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The SARFAESI Act, 2002 gives powers of seize and desist to banks. Banks can give
notice in writing to the defaulting borrower requiring it to discharge its liabilities
60 days. If the borrower fails to comply with the notice, the Bank may take recourse
one or more of the following measures:
Take possession of the security for the loan
Sale or lease or assign the right over the security
Manage the same or appoint any person to manage the same
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CURRENT AFFAIRS
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Rights of Borrowers
The above observations make it clear that the SAFAESI act was able to provide
effective measures to the secured creditors to recover their long standing dues from
Non performing assets, yet the rights of the borrowers could not be ignored, and
have
been duly incorporated in the law.
The borrowers can at any time before the sale is concluded, remit the dues and
avoid loosing the security.
In case any unhealthy/illegal act is done by the Authorised Officer, he will be liable
for penal consequences.
The borrowers will be entitled to get compensation for such acts.
For redressing the grievances, the borrowers can approach firstly the DRT thereafter
the DRAT in appeal. The limitation period is 45 days and 30 days
respectively
Pre-conditions
The Act stipulates four conditions for enforcing the rights by a creditor.
The debt is secured
The debt has been classified as an NPA by the banks
The outstanding dues are one lakh and above and more than 20% of the principal
loan amount and interest there on.
Methods of Recovery
According to this act, the registration and regulation of securitization companies
reconstruction companies is done by RBI. These companies are authorized to raise
funds by issuing security receipts to qualified institutional buyers (QIBs), empowering
banks and Fls to take possession of securities given for financial assistance and sell
lease the same to take over management in the event of default.
This act makes provisions for two main methods of recovery of the NPAs as follows:
Securitisation: Securitisation is the process of issuing marketable securities backed
by a pool of existing assets such as auto or home loans. After an asset is converted
into a marketable security, it is sold. A securitization company or reconstruction
company may raise funds from only the QIB (Qualified Institutional Buyers
forming schemes for acquiring financial assets.
Asset Reconstruction: Enacting SARFAESI Act has given birth to the Asset
Reconstruction Companies in India. It can be done by either proper management the
business of the borrower, or by taking over it or by selling a part or whole of business
or by rescheduling of payment of debts payable by the borrower
enforcement of security interest in accordance with the provisions of this Act.
Further, the act provides Exemption from the registration of security receipt. This
means
that when the securitization company or reconstruction company issues receipts,
holder of the receipts is entitled to undivided interests in the financial assets and
there not need of registration unless and otherwise it is compulsory under the
Registration 1908.
However, the registration of the security receipt is required in the following cases:
There is a transfer of receipt
The security receipt is creating, declaring, assigning, limiting, extinguishing any right
title or interest in a immovable property.
Is Mortgaged House exempted?
The Sarfaesi act covers any asset, movable or immovable, given as security whether
way of mortgage, hypothecation or creation of a security interest. There are some
exceptions in the act such as personal belongings. However, only that property given
security can be proceeded under the provisions of SARFAESI Act. If the property of
borrower is his own mortgaged residential house, it is also NOT exempted from
Sarfaesi act.
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Anonymous August 30, 2009 Reply
laudable presentation of topic..
hats off to GK today team.
have to note that such an act of the CMM or DM can not be called in question in
court or before any authority.
Comments
SANGAMESWARA RAO DHUPAM May 9, 2011 Reply
I have got doubt whether under SARFAESI Act can the Bank/financial
Institutions execute a Sale Certificate under Section 89 of the Registration
Act, 1908 as the section provides to execute a Sale Certificate only to Courts
No. U can challenge it before high court n obtain stay till u sell at own to market
price n discharge the loan.
sumit July 2, 2014 Reply
Dear sir plz tell me that any person (owner of property) can challenge that
sale deed which had done by bank/NBFC to the third person ( new owner) sarfaesi
act.
thanks
ALOKKUMAR KASLIWAL July 6, 2014 Reply
Some Banks & Financial Institutions themselves create loopholes safeguard interest
of the creditors who are paid handsomely under the table.
When a corporate takes loan and mortgages ones property to one bank when the
same corporate appears another bank and mortgages the same
property previously mortgaged to the previous bank, then why does the latter
bank give loan against the already mortgaged property and when dispute
arises, both the banks do not give noc to each other and the culprits continue
to enjoy. Is this not a conspiracy between banks and the corporate taking
loans against same property from two or more banks. SKUMARSSHRI
ALOKKUMAR KASLIWAL 9820081968
Parminder Singh November 20, 2014
On the time of loan borrower has to submit the original registry the bank
how can 2 copies of one property.
bank does nt accept photocopies of of registery,,,
anil November 29, 2014
actually rbi created central registry to overcome this loophole,
banks need to provide those mortage asset details to that registry
so if a person approach any other bank with same mortage details
they can caught ..
nitish pandey July 11, 2014 Reply
thank you GK today good information
KSVPrasad October 13, 2014 Reply
Sir
My self and my brother staying in two portions side by side in the first floor
of a residential house.Owner resides in the 1st floor.Because our land lord default
borrower bank got 14(1) section permission on the house.Vacating house will take
three months.Whom we have to approach to safeguard
ourselves.Very urgent suggestion is required
Thanking you
KSVPrasad
Cell:9440276121
Nalluru Ravikumar October 13, 2014 Reply
Respected sir
Land lord of 15 portioned apartment is not repaying the loan to the bank.The
bank collection agents threatening the tenants to vacate the portions since
the bank got the physical possession pemission from District Magistrate.The
auction sale was not performed.How the DM pass the possession
permission to the bank before auction sale.Please suggest a solution
Thanks
NRavikumar
naren November 4, 2014 Reply
after publishing in newspaper how many days after will the bank post sarfaesi sticker
to house. And after posting the sarfaesi sticker on wall what
are the legal things done by banks and duration of each. Plz
Ashwani November 14, 2014 Reply
Although the article is commendable, but the website authors mentality damn poor,
you have locked the whole webpage so that no one is able copy or print the content
here, what type of sharing of knowledge is this? You
are a really sick person.!
