I purchased an agri land of 5 acres in the year 2010. seller had given the said land as collateral security to a bank loan along with 15 acres of his other land as primary security. he then had promised to pay the bank loan shortly. Till Now he has not paid the bank loan. the Value of the 15 acres primary security is more than the loan amount. The person in question has become deaulter. and Debt Recovery Tribunal had published auction notice for selling primary Asset of 15 Acres. he then paid part of the loan and availed time for paying balance amount. Mean while my land i.e. 5 acres is being acquired by KIADB. Can I claim the compensation in this situation. I have registered sale deed in my name and all documents like RTC are in my name. Even KIADB has been communicated about this. and they have changed name of the owner as my name in their records. Please advise. thank you.
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1) if the bank becomes aware of acquisition of land they will claim the compensation as land has been given as collateral security by the seller .
2) seller could not have sold land to you without collateral security being released by the bank
3) request bank to release the collateral security and then sell the land if you so desire
Dear Ajay, but collateral security comes in to picture only after selling primary security no..? Collateral property should be attached in case the bank fall short to clear the debt after attaching primary security, That is what i felt. please clarify. can we file a case and delay the whole procedure of bank taking the compensation ? So that after some time DRT will recover from primary security ?
1) were you aware at time of purchase that seller had given property as collateral security to bank ?
2) mostly in auction proceedings before DRT properties are hardly ever sold over reserve price on account of collusion among bidders . even if bank has prime security it may not be able to recover its dues .
3) you can take out intervenor application in DRT if collateral security is sought to be sold by bank in recovery of its dues and seek stay of sale
Unless all attempts are made to recover the loan by the sale of primary security the collateral cannot be proceeded against. You can thus move the DRT to seek an urgent stay on the sale.
Can I claim the compensation in this situation.
I have registered sale deed in my name and all documents like RTC are in my name.
Even KIADB has been communicated about this. and they have changed name of the owner as my name in their records.
If the financial institution has initiated action under Sarfesi act, you do not have any option than to prefer appeal against the order in the strength of your sale deed.
However if the properties were offered as securities before selling it to you then you have less chances to recover the property, instead you can lodge a complaint of cheating against the seller and also file a recovery suit against him by cancelling the sale deed.
This is how problems arrive when a proper legal opinion is not obtained before purchasing any immovable property.
but collateral security comes in to picture only after selling primary security no..?
Collateral property should be attached in case the bank fall short to clear the debt after attaching primary security, That is what i felt. please clarify. can we file a case and delay the whole procedure of bank taking the compensation ? So that after some time DRT will recover from primary security ?
The question of primary security or collateral security will arise when the defaulted loan amount and its interests as ascertained. If the value of primary security is not capable of yielding the outstanding amount, then the collateral security also will be forced into this process. You can prefer an appeal before DRT failing which you may approach DRAT with second appeal.
Q. collateral security comes in to picture only after selling primary security no..?
A. doctrine of marshelling applies in your case and you can claim that recovery should be make out of the 15 acre land (primary security) section 81 TP Act.
