We understand that foreclosure property comes with some inherent risk however we had below queries. We will definitely be engaging with local lawyers but want different perspectives – 1. The manager of the bank has communicated that they have moved to court for possession (I am assuming physical possession). We wanted to understand if this would mean that though the auction is being done prior to getting the orders from the court regarding possession, can we go ahead and bid for the property? If the bid is successful, does the bank have any obligation to continue the case and hand over the physical vacant possession to us as per any SARFAESI Act? 2. The mortgage of the bank is reflected in the Encumbrance certificate and the bank also states that there are no other encumbrances in their notice. We have also checked the corporation tax payment which is up-to-date. Can you advise on any other checks that can be made?
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You can make offer to bank for one time settlement wherein you offer 20 per cent or so balance amount in equated monthly instalments spread over a year or so
2) make bid through third party for the property over the reserve price
3) if bid is successful and confirmed by DRT bank would hand over possession to successful bidder issue sale certificate in name of successful bidder
1. If the bank is invoking the provisions of sarfaesi act then it need not have to approach court for taking possession, however it may approach magistrate court seeking protection for taking physical possession.
In the auction sale any person can bid for the property and the successful bidder shall be to get possession of the property after completing the necessary paperwork and formalities in this regard
2. The encumbrance certificate alone is not the document to be verified, you may have to scrutinize the title and title chain documents, litigation if any filed by the borrower, the revenue records, and any other relevant document your advocate may name or suggest.
Most important is to confirm if the borrower has instituted any civil suit disputing the authority of the bank to take possession of the property.
1. Yes
2. No need you can at the most claim indemnity bond
Dear Client,
Property foreclosure is a legal process by which a lender obtains possession and sells the mortgaged property in order to recover the loan balance. Default occurs when the buyer, usually the borrower, fails to pay the monthly instalments.
Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act mandates District Magistrate to deliver possession of a secured asset within 30 days, extendable to an aggregate of 60 days upon reasons recorded in writing, to banks.
SARFAESI Act was enacted to provide a machinery for empowering banks and financial institutions, so that they may have the power to take possession of secured assets and to sell them.
Thank You.
1. Please get details of the bank's court action, whether it is for getting physical possession or for some other purpose. It is better to await the court order for physical possession before you bid for the property. Legally, the bank is duty-bound to hand you physical, vacant possession, if you win the auction.
2. If no other encumbrance is reflected in the EC, you are safe. However, please ensure that no other Corporation dues such as electricity or water charges are outstanding.
Thank you all for the response. I have participated in the said auction, and was declared the highest bidder. Upon which I have completed all the payment formalities. In the meanwhile the bank had petitioned the Magistrate court for protection and assistance in taking possession, which was granted - upon which the bank had set the date for vacating the borrower which was last week. However the borrower has approached the high court and got an interim stay few days ago. This was communicated today as I was to collect the Sale certificate (which is now deferred). Background-> The Company for which the borrower is partner/guarantor, has a due very large amount due to the bank which has declared NPA about 3 years ago. I gather that borrower(s) will not be able to repay which is 5 times the auction property price. Also the bank authorities mention that all the legal formalities has been followed in following the auction as per SARFAESI act. So I’m not sure how the High court has provided a stay. My queries 1. Can this have any potential impact on the sale - Since I have already made payments in full 2. What is typical duration I can expect to have this stay vacated (as per communication from the bank) 3. Can the borrower petition on medical grounds of his parents or any humanitarian grounds? if yes what does the law or SARFAESI act say about such case
1. Even if you are the highest bidder and have paid the entire bid amount, since there is a stay granted by high court, the bank will not be able to furnish the sal certificate nor it will be able to take physical possession of the property until the stay is vacated.
If you are not willing to continue with this then you may issue a legal notice to the bank to either handover the possession of the property along with the sale certificate or refund the entire amount with interest within a time period that may be stipulated in the legal notice addressed to the bank.
2. Until and unless proper and prompt follow up action is taken by the bank, the stay cannot be vacated so soon, hence you may decide.
3. The borrower has already approached high court with some reason, and the court also has accepted the same, so the best option before you is to implead yourself in the pending case as necessary party to the case and vent your grievances and objections to the case filed by the borrower against the bank in this regard
Stay order would be set aside but may take 6 months or so
your lawyer can guide you the time taken for setting aside stay
since you have made full payment and borrower is Janel to repay loan amount sale should be confirmed
on humanitarian grounds at most borrower may get some time to deliver vacant possession
Dear client,
You will have to represent your self before the DRT informing that sale has become absolute hence no right remain for the Borrower.
As this is document based process, Better discuss with an competent advocate with all relevant documents to get precise advice.
Thank you
1. Your interests as the genuine bidder at the auction shall remain protected by law.
2. You may implead yourself in the high court as an interested party and ask for vacating the stay at the earliest.
3. No, such a ground is frivolous and has no place under the Sarfaesi Act.
1. Only if court rules that.
2. Depends on court hearing. Any stay needs to be heard again after 6 months to continue.
On medical ground only bail can be granted that too jn exceptional circumstances.
Medical ground