• Repossession of auction property by bank from defaulting customer

Since I was unemployed due to recession I defaulted to pay the EMIs of my housing loan the bank has dispersed the property which was auctioned  for an amount of Rs27,00,000/- to a single bidder in a single auction in my absence in the auction  which was valuated for an amount of Rs35,00,000/-. After 2 ,3 years the bank is sending intimations to pay the remaining amount with interest till today .I kindly request you to give us a legal advice to deal with the problem since I have not received any information from the bank in written after the property was sold in the auction .Till today I am not in a financial to pay the debts .More over after 2,3 consultations with the bank debts recovery manager he is advising to just put a mail by saying that I can pay an affordable amount since I am facing financial problems ,Is this will be the right way to get an nodue certificate from the bank regarding the loan.i will be thankful if u guide me the right path
Asked 3 years ago in Property Law from Hyderabad, Andhra Pradesh
1. Do check whether the Bank sent you notice u/s 13(2) and then u/s 13(4) of SARFAESI Act or not.
2. Without sending or affixing these notices Bank can not proceed to attach and then auction the flat.
3. Before making the auction the bank is obliged to make a paper publication as well.
4. So if these conditions were not fulfilled you can file case to set aside the sale.
5. The bank is obliged to recover the NPA amount only , not more that  that.
6.If you lack these informations then ask for these details from Bank. If it refuses to inform you then send RTI notice.
7. Depending on the reply further advice can be given.
Devajyoti Barman
Advocate, Kolkata
12536 Answers
161 Consultations

5.0 on 5.0

1. What was your outstanding amount when your property was auctioned? Was it more than tye reserved price kept by the Bank for selling the said property?

2. When you have availed loan from the Bank, you shall have to repay it with agreed interest within the specified time. If for consequtively for three months there is no EMI payment for a loan, the Bank declares the loan account as Non Performing Asset after which it initiates SARFAESI Proceedings by issuing Demand Notice u/s13(2)  of SARFAESI Act,2002 demanding the outststanding to be paid within 60 days & if it is not paid, the Bank issues Possession Notice u/s13(4) of the Act,

3. At this time, the borrower files Application u/s17 of the Act finding fault with the said SARFAESI Proceeding and prays for stay order,

4. After taking symbolic or physical possession, the Bank sells the property by keeping a reserved price below which the property can not be sold,

5. The property can not be sold in a single auction if there is a single bidder,

6. Moreover, the property can not be sold below the reserved price,

7. You are silent on whether you have filred any application before the DRT to set aside the said sale or not?

8. However, if you have already agreed to accept the faults of the Bank in taking SARFAESI Action then nothing can be done,

9. After realising part of the outstsnding, the Bank will file Original Application (if the balance is still more than Rs.10 Lakhs), to realise the balance amount,

10. On receipt of the Possession Notice, you should have approached the Bank with a One Time Proposal to settle the dues at the ledger amount,

11. Now, approach the Bank with a proposal to settle the dues at the ledger amount and square up with the sale proceed which the Bank has already received,

12. No-Due Certificate will be issued by the Bank only when all your outstanding will be settled and there will be no due show in your said loan account.
Krishna Kishore Ganguly
Advocate, Kolkata
18160 Answers
438 Consultations

5.0 on 5.0

1) you have stated that no intimation was received from bank in writing after auction of property for Rs 27 lakhs . 

2) you have not mentioned whether prior to auction bank had issued you notice to pay the outstanding dues 

3) whether any reply was sent to the said notice by you . 

4) if bank had followed due process of law attachment and sale of property by auction would be valid . 

5) you have mentioned that valuation of property was fixed at 35 lakhs . what was the reserve price fixed at auction . ? if reserve price was Rs 35 lakhs bank could not have sold property at rate lower than reserve price . 

6) better contact a local lawyer .
Ajay Sethi
Advocate, Mumbai
44362 Answers
2575 Consultations

5.0 on 5.0

You can file a writ in the high court or file a civil case praying to give you possession of the same
Jeshma Mohandas KP
Advocate, Kozhikode
567 Answers
1 Consultation

3.5 on 5.0

Hi, Do you have receive notice under section 13(2) and 13(4) of the SARFAESI  Act, without giving notice and paper publication bank has no authority to sold the property and whether do you received any notice for the balance amount.... pls confirm us.
Pradeep Bharathipura
Advocate, Bangalore
4530 Answers
202 Consultations

4.3 on 5.0

1. If the property is mortgaged with the Bank against the loan taken, the Bank will first declare your account as Non Performing Asset to initiate SARFAESI Proceedings. NPA is declared after the EMIs are not paid for 90 days. 

2. After adjusting your loan account ,if there is any surplus ,the bank will return it. The bank is bound to return the excess amount to the mortgagor/borrower,after deducting the unpaid home loan.

3. You have not mentioned whether the reserved price kept by the bank was more than the amount outstanding. If 35 lakhs was the reserve price fixed then property could not have been sold for less than 35 lakhs. So if the reserve price was 35 lakhs then subsequent sale @ 27 lakhs is illegal. Your query is also silent as to whether the bank issued the possession notice to you and whether you took out any proceedings before Debt Recovery Tribunal/High Court against the sale. So the vital information germane to advice is missing.

4. If no action was taken by you pursuant to receiving the possession notice then no legal remedy is open except if the property was sold by the bank at below the reserve price. No fault can be found with the bank if it had complied with the legal process by issuing a notice to you and subsequently sold the property at the reserve price fixed. 

5. No due certificate will be issued by the bank only if no due is shown in your loan account. Your best bet is to negotiate with the bank and pay the amount which you can afford and the bank is willing to take.
Ashish Davessar
Advocate, Jaipur
22966 Answers
631 Consultations

5.0 on 5.0

A.	No bank permitted to initiate legal proceeding under SARFASI Act without issue written notice or demand notice towards the payment as well auction of the mortgaged property.

B.	The Bank has right to auction your mortgaged property under the Right to Redemption and reserve the right to recover whatever amount dues with respect to your loan.

C.	Usually, the bank has right to auction your immovable on the principle amount along with interest due and once the auction process completed bank has liability to return the excess amount to the borrower.

D.	The issue of NOC from the bank would be issued on the basis of whole payment received from you.

E.	Contact a local lawyer to clear this matter expeditiously.
B.T. Ravi
Advocate, Bangalore
831 Answers
55 Consultations

5.0 on 5.0

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