Sarfaesi act
Ajay
(Querist) 27 February 2019
This query is : Resolved
Dear experts,
I am one of the partners in a business of 5 partners. I was never really involved in the business, but the other partners cheated the civil supplies department and the bank and our business property was declared as NPA. Our house( owned by myself and another partner) was also a security for the business. The bank had given us the option of a one time settlement by reducing the amount owed, but due to differences with the partners, we didn't make use of this settlement. Now the property of the main business is sold off by the bank for 7 crores. The total amount owed is 7.7 crores. The bank is now planning to auction my house as well as it was another security.
My question: If the house is sold for an excess amount than owed to the bank, would they give the excess amount to the joint owners of the property or would they give this excess amount among all the 5 partners of the business? I would like to clarify that this house is already a part of a civil property dispute going on in a family court.
Also, if they give the excess amount to the joint owners of the house- how would they divide this excess amount among the 2 partners?
Suhail suhail
(Expert) 27 February 2019
If the property in question is in adjudication before the court of law it cannot be auctioned, the bank has either to approach to the court and apply for impleadment as a party and seek protection of its rights or wait until the matter is decided..
However if the auction amount is higher than the amount of demand then the difference amount shall be returned to original owner/s . You can submit application before the bank against a receipt for that purpose and notify them not to disburse the amount to any other other partners for the property being your personal asset.
Dr J C Vashista
(Expert) 28 February 2019
Surplus amount shall go to titleholder of the house.
Consult and engage a local prudent lawyer for better appreciation of facts, guidance and proceeding.
Ajay
(Querist) 28 February 2019
Dear experts,
Thank you for your response and my heartfelt gratitude for it. Here is an update on our situation and hope to get your learned counsel.
When I mentioned the total amount owed is 7.7 crores- out of this 6 crores is owed to the bank and 1.7 crores to civil supplies ( the amount my managing partner in the business cheated the civil supplies department for).
A little background, now when we found that my partner took stock from civil supplies, we had written a letter to civil supplies that we are not responsible for this amount and that our partner intends to defraud the government and requested them to take back the stock, but the civil supplies didn't take any action.
When they realized that my partner sold all the government stock, they issued a notice to all the partners that they intend to attach our properties from the family suit to get this amount(1.7 crores)
As a result, I got a stay on this notice from a single bench judge in the high court to stop the civil supplies from touching our joint property as I clearly informed them I am not responsible for the government stock. Now the government filed a case to vacate this stay.
Recently, when the bank performed the online auction and got an amount of 7 crores for it, the civil supplies asked a division bench to first transfer their amount(1.7 crores) and they also mentioned about the stay order on their previous request from a single bench judge and that they filed to vacate that stay, but they didn't mention that it was the other partners who brought this stay and not the managing partner.
The division bench made the managing partner ( the one who cheated the government) as a party. He responded saying there is indeed a stay on the civil supplies initial notice and that they want to vacate it. So he said their amount should be transferred to them and that other partners mismanaged the business. Very cleverly, he didn't mention in this response that it was the other partners who bought this stay against the civil supplies notice and not him.
Now I am assuming the judge thought it was the managing partner who bought this stay against the civil supplies and since he is asking to pay the civil supplies first, so ordered the bank to pay the civil supplies amount first by ignoring the stay and then auction my house to get their rest of the money. The bank told me if I can get a stay against this order by going to the single bench judge who issued the inital stay against the civil supplies, then they will not auction my house. They are okay as long as the amount is within the bank.
I want the civil supplies to get their due amount. I am not against that, but it has to come from my managing partner who cheated them and we already gave a notice to the civil supplies about it, but they didn't take action.
My Question: Can I approach the single bench judge to get a stay against the order by the division bench judge? I believe the division bench judge clearly didn't understand that the initial stay was brought by us and not the managing partner. An attorney I checked with mentioned as the division bench judge gave an order, the previous stay by a single bench judge is assumed to be vacated and I should now approach supreme court for a stay. Could the experts please weigh in on my situation and thank you for your patience in reading so far and any suggestions you can offer.
KISHAN DUTT KALASKAR
(Expert) 01 March 2019
Dear Sir,
The excess amount will be kept in abeyance or it will act as per the orders of Civil Court. You may file an application in the pending suit to direct the bankers to deposit the amount in the Court and later file another application to withdraw your undisputed share amount.
Please mark “LIKE” if satisfied by my answer.
Ajay
(Querist) 04 March 2019
Thank you experts for your responses so far. I would like your opinion on whether I can approach a single bench judge to get a stay order against the order by the division bench judge?
Suhail suhail
(Expert) 04 March 2019
No. If the judgment is passed by division bench you can appeal in supreme court
