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symbolic possession meaning?


One of my relative has been trapped in heavy overdue mortgaged loan availed from NBFC against residential house. The financier has lodged the Execution petition Special since April 2017. Till date on every date the Session Court adjourned and seems that case has not taken on board. Now, surprisingly the NBFC has asked the borrower to deposit the keys of mortgaged residential house stating that court has ordered to take symbolic possession. I have confusion that, the ecourt site case status is showing the next date 01.09.18 for "show cause notice to judgement debtor", how can court issue order to take symbolic possession of property. What actual meaning of "Symbolic Possession" means?
 
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Dear querist,

If the case has landed to session court then no need to follow instruction from NBFC, when required court will separately order you.

Possession of the Property: Under the SARFAESI act, at the time of the auction, the bank has either symbolic possession or physical possession of the property. In layman terms, symbolic possession means a bank or financial institution does not have the key of the property.

 

Thanks and Regards

Deepak Joshi & Associates

Djaa.legal@gmail.com

Mb/whatsapp +919456777600

 
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1. Who can order for possession of mortgaged property, under SARFASEI Act? 2. How the current valuation of property is fixed at the time of possession/auction? 3. Is there any liability left on borrower, if the total overdues (with interest) is not recovered from auctioned amount?
 
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The term ‘symbolic possession’ comes under The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016. In layman terms, symbolic possession means a bank or financial institution does not have the key of the property. In other words, the property is still occupied by the borrower or the defaulter. Though under the SARFAESI Act, in the case of payment default, secured creditor i.e. bank can take physical possession of the property i.e. collateral. In certain cases, it is not feasible for the bank to take physical possession because of variousreasons. The secured creditor issues symbolic possession notice and then proceed with the auction based on symbolic possession.

The symbolic possession is preferred by Banks also for the reason that it gives a demonstration effect. The secured debtor is put to mental social pressure as he is defamed in the locality of his residence. In most of the cases where the symbolic possession is taken by putting the notice on the main entrance of the property/ residence and photographs are taken in the presence of four/five bankers showing the symbolic possession, the secured debtor comes under pressure and comes forward with the outstanding amount or for a settlement with the bankers.

One of the cases thatcan be referred to by you is Kottakkal Cooperative Urban Bank v. T Bala Krishnan [2008 (2) KLJ 8]. In this particular case, the secured debt was put to sake without taking actual possession and was bid by a third party auction purchahser. 

Hope this answers your question

Regards,

Palak Singh

 
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