Siva (Consultant) 08 April 2010

s 13(2),13(4)-SARFAESI ACT?

Dear Law Experts,

Please find below are the queries pertaining to SARFAESI ACT, 2002, and make me understand on the followings:

1. What are the defensive mechanisms in Securitization Act?

2. Is there any way-out to stop/postpone/hold the possession u/s 13(4)?

3. Is that been possible to get stay/interim order by make an appeal with DRT before possession?

4. Can anyone pay any partial or part amount (1/4^th or 1/3^rd) of the total amount outstanding and stop/hold/postpone the action u/s 13(4)?

5. If there’s no reply from banker side for our Representation u/s 13(A), shall we go appeal at DRT? If so, what are all the procedures?

6. To appeal with DRT, is it mandatory to send Representation/Objection letter to the concerned Banker, in prior? And are we needed to wait till the notice period of (usually given) 60 days to complete/serve for appealing at DRT / DRAT?

7. If they go for possession, is that symbolic or critical possession that they must enact first?

8. What is the timeframe for Symbolic as well as Critical possession and how long it will take for them to achieve the auction / sale?

9. If we appealed with DRT, considering the (poor) financial situation, can we get some benefits like interest free installments (3 or more instls) when disbursing the Loan amount? Also, can we get any additional time to settle our loan amount?

10. Can we request the Bank Manager or DRT officials to Re-schedule any (Mortgage) Loan and request them to grant some 'Re-payment Holiday / Moratorium' at this point in time?

11. If we are not succeed at DRT? Then, can we approach DRAT/Consumer Court/High court? If so, what are the procedures/fair practices? And how long one can prolong/drag out/extend these type of cases to get some buffer time benefited?

12. When an account has been declared as NPA? Is that the 90 days period is of Collective or Intermediate terms? While the amount Overdue comes around 1 Lakh, then immediately the account has been classified as ‘NPA’ or is there any time limit / cut-off date to declare so?

13. What can be done if anyone made any reasonable transaction / paid any amount (Principal/Interest) within the period of 90 days although there’re some past due less than equal to 1 Lakh (apprx.)? So, at this scenario, shall the banker do re-classify/declare the account as ‘Standard A/C’ or Not?

Thanks & Regards,

Siva

Reply Follow

4 Replies

Manukant Sharma (Consultant) 02 November 2011

Dear All,

As discussed earlier, please go through the attachment and go to Page no 14-15 for Status of Notice U/S 13(4) of Act for publication of Symbolic Possession.

Thanks

Manukant Sharma

M/s Service4U

Legal & Industrial Consultants

Rudrapur (8439215386)

Attached File : 68279 220940 45 transcore v union of india 2006 sc.pdf downloaded: 209 times

Manukant Sharma (Consultant) 03 November 2011

As an Advocate we want a sound protection against NPA proceedings but can U say me that whether it is right to not to pay bank loan and try to get rebate on poverty or political grounds. This is the very reason, Indian Economic growth is slow and the person who require loan for his profession get loan on higher price and after tedious efforts and go towards local money-lenders. So try to support Indian Economy with the help of Banking Sector.

Manukant Sharma

M/s Service4U

Legal & Industrial Consultants

Rudrapur (8439215386)

Uday (Lawyer) 03 November 2011

Dear Mr.Siva,

My answer to your questions are as follows.

1) The only defensive mechanism available in the SARFAESI Act is that when there are some technical errors in sending the demand notice, possession etc.

2) There is no way out to postpone the action under section 13(4)

3) DRT has powers to intervene only after 13(4)

4) It is the discretion to the bank to postpone the acttion under 13(4). So, I can suggest you to request the bank to do so.

5) If there is no reply from the bank for the representation under 13 (3A), then it is a good ground for you to approach the high court under article 226 of the Constitution.

6) The Banks are deemeed caveators. The DRT will send the notice to the bank once you file the application before it.

7) As per the Transcore Judgement, there is no difference between a symbolic and actual possession. But some high courts insist on symbolic possession before proceeding with the actual possession.

8)There is no such time frame.

9) You can cannot get any consideration from the DRT as a matter of right. However, the DRT may suggest the bank for some consideration.

10) You can very well ask the bak for reschedulement, but, it is the discretion to the bank to consider your request.

11) On your failure before the DRT you can very well approache the DRAT. But, on finalisation of the case against you, you will have to settle the entire amount with interest.

12) The total number of days defaulted should be more than 90 Days.

13) Reclassification can be done at the banker's discretion. Since your loan has been recalled, even if you clear all the arrears, it does not mean that the loan account has been regularised by the bank. You have to necessarily pay the balance amount calimed in the demand notice.

RAJU O.F., (Advocate) 04 November 2011

If any Possession Notice is issued, whether symbolic or physical possession, ensure to file Appeal u/S 17 of SARFAESI Act within 45 days without fail; otherwise you may lose that opportunity. Several Courts have taken the view that, delay in filing Appeal u/S17 cannot be condoned.