• Auction of property before the arbitration is completed

I have been given a notice under the section 13(2) & Section 13(4) of SARFAESI act 2002 and a notice has been put outside my property which states that the financial instituition has taken the possesion of my property. As I have failed to pay my dues and the first notice for the repayment of the wholesome amount was given to me in September. The notice regarding taking the possession of my property was posted outside my property on 19th December 2018. Now I have today only received a notice dated 31/12/18 that an arbitrator is being an appointed by the NBFC to resolve the disputes between me and the lending NBFC. When I talked to my legal counsel about the appointment of the arbitrator, they told me that it is useless and he has already had a talk with the legal department head of the NBFC who is an Acquaintance and according to them they are moving on with the auctioning procedures. I wanted to know that is it even possible to go ahead with the auction when an arbitrator is being appointed by their end. If so, then what am I suppose to do? I am willing to pay 4-5 EMI's that are pending towards me and in no condition want my property to be auctioned as they loan amount for which it was mortgaged is far below than the current value of the property. Please help as I am running out of time.
Asked 11 months ago in Business Law from raipur, Chhattisgarh

Dar Client,

File your objection u/s 13(3) to bank (will buy some time) and offer the payment. NBFC bound to consider it. And two simultaneous  proceeding for same cause of action is abuse of process, since both initiated by NBFC , one must be stayed. File appeal along with stay application in DRT and get the reply from bank, which proceeding it wants to proceed.

Yogendra Singh Rajawat
Advocate, Jaipur
14648 Answers
19 Consultations

4.6 on 5.0

Once the arbitrator appointed for resolve the issue then the lending NBFC has to wait for arbitrator verdict.  One way appointing the arbitrator for resolve the issue and another way proceeding with recovery or auctioning the property is clearly violating the Law. If in case still the lending NBFC going ahed with its illegal activities your have to approach concerned Debt Recovery Tribunal (DRT) by way an OA (Original Application) and seek for stay all further proceedings in the matter. The DRT will stay the matter and also possibility of providing some time for repayment of loan amount.     

Lakshmi Kanth
Advocate, Hyderabad
435 Answers
15 Consultations

4.7 on 5.0

1) make an offer for OTS to the bank 

 

2) you can file application before DRT seek stay of auction proceedings 

 

3) if an arbitrator is being appointed by NBFC then bank may not auction your property pending disposal of arbitration proceedings 

Ajay Sethi
Advocate, Mumbai
69091 Answers
4157 Consultations

5.0 on 5.0

Sir file a petition before the high court to get stay on auction offering that you are willing to pay complete amount in the fixed time, further give the NBFC settlement offer, if you are willing to pay the high court shall grant you time stay auction. 

Shubham Jhajharia
Advocate, Ahmedabad
20947 Answers
81 Consultations

5.0 on 5.0

If you have not given a reply to their original notice within 60 days or if your reply was not acceptable to the NBFC then it is legal for them to go ahead with the possession and auction of the property.

The NBFC may ignore the arbitrator also if it has decided to proceed.

You may talk to the company about it with your proposal.

If they don't agree then you can approach DRT for relief.

T Kalaiselvan
Advocate, Vellore
58941 Answers
747 Consultations

5.0 on 5.0

Bank has power under SARFESI to auction your property after having taken symbolic possession of the same

If property is auctioned, the sale proceeds will be used to satisfy the outstanding of bank with interest and balance will be returned to you after deducting auction expenses 

Even you can participate in the auction to save your property from going in the hands of any third party 

The appointment of arbitrator by the bank will not come in the way of the bank to conduct auction 

I suggest you request bank for a one time settlement to stop auction 

Yusuf Rampurawala
Advocate, Mumbai
4674 Answers
28 Consultations

5.0 on 5.0

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