Sarfaesi act - symboli possession & "as is where is what ever there is" basis
dinu
(Querist) 06 February 2015
This query is : Resolved
I participated in a bank auction and was declared highest bidder in respect of residential property. However, sale was not confirmed as the borrower got stay on "sale confirmation" from High Court.
The bank had not obtained physical possession of the bank but had taken "Symbolic Possession".
High Court case was dismissed later on. Borrower approached DRT and there also the case was dismissed. Bank started proceeding for obtaining physical possession. Borrower then approached High Court and got 1 month stay for any possession proceedings.
Bank now says that the sale is on "as is where is whatever there is" basis and the Buyer has to obtain physical possession. I had paid 25% amount at the time of auction and now the bank is asking for balance 75% amount without handing over physical possession. Bank threatens to forfeit the 25% amount if balance 75% amount is not paid within 15 days.
Request the experts to provide some inputs on the following queries:
1. Can bank wash hands on delivering physical possession of property?
2. Can bank forfeit 25% EMD if balance 75% amount is not paid within 15 days?
3. Does "as is where is whatever there is" means that the buyer has to obtain physical possession by himself?
4. What should be my next action point?
Experts views would be of great help and would be highly appreciated.
Thanks !
Rajiv
Devajyoti Barman
(Expert) 07 February 2015
1. No, it can not. Sale will be incomplete by then,
2.No, it can not if you fulfill all terms of the auction.
3. No, it does mean more so if there is stay on the sale by the high court.
4.challenge their action in high court and get both the cases heard together.
P. Venu
(Expert) 07 February 2015
In spite of the proceedings under the Sarfaesi Act, it is open to the borrower to avail of legal remedies; recent decisions of the Supreme Court has opened many an avenues in this regard. The onus rests with the Bank in defending those cases and also, to protect interests of the successful bidder.
Rajendra K Goyal
(Expert) 07 February 2015
1. Bank can not wash hands.
2. Bank can not forfeit your money without completing the deal.
3. No it is not so.
4. If Bank proceed file case, consult local lawyer.
T. Kalaiselvan, Advocate
(Expert) 07 February 2015
I agree with the opinions of the experts above. The bank cannot take a decision arbitrarily after having lost its patience this way due to continuous litigation. If the bank is performing its part of contract as per the conditions of the auction, you can very well issue legal notice to bank demanding it to perform its role or else you can seek remedy through court either for refund of EMD with interest or for handing over possession of the property after receiving the balance of consideration amount.
dinu
(Querist) 08 February 2015
Thanks all for your views.
Now, should I pay the balance 75% and then fight for Physical Possession? I am worried that if bank forfeits the 25% amount, then again I will have to fight for recovering that also.
Bank says that you cannot link balance 75% payment with Physical Possession.
Should I approach DRT or High Court to get stay on bank's action of cancelling the bid and forfeiting the amount?
prabhakar singh
(Expert) 08 February 2015
If the auction notice published in news paper contained a term that auction and sale would be "AS IS WHERE IS BASIS" and "AS IS WHAT IS BASIS" & "WHATEVER THERE IS BASIS" ,the auction bidder can not force bank to give physical possession.Almost all High courts and even Supreme Court have expressed similar view.
Therefore either proceed on your own to take physical possession or for refund,either of which would not be so easy.
Courts view that auction bidders are always aware that banks and Fis do not hold physical possession of property secured for their loans and bids are made bearing this fact in mind ordinarily at much less of market value.It is bidders own risk if notice of auction published contains a term
that sale would be "AS IS WHERE IS BASIS" and "AS IS WHAT IS BASIS" & "WHATEVER THERE IS BASIS"
dinu
(Querist) 08 February 2015
Thank you Prabhakar sir for your views.
But, the auction notice stated that "Pursuant to possession taken by Authorised Officer under SARFAESI Act..."
What does this possession mean? Bank can't fool the bidders in this way.
"As is Where is" can mean that the property taxes, electricity dues, maintenance dues have to be borne by bidder. But, I am of the understanding that, for the Bank to auction a property, it has to take physical possession.
I was also told that bidders can't approach CMM for vacation of property, only banks can do.
Please clarify
prabhakar singh
(Expert) 08 February 2015
http://indiankanoon.org/doc/18718131/
malipeddi jaggarao
(Expert) 11 February 2015
If the auction notice does not contain "as is where is basis" the bank does not have any right to ask you to pay the balance amount without giving physical possession that when a stay is granted by the High Court. They cannot forfeit your EMD. Serve registered notice under Ack. on the bank stating that you are willing to pay the balance amount on the day when the physical possession is given to you, point out that the bank does not have any right to forfeit the EMD amount and you are entitled for interest on the EMD amount because of the delayed possession. The question is not the forfeiture of EMd, it is the question of not giving possession. I tendered a similar advice in this forum to another queriest long back and he fought on these grounds and finally bank took all steps including defending the legal cases filed by the owner of the property and handed over the possession. Recently he called me and thanked me profusely for the proper advice which has benefited him a gain of more than Rs.100 lakhs.
K.K.Ganguly
(Expert) 12 February 2015
1. Yes, the Bank can not be forced to take physical possession of the auctioned property since it was already mentioned in the sale notice that the property to be sold is on "as is where is whatever there is",
2. Yes, the Bank can forfiet the EMD if balance payment is not made,
3. Yes, but the bank shall have to initiate proceeding to take physical possession of the property by applying to the DM u/s14 of SARFAESI Act,2002,
4. Settle the matter amicably with the Bank. Ensure that it files the application u/s14 of the Act and follow it up with the DM's office to ensure that physical possession is taken with the police help.
Hemant Agarwal
(Expert) 09 March 2015
1. Conditional Sale agreement for "immovable property", is null and void, an ab initio, specifically more so when possession of property is not in the possession of the Bank. It is like selling you the Moon, pending claim/possession of the moon. Hence the Bank Auction Notice in itself is Null & Void. AND collection of EMD for a null & void transaction, is illegal, more so since the Bank did not follow Auction proceedings under the SARFAESI Act. The Auction Bidder, is no way concerned and/or liable by the failed procedures and legal modalities that the Bank has to statutorily follow, under the Law.
2. Typically before commencement of Auction proceedings under the SARFAESI Act, all the bidders are entitled to inspect the property, which is duly opened before the interested bidders. This itself would imply that the possession of the property is with the Bank.
Check out the principle of a Latin saying: " Nemo debet quod non habet ". THIS means that no one can give what he does not own.
3. File a private criminal complaint with the local magistrates court, against the auctioneers and related bank officials, for cheating, misrepresentation and intimidation. Additionally a complaint can also be filed with the Consumer Forum, for deliberate negligence and malicious deficiency, against the Bank auctioneers, related to the failed and incomplete transaction.
Auction parties (Bank and related) are not immune from Criminal proceedings and/or Consumer Court proceedings.
4. Sale of "immovable property", cannot be conduct on "AS IS WHERE IS BASIS" and "AS IS WHAT IS BASIS" & "WHATEVER THERE IS BASIS". This auction term may apply to other "movable property". There is no such thing as "symbolic possession", for a immovable third party property.
CONCLUSION: To maintain financial stability, serve a notice to the Bank, scrapping the deal and demand back the EMD with interest and other incidentals and losses.
Keep Smiling .... Hemant Agarwal
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