Undue / illegal recall notice under section 13(2) of sarfaes

Dear Mr.Raj,

1) Section 31(j) of the act is in my view is totally different.

Example:

Loan Amount: Rs.8,00,000/-

19% of Rs.8 Lacs is Rs.1,68,000/-

If the amount due to be less than 20%, then it should be Rs.1,68,000/-.

Whereas in your case, the amount due is Rs.9,12,993/- which is much higher.

In my opinion, section 31(j) is not applicable to your case.

2) You have raised your objections on 26-3-12.

• The Financial institution is duty bound to reply to your objections within a week from the date of receipt of your objection.
• As far as SARFAESI Act is concerned, the demand notice is the only opportunity given to the borrower to safeguard his property.
• Notice shall not be given to the borrower even when a petition for possession under section 14 is filed before a CMM or DM.
• In this circumstance, if the reply has not been given to you and you have enough proof that the bank has received the objection sent by you, you have a very good case to file a writ before the High Court on the ground of violation of principles of natural justice.
• Please do it before they proceed under section 13(4).
• If they have proceeded under section 13(4) High Court may not entertain the petition and may direct you to approach the concerned DRT.
• Act swiftly. You have a limited time.
• Pls don't give any other fresh proposal. If you give any fresh proposal, they may reject the same immediately and there are lot of chances for them to treat the fresh proposal as the objection to the demand notice. It will give a presumption that they have replied to your objection within a week of the objection. If this happens, then you will loose the only ground which you have with you.
• My sincere advice will be to approach the higher officials of the bank and convince them that you can close the loan account within a spitulated period. The financial institutions are run out of the funds given by the public.

@Uday.  Can you provide me with a case-law wherein HC admitted Writ petition for violation of principles of natural justice with regard to SARFAESI proceedings.  Thanks in advance.

To All Dear expert

We meet to Ro Mumbai and The Bank Official Now Verbally Asking for Fresh Proposal?. 

They said that even after giving fresh Proposal They will not accept the proposal in Writing & they will delay the further procedure? 

As I mention before there is dispute about Loan sanction & Loan disburse.

Loan sanction is 45,50,000/- and Actual Loan disburse is 48,86,044/- so The amount due is less than 20%.( as per Mr. Uday).

It is too late for writ Pretention Because Summer vacation started.  We want to Banking Ombudsman and discus the issue and directed us to contact to Banking supervision department. We are trying to get appointment somewhere in next week .

Regards,

Raj

To All Dear expert

60 Day time period of u/s. 13(2) is over on 22^nd May 1012. There is no further action by Bank? The doors of DRT are close to us? Bank is not giving anything in writing? We approach DRT Legal expert and took advice asking to wait till u/s. 13(4). What is remedy to us?

Raj

The door of DRT has not yet opened for you since you have not yet received the notice u/s 13(4) of SARFAESI ACT,2002. Did you submit any representation to the Bank after receiving the notice u/s13(2)? If yes, have you received the reply from the Bank which was sent to you within 7 days from the date of their receiving your representation as required u/s13(3A) of the Act? This will be helpful later on. However, presently wait for the notice u/s13(4).

If bank did not answer to your representation/objections within 7 days, then they cannot issue notice u/S13(4) of the SARFAESI Act. Howev er if they issue Possession Notice u/S13(4), then you can challenge it in DRT. In the alternative, bank may issue fresh Demand notice u/S13(2) to start the process afresh.

To All Dear expert

The Bank is not answer to our One objection & One representation not within 7days but not up till the date? We have paid all amounts against CC limit and ask the bank to close The CC Limit Entirely?(after issue of u/s 13(2)) We also ask The Bank to confirm that the CC limits have been closed in full and final (by Email) but they are reluctance to give in writing? I have taken all entry on Passbook. The term Loan due amount is also brought down to Rs.6,25,000/-. I don’t think that the Bank will issue fresh Demand notice u/s13(2) to start the process afresh? The T/L account is just running 1.8 EMI behind schedule, the amount is very much less then Sanction Principal amount i.e. Rs.45,50,000/-and 20% of it will become Rs.9,10,000/-and disburse principle amount is Rs. 48,68,044/- and 20% of it will become Rs. 9,73,608.8/- the amount balance in T/L account is less than 20% of principal amount i.e. Rs.6,25,000/-.  so 31(j) of the SARFAESI Act is clearly applicable. We have loss all faith on bank and so we have to take precaution.    

Raj

The Latest Up Dates

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

ARBITRATION PETITION NO. xxx OF 2011

1.... Petitioners

Vs

... Respondent

Mr. xyz.

None for the Respondent.

CORAM :  J.

Date:-

P.C.:

1. The petition is heard finally. This petition, under section 9 of

the Arbitration & Conciliation Act, 1996, is unsustainable.

2. The parties carry on business as partners of the firm. The

petitioners seek permission to sell the property which has been

mortgaged to (Bank) albeit to pay the dues of (Bank). The (Bank) is not

a party to the arbitration proceedings. The (Bank) is not even a party to this petition. The (Bank) has not even been given notice.

3. The petition is rejected.

* We Appeal ARBITRATION PETITION NO.XXX OF 2011 and the following judgment is given

APPEAL NO.XXX OF 2012

> 

IN THE HIGH COURT OF JUDICATURE AT BOMBAY.

