Taking physical possession

Chief Manager(Law)

 

Can the request of the Bank [secured creditor] under section 14 of SASRFAESI Act for obtaining  physical possession of the immoveable property be entertained by CMM after sale certificate is executed/registered by the Authorised Officer in favour of the Auction purchaser?

 
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advocate

yes, it can be as the property was hypothecated to the institution. also if it is saled then reffer to CBI for investigation of fraud.

 
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Sec. 14 of SARFAESI Act itself is very clear in its language that secured creditor can take assistance of the Magistrate. It may be further noted that, Authorised Officer is only agent of the secured creditor and it is not mandatory to involve him by the cecured creditor (See Sec.13(13) of the Act is directory in nature). Prior issuance of sale certificate does not operate as bar for taking assistance of the Magistrate under Sec.14(2) of the Act  and the bank does not cease to be secured creditor after execution and registration of sale certificate by the authorised officer [Shakthi Industries & Others Vs. Indian Overseas Bank 2010(2)DRTC 725 (Mad.)]   


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Management Trainee

I completely agree with Mr. Ramachary sir. If I may add also please go through the case of M/S.Kathikkal Tea Plantations vs (R2 Impleaded Vide Order Of on 30 July, 2009. In the said case the court has validated the recovery of physical possession by the bank after it has sold the same property off to another third person & a sale certificate too has ben issued. I have atahced the same for your perusal.

Regards,

Sagnik Sanyal



Attached File : 844187416 m s.kathikkal tea plantations vs (r2 impleaded vide order of on 30 july, 2009.pdf downloaded 195 times
 
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Management Trainee

I completely agree with Mr. Ramachary sir. If I may add also please go through the case of M/S.Kathikkal Tea Plantations vs (R2 Impleaded Vide Order Of on 30 July, 2009. In the said case the court has validated the recovery of physical possession by the bank after it has sold the same property off to another third person & a sale certificate too has ben issued. I have atahced the same for your perusal.

Regards,

Sagnik Sanyal



Attached File : 844192447 m s.kathikkal tea plantations vs (r2 impleaded vide order of on 30 july, 2009.pdf downloaded 166 times

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Chief Manager(Law)

Dear Sri.Sagnik Sanyal, the citation affirms the postion that no notice is required to be given to the Borrower or tenant for obtaining Physical Possession orders. However, the question is as follows:

Bank sells the secured assets on "as is where is Basis". Delivery of possession to the successful bidder is only symbolic. After sale certificate is registered in favour of Bidder-Purchaser, he becomes absolute owner of the property.  The dues of the Bank are fully satisfied by the sale proceeds of the auction. Tenants are in actual possesion of the property. Bank has to obtain actual possession by "due process of Law".

After satisfaction of the dues of the Bank, Creditor-debtor relationship ceases. Hence to obtain physical possession, whether the Bank can file petition-request before CMM to take physical possession? or Whether the Auction Purchaser is required ot file eviction suit?

 
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Mr. Narendra S.P. ,

Please read the full text of the judgment of Madras High Court in Shakti Industries Vs. Indian Overseas Bank cited above. On recovery of the debt the secured creditor does not loose his status as secured creditor and his relationship with his debtor does not cease since the secured creditor has to recover the balance amount of debt if any not compleately realised under SARFAESI Act. 

 
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Management Trainee

Dear Mr.Narendra S.P,

If you peruse the full extarcts of either of the cases as cited by me or Ramachchary sir, you will find that just because the Bank has sold off the said property does not mean that it can not take recover the said prioperty physically. The case of M/S.Kathikkal Tea Plantations particularly points out to this fact. Henceforth the Bank can very well initiate an action to recover the said property physiccally with the help of the CMM. I can also tell you the process to do the same.

Regards,

Sagnik Sanyal

 
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Advocate

"as is where is " condition does not avoid the responsibility of the bank to handover the possession of the auctioned property to the purchaser.

 
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Consultant

Dear Experts,

Pls let me know :

(1) whether the banker (secured creditor) has the rights to take physical possession of the 'GUARANTOR's PROPERTY' where the "PRINCIPAL DEBTOR / BORROWER" has failed to repay the loan?

(2) whether the ORDER OF CMM or DM or COURT ORDER is mandatory before initiating physical possession of the property by the secured creditor? Or, they can proceed without any order (for auction / sale of the Guarantor's property) by Sec 13(4), SARFAESI ACT ?!

Thanks.

 
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