2. If the borrower fails to repay the money then the creditor cam  indeed fole suit for foreclosure and sale under DRT Act.

2. If the creditor seeks injunction on the suit property and its allowed by court the borrower would be restrained to use the said property. 

4. If civil suit is pending writ court can not pass any substantive or equitable order. 

Contest suit.

If the pleading of the suit is shown then further advice can be given. 

Feel free to contact. 

1. Yes

2. No if any such injunction order present

3. Yes it can file writ

If there is any surplus amount after adjusting term loan you are entitled to recover said amount

2) court would not stay regarding sale of properties if loan amount is not recovered 

3) you can take legal proceedings restraining sale of property in case SIPCOT seeks to auction the property 

Leased out or actually leased out if different thing. 

Merely on the assumption that if unit was leased out,  sipcot would have recovered the debt is not good ground. Amount still due, documents cannot recover. 

But keeping property locked till now is not proper. Can approch high court for direction to recover possession and permit you to sell the property and settle the debt with interest, claim of surplus amount.

Till than stay on auction/sell by SIPcot.

Mortgage law is mainly dependent on the terms of mortgage deed subject to applicable provisions of the law.

It means terms and conditions of the deed shall prevail over certain provisions of mortgage law.

So it would not be appropriate to tender any legal advice without first going through the mortgage deed.

 The Act was enacted by the Parliament with a view to promote industrialization and offer assistance by giving financial assistance in the shape of loans and advances etc. repayable in easy instalments. The Corporation has to recover the loans and advances, so as to be able to give financial resources assistance to other industries and unless it recovers its dues, the money will not remain in circulation for long.

Section 29(1) in The State Financial Corporations Act, 1951 says that  Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any installment thereof or in meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation, the Financial Corpo­ration shall have the right to take over the management or possession or both of the industrial concerns, as well as the right to transfer by way of lease or sale and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation.

Section 29 of SFC Act spells out the rights of State Financial Corporations to realize its dues without the intervention of Courts, when the borrower industrial concern commits default or breach. The intention is to save public money from unscrupulous or recalcitrant entrepreneurs/industrial concerns. Section 29 dearly states that the financial corporation shall have the right to take over the management or possession or both of the industrial concern. It does not refer to taking over of management or possession of the property belonging to the surety, which has been secured in favour of Financial Corporation. Since, the Corporation must be held entitled and given full protection by the Court to recover its dues it cannot be bound down to adopt only one of the two remedies provided under the Act.

In such situation you can challenge the possession. Did you use this opportunity in 1999?  Did the financial Corporation filed any suit against SPVT (P)ltd under Sec.31 of the State Financial Corporations Act, 1951.

It is your obligations to discharge the loans borrowed from the respondent-Corporation. The aim of equity is to promote honesty and not to frustrate the legitimate rights of the Corporation which after advancing the loan takes steps to recover its dues from the defaulting party. If you approach the High court by a writ the court will says that there is no equity in favour of a defaulting party which may justify interference by the Courts in exercise of its equitable extraordinary jurisdiction under Article 226 of the Constitution of India to assist it in not repaying its debts.

In such a stage the return of sale deed is not sustainable. But you can file a case for rendition of account against bank.

1. SIPCOT has taken foreclosure action and also took possession of the the entire property in the year 1999.

The borrowers did not take any action against this foreclosure even though they had very good opportunities for that as per provision of law  and the terms of the loan agreement or contract.

Actually the borrowers have slept over the matter till date without taking any steps on it.

If the borrower is claiming the return of property for whatever reason they may rely upon, the lender finance company may  demand interest over the loan from that date till this date, however since the loan has been foreclosed by making the adjustments after taking over possession of the property offered as security for the loan, the borrower may not have any right over it.

2.  If the lender did not or could not sell the property till this date, then it is their problem and not the problem of the borrower. 

The borrower may not be able to claim any right over the property once it was taken possession by the lender as per the terms and conditions of the loan.

3. In my opinion, the proposed writ petition may not be maintainable because the borrower had never taken any step to repay the loan or even interest after the lender took possession of the property offered as security for the loan.

The borrower can claim the surplus if any available with the lender after disposal of the property by sale or auction;

The borrower can file  a case against the bank for rendition of account.

However you may consult a local advocate with experience on such matters by producing all the relevant papers  for proceeding through any loopholes on the basis of the documents scrutinised by the lawyer.

Hi

1. Yes SPVT is all eligible to claim the surplus amount and return of documents. 

2. You have to apply for Temporary injunction for stopping them from selling the assets. 

3. Yes take temporary injunction allowed and move ahead with specific performance suits for return of documents.

Thanks

1. the state lender had the right to take over management of the borrower and possession of its property which was given to lender as security 

2. the above is like a conveyance because the management of the borrower is taken over by the state lender [meaning thereby that the borrower company is then controlled by the lender] which is coupled with possession

3. so if a suit is sought to be filed now [after 20 years of taking of possession of the secured property] then there will be a question of limitation i.e. the lender may raise the plea that the suit is barred by limitation and thus liable to be dismissed

4.what was the borrower company doing all this while, i.e. for last 20 years? Why did it not take any steps to get back its property ?

5. even if the lender would have leased the property, it would be required to have a title as a lessor to lease out the property. So the lender could lease the property only when it took over management of borrower company and also possession of its property. 

