SJM (prop.) 24 April 2013

Misuse of powers by bank (srfaesi act, 2002)

The secured creditor (Bank) initiated actions against the Borrower u/s. 13 (2) and 13 (4) of the SFRAESI, Act 2002 and took the possession of the said Flat and then sold the said Flat in Public Auction and received the bid amount (sale-consideration) very much more than the outstanding debts.

But for certain disputes the Highest bidder has filed Civil case against the Bank and now the matter has been settled between them and hence the said Highest bidder (on behest of the Bank and on instruction of the Court) has paid the full bid amount (sale-consideration) in the Civil Court before about 1 year ago.

But the Bank has not collected the said amount and put a condition on the said Highest Bidder that first of all the House Tax and maintenance Charges be paid first and then only the Bank will collect the said bid amount from Court and then the Bank will give possession to the said Highest Bidder.

But the Secretary of the concerned Society asked the said Highest Bidder that he must show the Sale-Certificate or Allotment letter in his name duly issued by the Bank then only he can accept the money from him on count of maintenance charges otherwise he refused to accept money from him on that account by saying that the said Highest Bidder is unknown third person to the society.

Similar problems were faced by the said Highest Bidder in the Mahanagar Palika while paying money for the House Tax of that Flat.

Then the said Highest bidder made “Pay Order” in the name of the Bank and sent the said Pay Order to the Bank with request that the Bank can pay the said House Tax and Maintenance Charges.

But the Bank refused to accept the said Pay Order and also refused to issue any Sale Certificate or Allotment Letter in name of the said Highest Bidder.

This seems never-ending-process.

My problem is that the Bank is still charging interest in the Borrower’s Loan account and also charging penal interest because the Bank says that the Bank has not received the sale-consideration of the said Flat.

Now the situation is as under :-

1. The Mortgaged Flat is under the Bank’s possession.

2. The bid amount fixed in auction is more than the Reserve price fixed by the Bank and also more than the Outstanding Debt in loan account.

3. The said Highest Bidder paid full sale –consideration but In spite of the same the Bank has not refunded the excess amount to the Borrower but on the contrary the Bank is charging interests to the Borrower.

4. In spite of the full payment of the bid amount the said Highest Bidder has nothing in his hand and the possession is still not with him but the possession is with the Bank only.

Guide what should be done ?

Regards

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8 Replies

Anjuru Chandra Sekhar (Advocate ) 24 April 2013

Complain to Banking Ombudsman. It appears the Bank is spending time to earn interest on your loan account. If bank is sincere it can ask the highest bidder to deposit the tax amounts in your loan account and make payments to the Municipal authorities on your behalf by debiting your loan account because, property is still in your name and will remain so, till the bank in the capacity of secured creditor transfers it in the name of the highest bidder. Visit Reserve Bank of India website to know about the Banking Ombudsman and file complaint with Banking Ombudsman belonging to such zone of RBI that has jurisdiction of the bank you are dealing with.

Anjuru Chandra Sekhar (Advocate ) 24 April 2013

To the society also bank can pay the maintenance amounts in the capacity of mortgagee of its borrower who is owner of the flat in the society. No society will have objection if the payment comes from a party who is banker and mortgagee to one of the owners of flats. Those amounts the bank can duly collect from the highest bidder because, though the property is not transferred in his name, you are discharged from the liability of the property the day bank sold it to him. In my view, the borrower has discharged his debt the day bank sold the property in auction to the highest bidder. If there is civil suit between bank and the purchaser of the property, and it may go on for any number of years not necessarily one year. Supposing it goes on for ten years and bank says, till it is decided by the court, we charge interest and penal interest in loan account, it is no way correct and justifiable. Citing these reasons, you may write to Banking Ombudsman.

SJM (prop.) 25 April 2013

Thanks for your valuable opinion under Reply.

Sirji in this regard please nopte that I had inquired with the office of the Banking Ombudsman and was told that the matter is subjidiced with court and so it not under the ambit of the Banking Ombudsman.

And so kindly tell me whether can I approach with DRT for directing the Bank to accpet the bid amount deposited by the Highest bider and stop my interest.

And whether it is a criminal act on part of the Bank or not ? if yes under which section. ?

Kindly guide,

Regards

Anjuru Chandra Sekhar (Advocate ) 25 April 2013

No police station will file a criminal case against a bank. There is no such legal provision also. It can only be a civil proceeding. You can file your grievance with DRT or invoke the jurisdiction of High court under Article 226. As per Securitization Act law provides for filing of grievance with DRT only up to 45 days after action is taken by bank under Section 13(4). However there are SC judgments to the effect that DRTs can admit cases relating to borrower grievances even with regard to other steps that follow the taking of possession of secured asset, viz., sale of asset etc. The other way is to implead yourself in the suit between bank and highest bidder as an interested party and file a third party interlocutary application in the said suit and move the civil court to adjudicate on your grievance.

SJM (prop.) 26 April 2013

Again thanks for your valuable advices.

Sirji please see the Bank took actions under SFRAESI, Act 2002.

Should I file "S.A. u/s. 17 (1) and (2) of SFRAESI, Act 2002 and u/s. 22 RDDBFI Act, 1993" to secure ends of justice with prayers for directing the Bank to accpet the bid amount lying with Court deposited by the Highest bider and stop my interest.

And further sirji tha Bank has contravened the provisions of Law (particularly sub section 6 to 10 of the Security Interest Enforcement Rules 2002 and hence liable for criminal actionsu/s. 29 and 30 of the SFRAESI, Act 2002 and whether in such case should I approach the M.M. or JMFC for criminal action against them ?

Kindly guide,

Regards

Anjuru Chandra Sekhar (Advocate ) 26 April 2013

Can you share the copy of order of Civil court?

SJM (prop.) 27 April 2013

Sirji,

The matter for other encumbrances (of some other person) on the said Flat has been cleared and settled between the said Highest Bidder and the Bank and the matter is still pending in the Court and there is no Order from Civil Court but money (bid amount) is lying in the Court.

Regards

Anjuru Chandra Sekhar (Advocate ) 27 April 2013

Civil court has no jurisdiction as per Section 34 of SARFAESI Act to decide on matters related to actions taken by Secured creditors under SARFAESI Act or Security Interest Enforcement Rules. The case should not have been admitted by the Civil court. The secured creditor is at liberty to reject sale of property if he is not in a position to collect the money related to encumbrances from the purchaser. You file a Writ under Article 226 in High court stating that the Civil court had taken up the matter on which it has no power to adjudicate. And that you should not suffer paying interest to bank for no fault of yours because a litigation is taking place in civil court between highest bidder and the banker. You will definitely get justice.