action under the provisions of SARFAESI Act. Only when the action of secured creditor is fraudulent or the claim of the secured creditor is so absurd, the civil court can have a jurisdiction to grant a relief as against the secured creditor. But, in the instant case, there is no such allegation as against the appellant bank.
Therefore, I am not inclined to accept the submissions made by the learned senior counsel for the respondent in this regard. Under such circumstances, the order dated 09.08.2010 passed by the trial court is liable to be set aside and, accordingly, the same is hereby set aside. In the result, the civil miscellaneous appeal is allowed. No costs. Consequently, connected M.P.is closed."