6. first the borrower needs to ascertain whether the property was indeed let out on lease by the lender and if yes then what was the actual lease rent it earned and whether the entire outstanding loan with interest has been covered by the lease rent so earned? If that is so then the borrower can file a suit for recovery of its property 

7. if the property was not leased out and the lender only enjoyed the possession of the property without doing anything further, then the borrower can sue the lender for withholding the property for so long, subject to limitation as above

8. the relief against the lender for not selling the property in the meanwhile can be sought in the suit itself. A separate writ petition is not required

9. you can also file a writ petition against the lender because it is a state intrumentality [instead of filing a suit]. But i think that there is a recent Supreme Court judgment which has held held that just because the respondent is a state, writ petition will not always lie. Here there is a contract between the borrower and state lender for advancement of loan. Any breach of such contract can be adjudicated by a civil court in a civil suit. 

Dear Sir,

You may file the suit/writ in the High Court stating that the amount of loan money advanced by SIPCOT was realised and it also own the company for about 20 years. In this condition, the SPVT (P) Ltd may be returned its building (sale deed), machinery as and where basis, the same should not be sold to third party and any such action by SIPCOT should be stayed. It is possible that SPVT (P) Ltd will be asked to make some payments and then it may acquire, its properties. It is also suggested that  SPVT (P) Ltd may approach SIPCOT  in this regard before filing the case. 

1) If the same is concluded in auction, after adjusting the amounts the balance if any, will be given to you.

2) If Injunction is obtained against SIPCOT restraining it from selling the property, it cannot go ahead with sale.

3) You can take action if SIPCOT goes ahead with sale of property.

1. SPVT may plead that after taking possession of its assets, SIPCOT deliberately failed and neglected to put them to any productive use, and is ,therefore, liable to SPVT for the economic loss caused. This point is to be strongly argued in order to off set the loan dues of SPVT to SIPCOT against the notional financial loss suffered by SPVT on account of SIPCOT's deliberate negligence.

2. SPVT may pray for an order of injunction restraining SIPCOT from sale of its assets.

3. No Writ jurisdiction is applicable against a government corporation.

1. SPVT can file suit against SIPCOT with application of condonation of delay because it may not be maintainable due to Limitation period.

2. Yes you can make an application for Temporary Injunction against SIPCOT for stay on sale till disposal of suit.

1. There is no legal infirmity in it.

2. If the aggrieved party is intending to challenge the acts done by Tahsildar, may include all such lacunae in his favor in his pleading in the case he may plan to file.

3. If you want to fight on this platform also then you may include this lacuna too in the proposed case to be filed. 

However it may be too late to point out such technical errors because the case will not stand based on such errors. 

Merely non mentioning of section and act would not void the foreclosure order 

2) there must be board resolution authorising 2 directors to execute loan security documents 

3) possession proceedings should mention details of due amount , loan details etc

4) you ought to have taken legal proceedings to set aside recall order , possession notice within limitation period 

Dear Sir,

Even if there is not specific Act/section, the creditor is entitled to get the possession of assets under mortgage. And because non description of section/Act, the proceedings may not be void. The issue raised about the seal is also of not much worth today. However, you are suggested to take all pleas when you file the case or proceed against them.  

1. It is correct to some extent but there can a strong objection be made against the order.

2. No, 

3. Yes, common seal is needed to be affixed on each page signed by the eligible members.

Loan security documents not signed by the eligible members makes it invalid. 

1. 1 and 2 it's illegal

3. Yes it's illegal if conditions of article of association is not abided. You can challenge the same

Once A Mortgage, Always A Mortgage. You have to file suit to claim right To Redeem Mortgage.

Not mentioning provision of law is not fatal and not following AoA procedure to obtain loan cannot raise now, barred by limitation.

1. SIPCOT should have clearly stated in its foreclosure and recall notice under what legal provisions it was issuing such an order. This point may be challenged.

2. As you say a Tahsildar was involved, it implies SIPCOT had proceeded under the SFC and not under the Sarfaesi Act.

3.If the Articles say an MD shall witness affixing of the common seal, any document which bears the common seal but has not been witnessed by the MD can be held to be not binding on the company.

1. SIPCOT has acted within the mandate of law by taking over the management of the borrower and possession of its property.

2. The borrower could have filed a suit for recovery of possession immediately after the possession was taken over. Now after 20 years the suit will be barred miserably by limitation.

3. The surplus lease rent, if any left, after adjusting term loan with interest, has to be delivered to the borrower by SIPCOT. A suit for recovery of money can be filed. 

4. If the loan amount is still not recovered there cannot be an injunction against the sale of properties by SIPCOT. The mere fact that possession has been retained by SIPCOT without selling the property to recover the loan amount with interest is not a ground to pass an injunction against it. Further, any such civil suit now will run into question of maintainability on the ground of limitation unless a recent cause of action within past 3 years is shown to exist. 

Yes they are at sone length suitable and applicable

You can not recover possession without repayment of loan to SIPCOT 

Dear Sir,

These judgment are relevant but facts of case your case seems to be a bit different. Hence, you are suggested to consult to your working advocate and the relevant judgments will be used as per need.   

If at all you want to file a suit for recovery of possession based on your own understanding of law, you can proceed or if your lawyer suggests that you can proceed with the proposed suit based on the circumstantial evidences in your support, you my proceed.

The referred judgments cannot be a base for a suit to be filed in this regard.

The judgments referred are applicable to circumstances of the case for which the verdict has been given, hence you may not be worried about the said judgments so soon, you will get plenty of such judgments at a later stage when the case would be posted for final arguments. 

Yes.

Yes these are relevant 

1. Your opinion is misconceived. Don't run after judgments. Any judgment is peculiar to the facts and circumstances of the case. Judgments can interpret law, but cannot create facts and evidence.

2.Unless the loan is repaid the possession cannot be recovered.

No, in my humble opinion these judgments are not relevant to the case on hand. SPVT P Ltd cannot wriggle out of its liability to repay the Sipcot loan.