We have handed over Physical Possession of a Flat to a Bank,by
handing over the Keys,for recovery of Home Loan under SARFAESI Act.Bank handed over the Loan to an Asset Reconstruction Company (ARC).ARC has approached us ( borrower ) with an offer that a Purchaser is interested in Private Sale.ARC told us that an Agreement of Sale need to be written as the first step of Private Sale.ARC also told us that,as borrower,we must also be a party in the Private Sale.
Is it necessary that Borrower must be a party in the Private Sale,in the above case ? Isn't ARC the Seller in this Private Sale, as Bank had already taken Physical Possession of Flat ?
RELEVANT PART OF SARFAESI RULES COPIED BELOW FOR REFERENCE :
8. Sale of immovable secured assets
(1) Where the secured asset is an immovable property, the authorised officer
shall take or cause to be taken possession, by delivering a possession notice
prepared as nearly as possible in Appendix-IV to these rules, to the borrower and by
affixing the possession notice on the outer door or at such conspicuous place of the
(2) The possession notice as referred to in sub-rule (1) shall also be
published in two leading newspapers, one in vernacular language having sufficient
circulation in that locality, by the authorised officer.
(3) In the event of possession of immovable property is actually taken by the
authorised officer, such property shall be kept in his own custody or in the custody of
any person authorised or appointed by him, who shall take as much care of the
property in his custody as an owner of ordinary prudence would, under the similar
circumstances, take of such property.
(4) The authorised officer shall take steps for preservation and protection of
secured assets and insure them, if necessary, till they are sold or otherwise disposed
(5) Before effecting sale of the immovable property referred to in sub-rule (1)
of rule 9, the authorised officer shall obtain valuation of the property from an
approved valuer and in consultation with the secured creditor, fix the reserve price of
the property and may sell the whole or any part of such immovable secured asset by
any of the following methods:--
(a) by obtaining quotations from the persons dealing with similar secured assets or
otherwise interested in buying the such assets; or
(b) by inviting tenders from the public;
(c) by holding public auction; or (d) by private treaty.
(6) The authorised officer shall serve to the borrower a notice of thirty days
for sale of the immovable secured assets, under sub-rule (5):
PROVIDED that if the sale of such secured asset is being effected by either
inviting tenders from the public or by holding public auction, the secured creditor shall
cause a public notice in two leading newspapers; one in vernacular language having
sufficient circulation in the locality by setting out the terms of sale, which shall
(a) the descripttion of the immovable property to be sold, including the details of the
encumbrances known to the secured creditor;
(b) the secured debt for recovery of which the property is to be sold;
(c) reserve price, below which the property may not be sold;
(d) time and place of public auction or the time after which sale by any other mode shall
(e) depositing earnest money as may be stipulated by the secured creditor;
(f) any other thing which the authorised officer considers it material for a purchaser to
know in order to judge the nature and value of the property.
(7) Every notice of sale shall be affixed on a conspicuous part of the
immovable property and may, if the authorised officer deems it fit, put on the web-site
of the secured creditor on the Internet.
(8) Sale by any method other than public auction or public tender, shall be on
such terms as may be settled between the parties in writing.
9. Time of sale, issue of sale certificate and delivery of possession, etc.
(1) No sale of immovable property under these rules shall take place before
the expiry of thirty days from the date on which the public notice of sale is published
in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been
served to the borrower.
(2) The sale shall be confirmed in favour of the purchaser who has offered
the highest sale price in his bid or tender or quotation or offer to the authorised officer
and shall be subject to confirmation by the secured creditor:
PROVIDED that no sale under this rule shall be confirmed, if the amount
offered by sale price is less than the reserve price, specified under sub-rule (5) of rule
PROVIDED FURTHER that if the authorised officer fails to obtain a price
higher than the reserve price, he may, with the consent of the borrower and the
secured creditor effect the sale at such price.
(3) On every sale of immovable property, the purchaser shall immediately
pay a deposit of twenty-five per cent of the amount of the sale price, to the authorised
officer conducting the sale and in default of such deposit, the property shall forthwith
be sold again.
(4) The balance amount of purchase price payable shall be paid by the
purchaser to the authorised officer on or before the fifteenth day of confirmation of
sale of the immovable property or such extended period as may be agreed upon in
writing between the parties.
(5) In default of payment within the period mentioned in sub-rule (4), the
deposit shall be forfeited and the property shall be resold and the defaulting
purchaser shall forfeit all claims to the property or to any part of the sum for which it
may be subsequently sold.
(6) On confirmation of sale by the secured creditor and if the terms of
payment have been complied with, the authorised officer exercising the power of sale
shall issue a certificate of sale of the immovable property in favour of the purchaser in
the form given in Appendix-V to these rules.
(7) Where the immovable property sold is subject to any encumbrances, the
authorised officer may, if he thinks fit, allow the purchaser to deposit with him the
money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies
or further cost, expenses and interest as may be determined by him.
(8) On such deposit of money for discharge of the encumbrances, the
authorised officer may issue or cause the purchaser to issue notices to the persons
interested in or entitled to the money deposited with him and take steps to make the
(9) The authorised officer shall deliver the property to the purchaser free from
encumbrances known to the secured creditor on deposit of money as specified in
sub-rule (7) above.
(10) The certificate of sale issued under sub-rule (6) shall specifically
mention that whether the purchaser has purchased the immovable secured asset
free from any encumbrances known to the secured creditor or not.
We have handed over Physical Possession of a Flat to a Bank,by