ORDINARY ORIGINAL CIVIL JURISDICTION

APPEAL NO.XXX OF 2012

IN

ARBITRATION PETITION NO.XXX OF 2011

…

Mr. and Mr. ...Appellants

v/s.

Mr. ...Respondent

…

Mr.xxxx for Appellants.

Mr.vvvv  i/b Mr.rrrrr for Respondent.

...

CORAM: C.J. & J.

DATE : -------

P.C.

Leave to add (Bank) as party respondent. Amendment shall be carried out forthwith.

2. Having heard the learned counsel for the parties, we find

that the interests of justice would be served, if this appeal is disposed of

in following terms:

The appeal is allowed and the matter is remanded back to

the learned single Judge, after joining (Bank) as party respondent in the arbitration petition.

3. We are inclined to take this view, because the learned

counsel for the appellants submits that the appellants, who are two

partners of the firm , have not challenged the claim of the bank for

recovery of the dues of the firm and in that sense the bank would be

proforma respondent. In fact, the bank would be in a position to recover

its dues from the firm from the properties of the firm and therefore, the

bank need not go against the personal properties of the appellants.

4. In view of the above, we set aside the impugned order of

the learned single Judge dated XX-XX-2011 and remand the matter

back to the learned single Judge, after permitting the appellants to join

(Bank) as party-respondent in the arbitration petition.

5. It is made clear that we have not gone into merits of the

controversy between the parties, which is the subject matter of the

arbitration petition. Subject to above directions, appeal is disposed of.

CHIEF JUSTICE

Now the question is why and how does the bank will become the second responding party? What will be the Bank Stand in this matter?

Note that 13(2) is issued on 19/03/2012 / 60day period is over / no action        u/s 13(4) or u/s. 14 have been taken by Bank.

Raj

Latest Updates

As I mention before arbitration petition is revised by adding Bank as party respondent in the arbitration petition. Bank Remain Silent? Arbitrator is appointed. Bank is not issued 13(4) till the Date.

Either you may settle the matter amicably with the bank or wait till further action by the bank by issue of Possession Notice u/S13(4) of SARFAESI Act; then only you can agitate your grievances by filing appeal u/S 17 of the Act before the jurisdiction DRT.

Hi to All ,

Latest update of the case is

Today Bank has pasted Possession Notice on Office,

Taking  Lawyers advice .

Outstanding  dues are 6,50,151 (including Interest till the Date).

Any grateful advise ?

Raj Mulay

File a SARFAESI APPLICATION u/s17 of SARFAESI ACT,2002 before the appropriate DRT. Contact a lawyer who has experience in DRT matters.

Write a letter to Bank  proposing an amount towards OTS & get it rceived by them. Try to get a reply from the Bank regarding your proposed OTS. It will be of help later on.

Best of luck.

Immeditely prefer an application u/S 17 of SARFAESI before DRT having jurisdiction and seek stay of sale or any further proceedings. Please do it through an advocate conversant with SARFAESI & DRT proceedings and who usually for borrowers.

To All dear expert

Latest updates of the case

We file SA u/s17 of SARFAESI Act on 17/09/2012.

Our lawyer also inform the said bank manager by the Letter requesting that not to take further action u/s. SARFAESI Act. I personally have given the said letter by hand delivered today, and taken acknowledgment on duplicate. Also hade talk to branch manager and requested not to take further action u/s. SARFAESI Act. The DRT Mumbai (All I,II,III,) are having full load and the our application might take one and half months to remove any objection?

The application is based on,

1) The NPA declaration is not as per guide Lines of RBI.      

The T/L account is just running 1.8 EMI behind schedule(EMI=1,04,914/-),

      The CC Limit reducing as per understanding between Bank and us, we have paid interest on CC Limit on time and there is no outstanding interest due.

2) Action u/s u/s13(2) is illegal because of u/s31 of SARFAESI Act.  

The outstanding amount u/s. 13(2) notice is Rs. 9,12,993/-which is very much less then disburse principle amount is Rs. 48,68,044/- and 20% of it will become Rs. 9,73,608.8/- the amount balance in T/L account is less than 20% of principal amount i.e. Rs.6,25,000/-.  so 31(j) of the SARFAESI Act is clearly applicable.

3) The Bank is also violated u/s.13(3-A)

      The Bank is not answer to our one objection & one representation not within 7days but not up till the date?

4) We have paid all amounts against CC limit and ask the bank to close The CC Limit Entirely.

5) Latest outstanding is Rs. 6,50,151/- as per Notice u/s.13(4) dated 21/08/2012.

I don’t able to understand the next stapes of the Bank?   What bank will do?

There is major confusion about meaning of Principal Amount mention in u/s.31(j)? In the bank officers as well as the Bank lawyer, I personally talk with one of the Bank lawyer ? As per the bank lawyer Principal Amount = outstanding amount mention in notice u/s13(2) i.e. Rs.9,12,993/-and Latest outstanding is Rs. 6,50,151/- as per Notice u/s.13(4) ,which is not less than 20% of Rs.9,12,993/-? So there is no question of application of u/s.13(j)? (at list they are pretending the same in front me for misguide?)

I personally feel that bank will further do mistake of physical possession of Partnership property?

Or straightly issue the sails notice?

Raj

If bank issued sale notice during pendency of your Appeal under Sec.17, then immediately file a petition for urgent hearing and also for stay of sale. If necessary, engage a Senior advocate for obtining stay order.