Cpc and sarfeasi
Terry DCruz
(Querist) 28 November 2014
This query is : Resolved
Dear Sir(s),
One of the Nationalized Bank has filed a money suit against the borrowers and guarantors; for recovery of loan, praying for attachment of the properties mortgaged with the bank. After the framing of issue bank did not effectively participate in the suit proceedings as a result the suit got dismissed for default. Bank did not even file any restoration petition for last 8 months.
Now after 8 months time the Bank is issuing notice under section 13(2) of Sarfeasi act.
Now the query would be :-
1) Is the 13(2) action is barred by resjudicata?
2) Can the borrower demand cost in counterclaim for filing a frivolous suit by the bank?
Note : The borrower could not repay the loan due to various external factors including change in government policy as a result the business was closed. These facts were suppressed by the bank while filing the suit. After framing of issue they did not come forward to contest the case as such the suit was dismissed for defualt.
ROHIT SHARMA
(Expert) 28 November 2014
1. The case was dismissed yet the principle of resjudicata cannot be agitated since SARFESI Act is not deemed as a civil suit. C.P.C. is not followed at all in such proceedings and civil courts cannot interfere with the proceedings before D.R.T.
2. The case being dismissed without ordering cost then now to seek cost for such frivolous suit cannot be now belatedly agitated.
Terry DCruz
(Querist) 29 November 2014
Sir(s)
What is the remedy available to borrower?
Is it only objection to the 13(2) application or any other remedy?
c.p.s. ramachary
(Expert) 29 November 2014
If SARFAESI Act is invoked, borrower has no remedy except defending the action on technical points. Dismissal of the suit has nothing to do with the action under SARFAESI Act.The bank can file application (seeking condonation of delay)for restoration of the suit dismissed for default. Both the remedial actions can go on simultaneously. Though the remedial measures under C.P.C. and SARFAESI Act operate in different fields they together constitute to one remedy. You cannot have an easy walkover since suit is dismissed for default. The bank can recover the entire dues together with costs under SARFAESI Act. You may contact the bank and appraise them for reasonable compromise or settle the dues seeking some cocessions instead of being under wrong imaginations, so that you can save your property as well as unsavoury action which is a costly affair.
K.K.Ganguly
(Expert) 29 November 2014
1. No, not at all. The Bank is well within its right to issued demand notice u/s13(2) of SARFAESI Act,2002. In fact the Bank can also paralelly file Original Application (O.A.) before the FRT u/s19 of recovery of debts Due to Banks and Financial Institutions Act, 1993, if the debt is for more than Rs. 10 Lakhs,
2. Ha the case filed by the Bank been decided as frivlous? The Bank can not be forced to bear for the losses incurred by tye Borrower for whatever reason.
Satya nand aggarwal
(Expert) 30 November 2014
Terry DCruz
Reply to u query is as under:-
1. No resjudicata.
2. Not at all. suit is finished there can be no counter claim. It was not a frivolous suit. Bank can avail both remedies even side by side.
T. Kalaiselvan, Advocate
(Expert) 03 December 2014
Your query has been very properly addressed by expert Mr. Ramachary, nothing more to add.
