1) meaning of the word “borrower” as defined

under Section 2(f) read with Section 13(2) of the Securitisation and Reconstruction

of Financial Assets and Enforcement of Security Interest Act, 2002( hereinafter

called 'the Act'). extend to include legal representatives of the original borrower inasmuch as the said expression extend to his heirs, successors or legal representatives.

2) The relationship between the borrower and the bank or the financial

institution is created by a contract under the Indian Contract Act, 1872. Promise

made by the promisor is binding on his representatives in case of his/her death,

unless a contrary intention appears from the contract. Promise to perform an

obligation under contract is not personal to the contracting party but is also binding

on his representatives. Legal representatives under law is liable for the debts of their

predecessor to the extent of any property inherited by them from their predecessor in

interest.

3) under section 37of indian contract act Promises bind the representatives of the promisor in case of the death of such promisors before performance, unless a contrary intention appears from the contract.”

4) bank has to substitute the legal heirs of MD in notice s issued as The residual interest in the property passed on to the hands of the legal representatives

1) you cant serve demand notice and possession notice to person who is dead .

2) you will have to issue fresh demand notice to legal heirs of the guarantors

3) then proceed for auction . you should not leave any loopholes that can be exploited by the legal heirs of the guarantors

If the property of the guarantor is seized and the guarantor dies midway before completion of process under the said act, then the process has to be initiated afresh against the legal heirs of the deceased guarantor in respect of the property of the deceased.

Giving fresh notices from start of Demand Notice will take much time consuming process. What should we do to auction it immediately legally under SARFAESI Act.?

Whether it is time consuming or otherwise, there is no bye pass to follow the due of process of law or else the entire entire recovery process will come a literal halt if the heirs obtain an injunction order against you for depriving their rights to property. After that the issue will become more complicated and may prolong without an end.

Take legal opinion from the panel legal adviser before taking any action in a hurry.

Dear Querist

When the SA is pending before the DRT concerned then the company should filed an application for stay along with SA and try to get the same till the final disposal of the case, the bank is adopt very much legal available way to recovery their dues. the bank have power to attached the property of Guarantor under SARFAESI ACT-2002.

Immediately file an application before DRT for stay the proceedings and also file an application for add the appellant (legal heirs of deceased) in SA under Order 22 rule 3 of CPC read with section 151 of CPC before DRT.

The demand notice had been issued. No fresh demand notice is required to be issued now to the legal heirs. A notice of sale should suffice to fasten the liability on the legal heirs.

1. Since SARFAESI proceeding has been initiated by the Bank then certainly there will be a mortgaged property,

2. The Bank will take possession of the mortgaged property by issuing possession notice u/s13(4) of the Act and then sell of the property to ealise their outstanding dues,

3. If anything remains from the ales proceed after realising the dues, the Bank will return the same to the Borrower or his legal heirs,

4. The demise of the MD of the Borrowing Company is irrevalent in the instant case.

1.The MD died even after the District Magistrate issued his order,

2. So, you shall have to just take over possession of the mortgaged property of the mortgagor who died afterwards.

1) my opinion stands vindicated

2) issue fresh demand notice on legal heirs of guarantors as residual interest in property passed on to the hands of legal representatives of the guarantor

As per the referred judgment the observation and judgement by the court on the point in question, i.e., Whether the notice under sub-section (2) of Section 13 should be issued to the legal heirs of the deceased borrower/guarantor afresh in the event such borrower/guarantor dies after the service of notice under sub-section (2) of Section 13 of the SARFAESI Act., is furnished below

The proceedings initiated against a person while he was alive would automatically stand abated immediately after his/her demise. The only course open to the respondent-Bank is to initiate proceedings by issuance of fresh notice to the legal heirs of the borrower/guarantor, as the case may be, as the legal heirs of the borrower/guarantor will have an opportunity to discharge the liabilities in sixty days. Only in the event of failure to discharge the liabilities in full by the legal heirs, the respondent-Bank could proceed further by issuance of notice under sub-section (4) of Section 13 and duly served or affixed in terms of that provision read with Rule 8 of the Security Interest (Enforcement) Rules.

From the above judgment, which is self explanatory, it can be noted that the Bank has to initiate fresh process for recovery.

Therefore it can be concluded that the proceedings initiated against the person who died subsequently, the proceedings against him stands abated and therefore not sustainable in law. That is what is the referred judgement speaking about.

1. It escaped my attention that the MD expired before the date of the DM's order. However, it did not change the situation since as per SARFAESI Act and several Judgements, it is not mandatory on the part of the DM to hear the mortgagor being he MD herein while dealing with Sec 14 Application,

2. It is not clear whether the application u/s14 of the SARFAESI Act was filed before the DM against which he had issued order for taking physical possession of the property with police help or it was attachment order passed against some other Act,

3.If the order was issued against application filed u/s14 of the ACT when he Bank was not aware of the demise of the MD, then the said order is perfectly in order,

4. The legal heirs of he MD should now file an application before he DRT for substituting their names in place of the demised MD,

5. The Bank won't have to start its SARFAESI Proceeding afresh.since all the notices issued by the Bank were issued to the MD when he was alive for which he has already filed SARFAESI Application before the DRT,

6. In one such case when my client Bank had filed Original Application under RDDBFI Act, it was found that the addressee of the recall letter issued by the Bank had expired before it was issued which the Bank was not informed by his legal heirs. The DRT, Kolkata refused to reject the O.A. for issuing recall notice to a dead person on the plea that Bank was not made aware by the legal heirs of the said demised Borrower and also that when the legal heirs of the dead Borrower received the said recall letter, they should have reacted to it either by paying or by informing the Bank about the death of the Borrower,

7. So, the above citation is not exactly applicable in the instant case since all he SARFAESI Notices were issued by the Bank to the said MD when he was alive. In the case of S.Suhaina Banu vs Indian Bank the Guarantor expired after receiving the 13(2) notice but within the 60 days period when she was called upon to pay the demanded amount. Hence, the SARFAESI proceeding initiated by Indian Bank was issued (or was called upon to act within a specified period when she died) to a dead person which is liable to be set aside.

In your case the proceedings were set in motion against the guarantor during his lifetime. The proceedings against him abated on his death. This, however, does not impair the right of the bank to proceed against his legal heirs. When the guarantor had notice of the legal proceedings the same can be carried forward against his heirs. The