DRT, CHANDIGARH
At onlineadvocateindia law firm, Advocate Vikram singh, wished to provide relevant information to person who are in need of expert advocate on SARFAESI Act and related matters, it is specialized Act, promulgated by parliament of India to expedite recovery of loans given by bank to borrowers. This act is both blessing for bank and a huge problem for borrower, especially for those borrower, who are not willful defaulter and have committed default in repayment of loan taken from Bank due to any genuine reason or some personal or professional difficulty. This Act gave unfettered power to banks to take possession of property of unsuspected borrowers by simply issuing Notices under SARFAESI Act, without approaching the court. These Notice under SARFAESI Act could only be challenged before the Debt Recovery Tribunal and Debt recovery appellate Tribunal, New Delhi. Any state High court for that matter Punjab and Haryana High court at Chandigarh, would intervene only upto limited extent and civil courts can not intervene in SARFAESI Act notices, save except under very limited situations or circumstances. We are Operating Best law firm in Chandigarh for DRT and related matters and we had saved Number of Houses and industries from going in to bank’s hand.
SCHEME OF SARFAESI ACT 2002
SARFAESI Act:- This Act aims at speedy recovery of defaulting loans and to reduce the mounting levels of Non-performing Assets of banks and financial institutions. The provisions of the Act enables the banks to recover loan from borrower without an intervention from Court and by simply issuing notice under SARFAESI Act and to take possession of mortgaged Property. It further enables Bank to sell property of borrower in auction to recover its loan. To safeguard the interest of unsuspected borrower, proper mechanism of Debt Recovery Tribunals (DRT) and Debts Recovery Appellate Tribunals (DRAT) were constituted under the provisions of Act itself. we are one of top lawyers in Chandigarh for DRT cases
Step by step this Act empowered the Bank and Financial Institution and remedy for borrower is as under –
- A)Declaration of Account as Non performing Account– if any borrower failed to pay three EMIs of loan taken consecutively then the Secured Creditor, bank or financial Institution, can declare such Account of borrower as Non Performing Account. It is important to mention here that by declaration of account of borrower as Non performing account, the provisions of SARFAESI Act come into operation.
- B) That there after, Secured Creditor, bank or financial Institution would issue formal notices to borrower and apprise him of current position of his loan account and asked him to regularized his account by depositing amount of default committed by him in repayment of loan. If borrower failed to do so then Bank would issue Demand Notice under Section 13 (2) of SARFAESI Act and direct borrower to Pay complete outstanding amount to Bank within 60 days of issuance of this notice.
- C) Thereafter, if the borrower failed to pay this whole amount within 60 days as directed in demand notice, then bank would further issue Notice under section 13 (4) of Act, But prior to this there is an safeguard provided to Borrower, he can gave a legal representation to Bank and tried to explain his position bank, regarding reason of his account becoming NPA and propose some One time settlement of loan or Restructuring of loan as well. The bank cannot issue Possession notice under section 13 (4) of SARFAESI Act, 2002 to took possession of Borrower’s property, unless bank decided this Legal representation.
- D) Thereafter, decision on legal representation of borrower, bank can issue Notice under section 13 (4) of SARFAESI Act, 2002 to take physical possession of borrower’s property. This notice could be challenged before Debt Recovery Tribunal by filling Securitization Application under section 17 of the same act, with accompanied fee.
- E) That after issuance of this notice under section 13 (4) of Act, Bank or secured Creditor, would approach, Concerned District Magistrate to seek police help to take possession of Borrower’s mortgaged property, if no stay etc had been granted by concerned Debt Recovery tribunal.
- F) Thereafter, with or without taking possession on borrower’s property, secured creditor, bank would issued a notice for sale of Borrower’s Assets, in this notice Description of assets, time of Auction, minimum reserved price for mortgaged property would be mentioned. This notice would be published in two Newspapers, one in English Language and other is Vernacular language.
EFFECTS OF SRFAESI ACT, 2002 AND REMEDY
Effect of this Act is that balance of power is heavily placed in favour of bank but it is not that the Borrower had been left on mercy of bank and bank had been permitted to sold borrower’s property at whatever price. It is expected from the borrower to be more vigilant and not sleep over his right, he can raised the dispute with bank if any, at Concerned Debt Recovery tribunal. For example borrower’s property and bank, which gave loan to borrower is situated in Chandigarh, then Concerned Debt recovery tribunal had the powers to set aside the Possession Notice or sale notice issued by Bank or secured Creditor under SRFAESI Act on application of borrower, under section 17 of SRFAESI Act.