Noc from society

Ananyaa Nair (Querist) 14 August 2024 This query is : Resolved
A flat owner in our society wants to mortgage his flat for business loan approx 30 crores. The property value is around 1 crore. The bank is asking for NoC from society.
He claims to have mortgaged other 3 properties as well which are elsewhere. The bank request letter only mentions to provide an noc for this flat.
What precautions should the society take while issuing such noc

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A society is seeking advice on issuing a No Objection Certificate (NOC) for a flat owner wishing to mortgage their property for a substantial business loan. The bank requires an NOC, and the owner has provided a specific format. The discussion highlights that societies are not liable for the owner's debts and should only provide information within their knowledge, such as confirming no outstanding dues. Societies are advised not to be dictated by bank formats for NOCs and can refuse to provide information beyond their purview.

T. Kalaiselvan, Advocate (Expert) 15 August 2024
The society is not liable to pay the debts of the owner member in case he defaults payment in future.
The society can furnish NOC as per the bylaws of the society instructing the member to comply with necessary formalities as prescribed in the bylaws for this purpose.

Ananyaa Nair (Querist) 15 August 2024
Thanks. But he has provided a noc format from the bank.it states that the society confirms that he hasn't raised any finance from any other source to buy the said flat. We don't have any information abt this. But he is insisting that the noc has to be as per bank format. The format has certain points which the society cant confirm. So can we reject giving noc in bank format. Note that an noc has been given to him stating that there are no unpaid dues from him.

T. Kalaiselvan, Advocate (Expert) 15 August 2024
The society is not bound by the banking rules, the bank cannot dictate terms on society to issue NOC in the format it is demanding.
The society can refuse to furnish the personal information sought by bank against the borrower which is not within the purview or knowledge of the society.
The society can very well decline to entertain this demand by bank.

kavksatyanarayana (Expert) 15 August 2024
The homebuyer can ask the bank concerned to show the legal provision requiring a NOC from the society for a home loan in their formate.

P. Venu (Expert) 18 August 2024
Yes, the Bank or the flat owner cannot dictate terms to the Society to act beyond its information.

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