Interst of the bank when n.a. permission is not renewed
Manoj
(Querist) 19 August 2011
This query is : Resolved
Hello to all experts
A Land is owned by a Company in State of Gujarat. N.A. Permission in respect of said land dated 20-12-1997 for residential purpose is granted by District Collector under Section 65 of Bombay Land Revenue Code 1879. The N.A. Permission is granted with stipulations that
(1) Construction should be started within six months and completed within 3 years
(2) when construction is started it has to be informed within one month to the collector
(3) renewal of N.A. Permission within a reasonable time.
The Co. has not carried out construction within six months and till date no constructed has been done.
My Query is as follows :
(1) As no construction has been carried out is the the N.A. permission dated 20-12-1997 should be considered as elapsed., the occupant has not received any notice.
(2) The above mentioned land is mortgaged to the Bank as Security for financial assistance granted by the Bank. Now if the Mortgagor commits any default in repayment can Bank enforce the security.
(3) What steps are required to be taken by the Bank in order to secure or protect its interest.
(4) Whether Bank can ask/force the Occupant to get the N.A. permission renewed. Whether it can be renewed
(5) What is the status of the land in this case, will it be considered as agricultural land
(6) What legal steps are required to be taken by the Bank
ajay sethi
(Expert) 19 August 2011
1)bank should immediatedly issue notice to company pointing out that as company has failed to adhere to terms and conditions stipulated in grant of NA permission ,
2)further said notice should mention that no construction has been carried out till date .
3) bank should immediatedly recall the loan .
4) after recipt of notice wait for company to respond . based on response of the company further steps should be taken by the bank
ajay sethi
(Expert) 19 August 2011
the company has failed to comply with terms and conditions stipulated in NA permission . the collector may on imposition of penalty renew the permission . the permission granted by collector must be mentioning conseqences of failure to caary out construction on time etc
malipeddi jaggarao
(Expert) 20 August 2011
The crux of the query as I understand is since non-agricultural land permission is lapsed whether the bank can enforce the security. If this is the problem of the queriest let me throw some light on this issue. If at the time of creation of mortgage in favour of the Bank, the owners submitted N.A.permission, the charge of the Bank over the property is valid in spite of non-renewal of N.A.permission subsequently. The Revenue authorities must have granted original N.A.permission at the request of the owner of the property and the same owner offered the property as security to the Bank. Hence he can not claim that the property is agricultural in nature and the mortgage in favour of the Bank is not valid as it was offered as security for a loan meant for non-agricultural purpose. Mere non-renewal will not change the nature of land. Once it is declared as non-agricultural, unless the land is used for agricultural purpose again, the land is non-agricultural in nature. Non-renewal is a technical flaw, which may create problems if construction activity is initiated for other than agricultural purpose. It will dealt when such situation arises. In this case, Bank might not initate any action, as long as the advance is a standard asset, if it slips into NPA, it can take the recovery steps treating the land as non-agricultural in nature.
Shashikant V. Patil
(Expert) 20 August 2011
The subject land is already N.A Land, that is why bank has offered loan. There are two diff issues i.e 1) Bank recovery 2) non conversion of land in N.A. So far as bank concern, the bank will not interefere in the matter of Co's problem. However, in respect of non-conversion of land , Revenue authority will impose penalty and Co. has to pay Penalty and start construction.
girish shringi
(Expert) 23 August 2011
If its in the state of Gujarat.
The company has to appeal to the Collector of extending the time limit as the company could not start the construction as per stipiluted time in the N.A. permission.
2.....Since it is N.A. in present terms and Bank had taken in to equitable Mortgage as security Bank can not cancell the Loan in want of non fulfilment of the N.A. condition.
Manoj
(Querist) 24 August 2011
Thanks to all "Experts"
