SARFAESI ACT illegal?
Querist :
Anonymous
(Querist) 13 January 2011
This query is : Resolved
Banks take possession of the mortgaged property, and auction the same without any court process. It is true that DRT is a forum where the affected party can file a case. If the affected party is not filing any case in DRT, the bank will proceed in their auctioning without any court order. Any body challenged the legality of the SARFAESI ACT?
Y V Vishweshwar Rao
(Expert) 13 January 2011
Independent(other court procedure)Rights for Recovery their /Banks loans- powers are conferred on the Banks under the said Act and procedure is prescribed for any action under the Act - any person having grievance can approach the DRT to get it declared as illegal ! The said powers are also under sec 29 of the SFC Act ! There are Mortgage Deeds with a right to mortgage to sell the property in default of repayment of Mortgage due ! Under all these proceedings if thee is nay irregularity / or/ illegality the same can be declared as illegal by DRT- SRFAESI Act / HC-SFC Act /Civil Court- for Mortgage Deed with conditional Sale .
Uma parameswaran
(Expert) 13 January 2011
If there is any irregularities in serving notice ,value of the property, auction proceedings ,terms and conditions then you can challenge the auction. The pecuniary jurisdiction of DRT is 10 lakhs.If the loan amount is 10 lakhs or more you can approach DRT.
N.K.Assumi
(Expert) 13 January 2011
Yes, agreed with Uma, no doubt extensive power is given to the financial institutions under the act, but there are certain mandatory procedure to be complied with by the bank and if those are not complied with you can challenge the action of the bank.
abhishek
(Expert) 13 January 2011
No, the legality of an act cannot be challenged unless it is inconsist with the Art 13 of the Constitution. and any order can be challenged in case, if there is any irregularities made by the bank with the procedure laid down under this act i.e. in serving notice ,value of the property, auction proceedings ,terms and conditions etc.
Querist :
Anonymous
(Querist) 13 January 2011
So, it is very clear, that the affected party should approach the DRT only for stay of the auction.
So, it is very clear the bank need not get any permission from the court or even from DRT before the auctioning.
Numerous cases are pending before the DRT stating that the bank had taken possession of the third party. The bank which extends loan without properly perusing the papers, tries to safe its interest, by auctioning the property.
I personally saw a case in DRT. A property was sold by forging the signature of the real owner. The bank extended loan and taken possession in default. Now the original owner comes before the DRT and begs for stay and restoring the possession. But, the DRT had said that forgery has to be proved in the civil or criminal court only. The DRT can not stop the auction.
DRT is not a civil court to decided the third parties rights over the property, which is being auctioned.
So, under the circumstances, the SARFAESI act is a lethal weapon given to the Banks, which is being misused in many at least some cases.
So, I say the SARFAESI act is illegal and has to be challenged.
Y V Vishweshwar Rao
(Expert) 13 January 2011
The Mortgage itself is illegal , you have to challenge the mortgage and get it declared as illegal and not enforceable!
Querist :
Anonymous
(Querist) 14 January 2011
But, which is the right forum to challenge.
The auction is over. DRT is not having powers in civil matters. Bank had exceeded their powers.
So, I say the SARFAESI act is illegal and has to be challenged.
Y V Vishweshwar Rao
(Expert) 14 January 2011
You can approach the Civil Court to declare your title and possession -injunction against the auction purchaser and Bank and alleged Mortgagor.
Amit Minocha
(Expert) 14 January 2011
agree with Mr Y V V Rao
