Dear Friend,
SaRFAESI Act 2002 deals with Three issues:
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Securitisation,
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Reconstruction of Financial Assets, and
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Enforcement of Security Interest.
In your case, case 3 applies Enforcement of Security Interest.
The lessor of the Asset migh have taken a loan/ Financial Assistance from the Bank and got the property mortgaged/ Provided as security to the Bank. Generally Bank has to take permission from the Court to inintiate possesion of the security (as per TP Act) hence the Bank would have to follow the procedure through Court BUT SARFAESI Act gives short cut to this procedure. Section 13 of SARFAESI Act Overrides Section 69 of The TP Act hence the bank can directly enforce the security interst without intervention of the court .
Since Lessor & Borrower is not paying the borrowed amount to the bank and the Bank has categoriesed his account as Non Performing Asset (NPA) and the Bank must have given demand notice to HIM (since he was the Borrower) and not to you ideally lessor should have told you this when he was served with the notice from the bank.
However, The Bank Can not enforce security interest in following cases:
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Agricultural Land
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Amount due is less than 1,00,000/-
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Where the borrrower has paid at least 80% (I.e only 20% or less amount of principal and Interes is outstanding)
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Key point is : the Bank can not take action if the case is time Barred under Limitation Act.
Section 13 SARFAESI act: The Bank has to Send Demand Notice (in writing) to the borrower in case his intalments are overdue and will ask to pay Full amount within 60 days. The Notice should also mention the fact that failuer to pay Full amount within in 60 days the Property is subjec to enforcement of Security Interest.
My suggestion to you:
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if you lessor/ borrower is in you contact ask him whether he has made any represention to the Bank, becuase if the case is open then Bank can not go to DRT/ Dist judge.
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there is no timelimit within whihc the property must be possesed by the bank. You can request bank for extention of time to vacate the property. But Remember Bank has all right but you do not have.
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If you wish, you can file a suit againt Lessor for concealment of the fact that property is subject to ESI if instalments not paid to bank and the tenant will have to vacate the property without notice and thereby you can recover additional amount incurred on short notice of vacation.
Thes Act is silent on the issue what if Secured Assest is given on lease/ let-out.
Sine the Act is a bit new, and not much settled cases available, there is scope to Plead court to give some time.
hope this will give some idea or would assist you in taking decision.Good Luck
VK Dwivedi
