Sarfaesi act

Vivek (Querist) 17 August 2013 This query is : Resolved
Dear Sir
I m a Branch Manager in a govt bank want to know that some borrowers of our bank were sent notices under SARFAESI ACT(First Stage) in year 2012 but were not initiated further for second stage also borrowers had not deposited any single rupee in their loan account.

Can i straight away go to the second stage and issue possesion notice or i have to initiate the process again with the first stage

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R.K Nanda (Expert) 17 August 2013
consult LA of ur bank.

Advocate M.Bhadra (Expert) 17 August 2013
If you served a Notice u/sec. 13(2) of the SARFAESI ACT then you can serve another notice u/sec.13(4) of the same Act for taking possession or you can issue fresh Notice u/sec.13(2) if you have not served earlier.
Alternate relief you can file a Money suit in Civil Court,but best option is taking action under SARFAESI Act by filing a case in DRT.

To speed up the process of recovery from NPAs, The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) Act was enacted in 2002 for regulation of securitization and reconstruction of financial assets and enforcement of security interest by secured creditors. The SARFAESI Act empowers Banks / Financial Institutions to recover their non-performing assets without the intervention of the Court. The Act provides three alternative methods for recovery of non-performing assets, namely: -
Securitisation
Asset Reconstruction
Enforcement of Security without intervention of the court
Secured creditors are given the power to take possession of the securities in the event of default and sell such securities for the purpose of recovery of the loan. The Act provides for enforcement of Security interest by a secured creditor without intervention of the court, in cases of default in repayment of instalments and non-compliance with the notice period of 60 days after the declaration of the loan as a non-performing asset.

Advocate Bhartesh goyal (Expert) 18 August 2013
You need not to issue again notice u/s 13[2] of Act.you can proceed/initiate to take possession of secured property.

malipeddi jaggarao (Expert) 18 August 2013
Agreed with Mr.Bhartesh Goyal.
When there is no recovery after serving notice u/s 13(2); why the Bank did not proceed further? Unless stringent actions are taken by the Banks Managements internally this type of lapses will dilute the recovery process meant by the Act.

Nadeem Qureshi (Expert) 18 August 2013
Dear Vivek
you have to send another notice u/s 13 (4) of Sarfaesi act and if the borrower is not ready to make the payment then you can go for possession or mortgage property. without sending notice u/s 13 (4) the possession will be illegal.

Rajendra K Goyal (Expert) 18 August 2013
Well advised by the experts, nothing more to add.

K.K.Ganguly (Expert) 18 August 2013
1. There will not be much delay if you issue Possession Notice u/s13(4) of SARFAESI Act,2002 now after you had issued Demand Notice u/s13(2) of the Act in the year 2012,

2. Usually the said Possession Notice is issued even after 2 years of issuing Notice u/s13(2) of the Act.

3. You can issue Possession Notice now.