If any other bank is ready to bail out your property by paying the debt due by you to the said bank you can take back possession and continue with business.

In case you need possession of your property you need to repay loan amount since banks won't be inclined to give loan once you have defaulted in payment of loan amount.

According to RBI, terms loans on which interest or installment of principal remain overdue for a period of more than 90 days from the end of a particular quarter is called a Non-performing Asset. If you can prove that your property was attached before time limit and you had amount to pay dues then you can challenge the classification.

You can file an application under SARFESI section 17 to recover the possession as NPA is not done by following the guidelines of the RBI.

Also the bank must have filed the recovery suit against you in DRT contest same based on NPA of NPA is illegal the whole.proceeding is infructuous and bank cannot recover from you illegal.

If default is for 90 days the bank can issue a demand notice under section 13 SARFESI to recover complete amount in 60 days after that they take possesion under 13(4) notice and for physical possesion under section 14 with order of magistrate or.district collector.

So kindly contest the 13(4) notice take a stay on auction sale on ground that the recovery proceeding is infructuous on ground of illegal NPA.

The bank has to reinstate you loan and provide you time to settle your dues.

In worst circumstances even of the NPA is legal than the last option available with you is 13(8) SARFESI under this you can repay all the amount and save your company with interest and penalty I know this is harsh but on contrary if NPA is illegal the bank proceedings are wrong from the starting and stands no legal ground.

1) You have to talk with Bank Management, regarding new upgrade loan system and current not paid loan. Check how much currently you have to pay the amount and settle the issue.

2) Pay current loans minimum due amount atleast. Borrow from others not fro state bank.

You please do understand each step in the debt recovery proceeding initiated by the bank and your right to challenge the same, if it is illegal or violated by law.

The action of the Bank under the SARFAESI Act, 2002 starts with classifying an account of the borrower as ‘NPA’ as per the guidelines issued by the Reserve Bank of India. The Courts have repeatedly held that RBI guidelines are mandatory and every Bank/Secured Creditor should follow the RBI guidelines when it comes to classifying an account of the borrower as “Non-performing Asset”.

According to RBI, terms loans on which interest or installment of principal remain overdue for a period of more than 90 days from the end of a particular quarter is called a Non-performing Asset. If you can prove that your property was attached before time limit and you had amount to pay dues then you can challenge the classification.

When the classification(NPA) as referred to is illegal, then, the borrower has two options to challenge the illegality. The borrower can approach the High Court under Article 226 of Constitution of India and the High Court can also entertain a Writ Petition from the borrower if the borrower could establish his case clearly.

otherwise, the borrower can file an Appeal to the Debt Recovery Tribunal under Section 17 of SARFAESI Act, 2002 questioning the measures initiated by the Bank under section 13 (4) of the Act and the borrower can expose as to how the Bank has not followed the RBI guidelines when it comes to classifying the Account as ‘NPA’.

Once the Account is classified as ‘NPA’, then, in accordance with the procedure prescribed, the Bank will proceed to make a demand under Section13 (2) informing the borrower about the outstanding amount in the loan account and also the consequences. There is a general format to give a notice to the borrower under section 13 (2). The notice under section 13 (2) should substantially comply with the requirements and if the borrower raises a technical objection, those are not appreciated normally going by the precedents so far. Normally, borrowers may choose to remain silent after receiving a demand notice under section 13 (2), though, they can send their objections to the Bank/Secured Creditor. If the borrower sends any objections to the notice under section 13 (2) of the Act, then, the Bank should carefully consider those objections and should be fair in looking and replying to the objections. There should be a reply to the objections raised by the borrower under section 13 (3A). If the Bank chooses to ignore section 13 (3A), then, the entire action of the Bank under section 13 of the Act gets vitiated. If the Bank failed to reply to the objections raised by the borrower, then, the borrower can raise the same before the Debt Recovery Tribunal in an appeal under section 17 of the Act. This is the adjudication part and the Bank is supposed to act fairly at this stage considering the object of the special legislation ‘SARFAESI Act, 2002’.

After the adjudication part is over, then, the Bank proceeds to issue a possession notice under section 13 (4) of the Act informing the borrower that they have taken symbolic possession of the property. This is not actual possession of the ‘secured asset’ or property of the borrower. The borrower gets a right to question the notice under section 13 (4) and all subsequent measures initiated by the Bank under section 17 of SARFAESI Act, 2002. All measures of the Bank under section 13 (4) of the Act can be questioned under Section 17 of the Act.

After the possession notice under section 13 (4) and if there is no stay of further proceedings, the Bank will proceed to take physical possession of the property under Section 14 of the Act through District Magistrate or Chief Metropolitan Magistrate etc. Before the Magistrate under Section 14 of the Act, there will not be any kind of adjudication and notice need not be given to the borrower at this stage. The Magistrate is required to look at the statutory compliance of Section 13 and if the is satisfied, he will assist the Bank in taking physical possession of the property.

If there is a clear case, then the Debt Recovery Tribunal can restore the possession back to the borrowers even after taking physical possession.

After taking physical possession of the property under section 14, if there is no impediment to proceed further through an order from the Tribunal or the High Court, the Bank will proceed to sell the property/secured interest and the Bank is supposed strictly comply with the provisions of the Act and the SARFAESI Rules in this regard. If the Bank violates the SARFAESI Rules while proceeding to auction the property, then, the entire auction can be set-aside on that ground alone. Even after the confirmation of sale in a public auction conducted by the Bank, the auction can be set-aside if the Debt Recovery Tribunal decides infavour of the borrower in his appeal under section 17 of the Act. From and out of the sale proceedings, the residue is to be returned to the borrower.

So challenge the banks notice and File SA before DRT court

1. Mere declaration of your loan account as NPA does not entitle the creditor to take physical possession over the property.

2. The physical possession come at the last stage and that too after compliance of provisions of section 13 and 14 of the SARFAESI Act.

3. I am not sure whether these momentary previsions were complied with or not.

4. if not then file an application under section 17 of the SARFAESI Act before the DRT and seek return of possession. In the said proceeding you can give representation on the scheme of your repayment of loan and made some payment as well towards your plan for repayment.

make an offer for one time settlement

2) in the alternative pay the EMI due and payable by you on date

3) bank would hand over possession of property to you

make an offer for OTS .

repay the outstanding dues

3) bank would be ready to do business again with you

Please file a writ on the grounds of illegal NPA in the High Court and pray for the order to allow you to continue business on the merits.

If you are able to prove that the NPA declaration is illegal then with the permission of the court you can take the possession of the premises and start your business

Note that you can only get back the physical possession after the order of the court and not otherwise.

Regards

1. YES. It can be done. Negotiate with the Bank for fresh terms of settlement and new guarantors, for consideration and execution.

Keep Smiling .... Hemant Agarwal

Yes, you can still get the physical possession back, once you clear the debt you owe to the State Bank of India.

Contact a local Lawyer having experience of handling matters in the Debt Recovery Tribunal.

If the bank has ignored the RBI guidelines and illegally declared your account as NPA, you'll have llegal recourse against the bank.

Is there any case filed in the DRT? On what note, the bank took physical possession?

If there was any case and as per the Order the Bank has taken possession then while the case was going they might have asked you to repay the loan.

Did the bank officials had Order to do that? Sometimes if repayment is not done within time, they provide some grace period.

It depends on the bank's discretion.

If you have arrived at a consensus by repaying the loan or any other agreement with bank then the bank may release the property on agreed terms.

If you have not contested their case You may approach DRT for relief under sarfesi act.