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Gopi Chandra   24 January 2022

Bank declared npa. what happens next?

I was one of the guarantors for a term loan for a SME company to manufacture food products.

Unfortunately the factory didn't do well and the company didn't pay EMIs. So, the bank declared NPA.

Now, the bank has sent notices to al guarantors saying that the borrower has defaulted and they want to
take possession of the properties we have given as collateral.

Though the factory assets is much more than the term loan, the banks are trying to sell the collateral first before
selling the factory.

Is this legal?



 4 Replies

Shashi Dhara   24 January 2022

Issue legal notice and take stay from court that they are intentionally harrassing and to first proceed on charged asset.

1 Like

Gopi Chandra   24 January 2022

Thanks for the response. The issue is the current directors of the company have close connections with the bank and have a negotiated a settlement to purchase the factory after selling all the collateral. Not sure this is legal.
The bank is using the Sarfaesi act to sell the collaterals.


Shashi Dhara   24 January 2022

It is illegal ,you can proceed  on factory for your  collateral security if bank proceeds 

Gopi Chandra   24 January 2022

The bank has already proceeded with 13/2 notice. The bank also pasted a notice on the property, took a photo and removed the notice. I think this is symbolic possession. I guess the bank may go ahead with actual physical possession. Do we need to file a complaint in the DRT now or wait till the physical possession?

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