B.N.Chandra sekhar November 21, 2014 Reply
This is regarding a legal question on bankers who have done an e auction
after proper notices to the defaulters and done through adv. We have been
declared as the successful bidder by the bankers after auction.later on defaulter has
gone to hon court and got a stay and time to pay balance..we the official bidders
who were declared officially and now bankers are colliding with the other party and
rendering time to defaulters showing the court orders.pls suggest the ways to move
on bankers in a legal wayand the rights of the successful bidder
G V B MURTY November 30, 2014 Reply
If any bank finances, construction of Building and furniture in the new
building, if that a/c becomes NPA, what is the position of the Banker.
Because Sarfaesi act is applicable only for Immovable goods
deepak kumar December 1, 2014 Reply
how to recive order to d.m in fast action
Ashim December 7, 2014 Reply
I have invested in a apartment in Bangalore , when apartment is 80 complete ,
Builder asked for 40% escalation charges , Due to which
consumers put a case in consumer court , While case was going builder
defaulted the bank loan , Now bank is acquriring the property under sarfaesi
act 2002 , In case bank is successful in acquiring the property from builder
.what is the safe gaurd for the 1000 + appartment owners , what will be their
status.
SUBRATA DUTTA December 8, 2014 Reply
WHETHER SARFAESI ACT APPLICABLE TO URBAN COOPERATIVE BANK
subrata dutta December 8, 2014
WHETHER SARFAESI ACT APPLICABLE TO URBAN COOPERATIVE
BANK
Raja December 13, 2014 Reply
I have availed home loan from nationalised bank.
My account classified NPA and sarfeasi notice issued than I have paid
overdue amount completly..
account has been regular.After one year same sarfeasi notice again sent me I am
unable to repay the amount
Than possesion notice sent to me by the banktill now unable to pay amount ..so
how to appeal tribunal court such amount reduce my account
than I wish to OTS scheme..
Pls give suggesion
RAJA December 23, 2014 Reply
While SA cases are supposed to be disposed within 6 months, cases dragged by filing
IAs by defaulters. What is the remedial action to be taken
by creditors?
BABU January 1, 2015 Reply
One of the property is leased to a private Bank which is unregistered for period of 10
years and is under mortgage in other bank by the landlord. Can
it be enforceable when the borrower defaulted!
Manojkumar G January 11, 2015
Yes!! Whene ever it was mortgaged, the rights of property vested with the bank. So it
can take any type of decision.
vicky January 5, 2015 Reply
i got the possession notice from the bank. and cmm ordered and appointed
a advocate to take possession .. can i still pay half or full amount and come
over this trouble? please suggest the best way.. the circle rate of the property
is five times higher then the loaned amount and market value is 10 times
higher
Manojkumar G January 11, 2015
Yes.. U can still repay and stop all the processes no need to the entire amount
even. Regularise the account first and then
continue by repaying EMIs
G.R.Krishna January 10, 2015 Reply
Is it safe to buy a auctioned flat were the borrower has absconded and I the lesse of
the flat since 9 years. What are the implications.
r c garg January 12, 2015 Reply
1.can the appeal before d.r.t. be filed after the date of auction for sale under
sarfaesi act2002 ? 2. can d.r.t. cancel the sale deed already registered
sarfaesi act ?
hemant khadke January 30, 2015 Reply
Sir, if memorandum of deposdeposits title is not executed in that case bank issue a
demand notice and further action like physical possession
under SARFAESI Act . please reply on mail id
Mahaveer February 2, 2015 Reply
I am pursuing a property which was purchased from the bank under surface
act now there was a typographical error while issuing the sale certificate the survey
number was wrongly mentioned on it . Now after six years
fighting with the bank they are finally ready to give an addendum but based
on the rules the sale certificate needs to be registered within 120 days now
since there was this typographical error the sub registrar refused to register
the same. Now my doubts are
a.can this document still be registered..????
b.What if the said document couldnt be registered how can i posses same. what
would be the procedure to follow.
c.Will there be any complications as the property is not yet transferred to rightful
owners due to the negligence of the bank, also the bank is not ready
to issue a fresh certificate they said they can just issue an addendum.
I am desperately in need of the property but need to follow the rules and then
acquire please help
rishi raj February 2, 2015 Reply
in year 2002 i had given a guarantee to a company for the value of property
worth 30cr . it was a continuing guarantee , in year 2009 given notice to bank
to withdraw my guarantee ,on the day of notice bank didnt apply CLYTON
rule and adamant that a continuing guarantee cannot be revoked . later inspection of
documents in the bank it was discovered that my signature guarantee deed yr 2009
and some other concerned documents were found
to be forged . forgery also proven by govt lab . FIR against the bank officials
also lodged and investigation in process. year 2013 CDR package proposed
and i didnt participate and sign . case in DRT . we also approached civil court
. recently bank given auction notice in newspaper to sell property without
informing me . please comment . what is jurisdiction of court ?
rj February 12, 2015 Reply
In case of assets sold under the ACT what happens to the employees
working in the asset (immovable property) prior to the sale?
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