Possession of agricutural land under surfesi by bank


I had a Packing Credit limit (For Exports) to the level of 68.5 lakhs (Book Value). The Property kept by the bank (Canara Bank) as Collateral is an agricutural property & it is shown in the Khasra & Khatoni of the said property that there is a crop plantation on the said land. Further there is no Lien also marked on the papers of the said land in the Tehsil. I am from Meerut & the said property is in Meerut too. We have given the bank a  proposal for on time settlement starting from 30 lakhs to the latest (& final) as 52 lakhs. As on date the Market value of that land is not more than 15 lakhs due to various negative reasons on the site. The Bank is asking us to sign an AOD (Acknowledgement of Debt) document which we have declined, though in our various letters to the bank we have said that we want to make the repayment of the loan which we have taken, but due to great loss in our business our factory was sold off & our business was shut. But still we are offering 52 lakhs as one time settlement to the bank. The bank is now moving to DRT and is threatning to take the possession of our land. We do not have any personal movable or immovable property in our name other than the said property kept with the bank as collateral. I request to the learned lawyers on this forum to kindly advise : 1. Can the Bank take over the said Agricultural Property in DRT in our case ? & 2. What if the bank sells this property (if at all they can), then what recourse can the bank have against us for the balance payment in the eventuality of we not having any other property/funds in our name ? Kindly advise....Thanks

 
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adviser

Dear, Having regard to the issues on which the opinion is sought, my reply would be as

1. Can the Bank take over the said Agricultural Property in DRT in our case ?

Ans : After the application is filed with DRT, the Bank can not, on its own, take over the property. It may have to wait for the decision of DRT. The decision would come after your reply is submitted. In case no reply is submitted, DRT can pass Ex-parte order... So take over by the bank  is ruled out in DRT cases. DRT can sell the agriculture property in execution of recovery certificate ... [ which is issued after following due procedure as prescribed under the DRT rules]

2. SARFAEI Act can not be invoked against agriculture property...

Further, if the account is settled under OTS... after payment all parties would be discharged from their liabilites... In case the litigation continues.. and DRT issues decree / recovery certificate, besides firm's assets, in case guarantee is given, all guarantors would be liable personally. The partners of the firm are also liable personally for the debt of the firm....  The  decree / recovery certificate reman valid for 12 years from the date of issue... In DRT proceedings, the bank can recovery from the personal assets of the judgement debtors [ excepting the assets excluded from sale like .. Mangalsutra of a women, tools of craftman / artisal etc., assets needed for suvival of a person] 

Hope this will clarify your doubts 


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Dear Mr. Pervez, Thanks for your invaluable advise. I wish to tell you that the gurrantor is the owner of the said agricultural property kept as collateral with the bank & the Partners do not have anything in their name, but one property (whose papers are not put in with the bank as collateral) of the gurrantor is sub-judice. Then, can the DRT order its possession in order to recover the balance dues after autioning/selling the agricutural property mortgaged with them ?

Also, if there is movable/immovable proerty a small business running in the name of the WIFE of the Partners/Guarrantor, can the same be acquired under any law by the DRT/Bank ?

Thanks & best regards.

 
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director

There are Supreme Court Orders on classification of land as agricultural land , and usage to that effect. There is prohibition under section 30(iI) of SARFAESI Act.

 

rajasekaran

 
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Advocate

Possession of agricultural property cannot be taken through SARFAESI proceedings; but can attach and sell the said properties through DRT proceedings.  After sale of properties, remaining portion of the decree-debt can be recovered within 12 years from decree from personal assets of the decree-debtors.

 
Reply   
 
Advocate

Possession of agricultural property cannot be taken through SARFAESI proceedings; but can attach and sell the said properties through DRT proceedings.  After sale of properties, remaining portion of the decree-debt can be recovered within 12 years from decree from personal assets of the decree-debtors.

 
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