Vijay (Management Consultant) 09 September 2015

Applicability of sarfesi procedure for floor under bps/brs

Respected Experts,

We availed loan-against-property (LAP) from a private bank with approved plan comprising of 3 floors.

With the loan proceeds we constructed another floor (4th floor) and have applied for Building Regularization Scheme (BRS/BPS) with the city municipal corporation and is still pending for final clearence.

Due to overall failure of the project, we are unable to settle the loan with the bank. Bank has initiated SARFESI proceedings and even served symbolic possession notice recently. Under these circumstances, please help to clarify whether the bank can auction the 4th floor which is not yet having approved plan.

Thanks for your expert advise.

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3 Replies

SIVARAMAPRASAD KAPPAGANTU (Retired Manager) 10 September 2015

A floor constructed above the mortgaged property in an unauthorised manner is a moot point. Bank has the right under the SEFASI act to sell the property under their mortgage. May be the buyer may ask for the approval at which stage, the issue of your applying for it and present pending status will come to picture. If the buyer is OK with it, the sale can be effected by the Bank, if Municipal Corporation otherwise will not object.

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Biswanath Roy (Advocate) 11 September 2015

The Bank can sale the entire mortgaged property.

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T. Kalaiselvan, Advocate (Advocate) 18 September 2015

There is no question ofconstruction of third or fourth floor. The only question is about default in repayment hence bank has initiated recovery action through sarfaesi act. You have to challenge the same by filing an appeal before DRT.