Abhishek Dutta 29 June 2022

Is having a sanctioned building plan mandatory for creation of valid equitable mortgage / sarfesai

Dear experts,

I am new here in the forum, and this is my first post here. I am a Finance Professional (PSU Banker , rather Credit Assessment Officer), so please pardon my ignorance of posting here ( And if I am violating any forum rules)

One of my client has created Equitable Mortgage with us for securing a limit of Rs 2.50 Crores and has now approached us for enhancement of limit to Rs 4.00 Crores, however it was previously known that the borrower doesn't have a sanctioned building plan.

According to the borrower the building on the captioned property mortgaged with us was constructed in 1965 , and at that time it was under Gram Panchayet jurisdiction and there was no provision of any sanction plan , however BLRO Mutation, Property Tax Conversion are all available in the name of the borrower.

My question is , will there be any issue in enforcement of SARFESAI initiation if we extend mortgage (In absence of Sanction plan) now ?

I request seniors and experts to kindly provide inputs in this regard and help me, with citation , case / appropriate sections/law for reference please...

Regards

Abhishek

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4 Replies

Dr J C Vashista (Advocate) 30 June 2022

It is the marketability (title, possession, encumbarance etc.) of the property offered for mortgage and not intrecacies of its construction and allied topics, accordingly sanctioned plan qua its construction would have no affect on creating charge on the property.

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P. Venu (Advocate) 30 June 2022

Admittedly, no sanction was requisite when the construction took place. As such, it is a non-issue. Moreover, sanction plan or its absence is of no relevance vis-a-vis the title to property.

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