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