Taking physical possession

yes, it can be as the property was hypothecated to the institution. also if it is saled then reffer to CBI for investigation of fraud.

Sec. 14 of SARFAESI Act itself is very clear in its language that secured creditor can take assistance of the Magistrate. It may be further noted that, Authorised Officer is only agent of the secured creditor and it is not mandatory to involve him by the cecured creditor (See Sec.13(13) of the Act is directory in nature). Prior issuance of sale certificate does not operate as bar for taking assistance of the Magistrate under Sec.14(2) of the Act  and the bank does not cease to be secured creditor after execution and registration of sale certificate by the authorised officer [Shakthi Industries & Others Vs. Indian Overseas Bank 2010(2)DRTC 725 (Mad.)]   

I completely agree with Mr. Ramachary sir. If I may add also please go through the case of M/S.Kathikkal Tea Plantations vs (R2 Impleaded Vide Order Of on 30 July, 2009. In the said case the court has validated the recovery of physical possession by the bank after it has sold the same property off to another third person & a sale certificate too has ben issued. I have atahced the same for your perusal.

Regards,

Sagnik Sanyal

I completely agree with Mr. Ramachary sir. If I may add also please go through the case of M/S.Kathikkal Tea Plantations vs (R2 Impleaded Vide Order Of on 30 July, 2009. In the said case the court has validated the recovery of physical possession by the bank after it has sold the same property off to another third person & a sale certificate too has ben issued. I have atahced the same for your perusal.

Regards,

Sagnik Sanyal

Dear Sri.Sagnik Sanyal, the citation affirms the postion that no notice is required to be given to the Borrower or tenant for obtaining Physical Possession orders. However, the question is as follows:

Bank sells the secured assets on "as is where is Basis". Delivery of possession to the successful bidder is only symbolic. After sale certificate is registered in favour of Bidder-Purchaser, he becomes absolute owner of the property.  The dues of the Bank are fully satisfied by the sale proceeds of the auction. Tenants are in actual possesion of the property. Bank has to obtain actual possession by "due process of Law".

After satisfaction of the dues of the Bank, Creditor-debtor relationship ceases. Hence to obtain physical possession, whether the Bank can file petition-request before CMM to take physical possession? or Whether the Auction Purchaser is required ot file eviction suit?

Mr. Narendra S.P. ,

Please read the full text of the judgment of Madras High Court in Shakti Industries Vs. Indian Overseas Bank cited above. On recovery of the debt the secured creditor does not loose his status as secured creditor and his relationship with his debtor does not cease since the secured creditor has to recover the balance amount of debt if any not compleately realised under SARFAESI Act. 

Dear Mr.Narendra S.P,

If you peruse the full extarcts of either of the cases as cited by me or Ramachchary sir, you will find that just because the Bank has sold off the said property does not mean that it can not take recover the said prioperty physically. The case of M/S.Kathikkal Tea Plantations particularly points out to this fact. Henceforth the Bank can very well initiate an action to recover the said property physiccally with the help of the CMM. I can also tell you the process to do the same.

Regards,

Sagnik Sanyal

"as is where is " condition does not avoid the responsibility of the bank to handover the possession of the auctioned property to the purchaser.

Dear Experts,

Pls let me know :

(1) whether the banker (secured creditor) has the rights to take physical possession of the 'GUARANTOR's PROPERTY' where the "PRINCIPAL DEBTOR / BORROWER" has failed to repay the loan?

(2) whether the ORDER OF CMM or DM or COURT ORDER is mandatory before initiating physical possession of the property by the secured creditor? Or, they can proceed without any order (for auction / sale of the Guarantor's property) by Sec 13(4), SARFAESI ACT ?!

Thanks.

1. Guarantor or mortgagor come under one common definition "borrower" 

See Sec. 2(f) of SARFAESI Act which reads thus:

"borrower" means any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance."

Hence there should not be any bar or distinction to enforce the security interest created by guarantor even without touching first, the borrower's property. 

2. Invocation of Sec. 14 is not mandatory. See Aboobacker  Vs. Punjab National Bank III (2005) BC 390 Kerala High Court. But purpose of taking assistance of the Magistrate is to ensure that, no breach of peace takes place.

Hon’ble DRAT Mumbai in State Bank of India  Vs. Clarity Gold (P) Ltd.  :2011 (2)  DRTC 300 (DRAT Mumbai) clarified the distinction between  Forceful possession and Peaceful possession. Please read the judgment.

1. Guarantor or mortgagor come under one common definition "borrower" 

See Sec. 2(f) of SARFAESI Act which reads thus:

"borrower" means any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance."

Hence there should not be any bar or distinction to enforce the security interest created by guarantor even without touching first, the borrower's property. 

2. Invocation of Sec. 14 is not mandatory. See Aboobacker  Vs. Punjab National Bank III (2005) BC 390 Kerala High Court. But purpose of taking assistance of the Magistrate is to ensure that, no breach of peace takes place.

Hon’ble DRAT Mumbai in State Bank of India  Vs. Clarity Gold (P) Ltd.  :2011 (2)  DRTC 300 (DRAT Mumbai) clarified the distinction between  Forceful possession and Peaceful possession. Please read the judgment.

Dear Sir,

One thing i would like to clarify that after auctioning the property and issuing the sale certificate is it not the responsibility of the bank to give the physical possession of the auctioned property to the purchaser ? If yes within how much time should bank give the physical possession? If the Bank has crossed that time limit can the purchaser demand interest or follow any other legal action?