Need advise on Symbolic Possession / Sec.13(4) on Mort. Prop

It is most unfortunate that each one including the judges, is interpreting the provisions of SARFAESI Act and Rules, according to his whims and fancies.

There is good (or bad) news that the Central Govt. will thoroughly amend the DRT Act and SARFAESI Act immediately, possibly in the winter session itself.  We have to wait and see as to what would be the final product.

It is not whims of the judges , the law is clear and well tested in all courts.

The fresh amendments now before law makers will make it more  DRACONIAN.and not less as you expect since speedy recovery of public money is needed.

For the kind information of members, here, in same building, in three floors, three DRTs are functioning.  But the Orders of the three DRTs  are inconsistent to one another.  But nobody can help, until correct law is settled.

Hello Sir, 

After symbolic possession, how much time a person may get before the Actual possession?

Awaiting for your response.

After symbolic possession, how much time a person may get before the Actual possession? The court has granted a stay on the possession notice sent by the bank and asked borrower to pay some amount within 6 weeks. After the stay has been granted the bank has come and taken symbolic possession. Is that right?

Bank has taken symbolic possession of my flat in July'08. Did not ever issue any public notice nor initiated any sale proceedings.

Complaint was filed with Banking Ombudsman in Nov'08. BO opined that there are lapses on part of the bank authorities in monitoring, nursing accounts and adhering to its Lenders liability. It has abruptly taken recovery/Sarfaesi actions instead of first compiling its Code of Banks commitment to customers and its Lenders Liability. There is a case of wrong NPA classification. Bank has stated to BO - it classified accounts as NPA due to its internal guidelines and therefore has every right to take action under Sarfaesi act.

Thereafter Bank filed OA at DRT for recovery of certain amounts by disposing my flat.

The monthly society charges are mounting and have accumulated to over 6.50 Lakhs and society is charging interest @ 21% per annum. Society has filed case on me under Cooperative act for eviction. How is liable to pay these charges??

The ambiguity in the provisions of law embodied in the SARFAESI Act [particularly in Sec.13(4) of  the Act] is cleared by Supreme Court in Transcore Vs. Union Of India & another (:AIR 2007 SC712) holding that, there is no dichotomy (difference) between symbolic possession and physical possession. On taking symbolic possession, the secured credito has to serve possession notice to borrower(s), stuck possession notice to the property (secured asset) and publish the same in two leading news papers (one in vernacular language) having sufficient circulation in the locality, within one week.

The secured creditor can bring the property to sale, based on the symbolic possession taken. Taking physical possession is not compulsory for sale of secured asset. Secured creditor can take physical possession with or without assistance of Magistrate u/s.14 of SARFAESI Act, without first serving the possession notice [under Sec.13(4)]. After taking physical possession of secured asset , the secured creditor has to serve possession notice[under Sec.13(4)] to borrower(s). There is nothing like “symbolic possession notice”  or  “physical possession notice” [under Sec.13(4)]. There is only one possession notice u/s.13(4) of the Act. There is no separate format for “symbolic possession”  or  “physical possession”. The secured creditor can take physical possession even withot taking assistance of Magistrate u/s.14 of the Act. Possession notice can be served,affixed and published after taking physical possession. The bank is not correct in sending a letter to borrower stating that, it will take action under Sec.13(4). No such procedure is contemplated in the Act.

Classification of a loan account as NPA is internal accounting norm of banks. It does not mean that interest accrual on loan account stops on its becoming NPA since the borrower wilfully failed to pay the same. The borrower is bound to pay the accrued interest on in the loan account.

Freezing of the account is another new and strange thing not known to SARFAESI Act. The word “Freezing” should not be confused with the word “Crystalization” of account which means that, the borrower himself determined his liability to bank by committing default of repayment of instalments/interest, beyond 90 days. 

The secured creditor is entitled to realise the same from sale proceeds of the secured asset. Nothing need be deposited with DRT with which it is not concerned except certifying whether the action of secured creditor is right or wrong.

Mr.Ramachary - thanks for the update.

Can you please confirm if a property, for example, was loaned at 10 lacs and auction is conducted at 6 lacs (thru all procedures as required), can the balance amount be demanded with a notice followed by DRT summon to the borrower ? This is the case with me.

Even after auction and sale of my property, the bank is behind me to pay the remaining amount due (close to 10 lacs again). My question is how did the bank evaluate the property while giving loan that they are not able to clear the debt due by the borrower even after same asset is sold off.

Please help.

First of all, I am very sorry to state that, your language is twisted and confusing and very difficult to understand. It has taken lot of time for me to understand as to what you exactly/actually want. However I answer your query as follows:

Accuracy and reasonableness are two essential things in valuation of secured asset. If the valuation is not accurate and reasonable, the same can not be accepted. (Bhupender Singh Vs. State Bank of Patiala: AIR 2008 Punjab & Haryana 148). In the cited case it was noted that, the house at the time of sanctioning the loan was higher than the valuation recorded at the time of sale. if such event occured in your case you should have challenged it in DRT within specified time. I think you have not consulted any lawyer well versed in SARFAESI Act.

If the bank has not realised the entire amount claimed in the demand notice, then, it can file its claim (in civil court if realisable debt amount is below Rs.10.00 or in DRT if realisable debt amount is Rs10.00 lakhs and above).I have conclusively given my opinion and I do not entertain any further querries from you on this subject.

Though the response was bit rude which i expected the least from a form like this, i appreciate for your time and advise. Thank you.

Vjiay,

I dont think the response from C P S Ramachary was rude in any way. Even if you are unhappy with the response, you should not react the way you have done. Mr Ramachary is a very renowned lawyer / retired judge and has always been providing professional advise free and in good faith.

Dear Mr. Ramachary,

Pls do not get disheartened and please continue the good work. God bless you.

Dear Ramachari Sir,

Although the person who made the query did not appreciate your answer it was help to other numerous persons. Hence continue your sincere efforts to give solutions to the needy. God Almighty will reward you.

Mr.Meha Hrish and Mr.O.F.Raju

Sirs,

It's OK. There is nothing serious. I will continue to serve the Forum

Regards

Ramachary c.p.s

I just want to ask one question to the experts.... Possession Notice once served during symbolic possession... can it be served again during physical possession ? paper publication, police GD, everything done at symbolic possession... so what will be correct process ???? pls suggest....

Supreme Court in Transcore Vs. Union of India & Anr., held that there is no Dichotomy(difference) between 'Symbolic possession'  and 'Physical possession'. If possession notice is served,affixed and published in compliance of Rule 8(1)&(2)   of S.I(E) Rules at the time of taking symbolic possession, there is no need to serve, affix and publish the possession notice [u/s.13(4) of SARFAESI Act r/w Rule 8(1)&(2)   of S.I(E) Rules] once again while taking physical possession.