Rahul shah (Ca) 26 October 2024

Sarfesi act symbolic possession physical possession 2

Hello ,

I have purchased flat in auction and consideration is paid in full.

The property is in symbolic possession and the tehsildar execution notice have failed few times to gain physical possession.(They give reasons like election duty and strike)

After each failure bank applies for new date.

Now bank is going to file WP in highcourt against tehsildar for directives.

My question is in this scenario - if bank takes 2 years to give physical possession, can I get interest compensation from bank or bank can escape liability by proving that they have taken necessary steps and the third party is at fault.

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Quick Summary

A buyer purchased a flat at auction, paid in full, but is experiencing significant delays in gaining physical possession due to the Tehsildar's repeated failures to execute. The bank is now pursuing a writ petition in the high court. The buyer is concerned about potential interest compensation if physical possession takes years. However, advice suggests the bank may not be liable for interest simply due to possession delays, and that purchasing a property not already in the bank's physical possession might have been an oversight.

2 Replies

T. Kalaiselvan, Advocate (Advocate) 27 October 2024

Bank cannot pay you interest just because they are not able to deliver possession of the property sold through auction

You have done a mistake by purhasing the property which was not taken possession by the bank before selling it, hence you may ahve to wait for the bank to deliver possession

Dr. J C Vashista (Advocate ) 27 October 2024

It is not symbolic but actual and physical possession of the property has to be taken over by the Bank before it is put under auction.

Rule 8 of the Security Interest (Enforcement) Rules 2002 deals with the procedural law for sale of immovable secured assets by the secured creditor. After issuance and service of demand notice under Section 13(2) of the Act, the procedure is as follows:

1. Possession notice under Section 13(4) to be served upon the borrower in the format prescribed under Appendix IV and such notice shall be affixed on the property due for possession.

2. The possession notice shall be published in two leading newspapers out of which one should be a vernacular language having wide circulation in the locality where the immovable asset is located.

3. Once the possession has been taken by the authorized officer, property shall be kept in the custody until such property is sold or disposed of. After physical possession, valuation of property shall be obtained under Rule 8(5) in order to fix the reserve price and sell the property.