Borrowers Apathy under SARFAESI Act

This is in apropos to the article of Mr V. D.Rao published on 6^th of June 2012. I have gone through the article. This article is quite praise worthy and full of facts. It focuses on the apathy of the borrowers who are subjected to litigation under the Securitization Act. It is my personal experience that some time for small reasons borrower has to face the burn of SARFAESI Act. This is due to extra ordinary power given to the banks. In most of the cases borrowers are defeated because they cannot afford to pay 75% as pre deposit for filing their appeal.

We the borrower of North East Region are quite new to this Act and due to ignorance and inadequate legal knowledge and support,  we are losing our appeals in DRT and DRAT and are deprived of our assets. Our valuable assets are being sold for a peanut price, as we are unable to deposit 75% of the debt due to the bank. We do not understand that when the bank has already taken the possession of our assets which is more than the value of the debt then why we are asked to deposit any further amount. When we have been already stripped off, where from can we make this deposit?  

We are fighting for our cause with the little resources remaining with us and with a hope that we shall get justice. This will not be out of place to mention here that in our case, bank has betrayed us. Bank has acted like a property dealer and indulged in speculation .Our bank is a prime nationalized bank of the country. We got a SME loan in 80s’and our loan became NPA in 2003. Our unit became sick due to various factors including one that there were lot of discrepancies in our banks’ accounts resulting in incorrect application of interest, penal interest etc. etc. A revival package granted by the bank, proved unworkable due to unilateral changes and delay in implementation, as such we had to apply for an OTS. Bank neither rectified the errors in accounts nor gave any reply to our various reminders. Instead, in an arm twisting act, issued a SARFAESI notice.

As it was impossible to fight with the mighty bank, we   made a representation to the bank for OTS and in reciprocation to our representation; bank sent us a communication to deposit 5% of the offer amount which was duly deposited by us. Bank accepted the deposited amount without any objection. Now it was for the bank to intimate us the acceptance of the offer and about the amount so settled by the bank.

However, since then we were awaiting for the communication from the bank regarding acceptance of our proposal and fixation of the settled amount as per the OTS communication from the bank. In view of the fact that unless the amount for one time settlement was finalized by the bank, there was no occasion for us to submit the programme of repayment of the settled amount.

However a period of more than two months had elapsed but no such information was given to us. Instead, after two months, Bank took over the possession of our SSI unit and its guarantor’s assets without giving   any intimation about the fate of our OTS offer.

Bank got the assets valued and in a purported public auction, which was held in their own office, auctioned both the immovable properties, devoid of any public participation, and purchased the same itself. It is pertinent to mention that movable assets remain unsold.

It is pertinent to mention that bank did not deposit the mandatory 25% of the bid amount on bid being confirmed by the Authorised officer as per the SARFAESI Act.

The representatives of workers union were not allowed to attend the auction proceedings except banks own invited guest , reasons known to the bank only.

Further, before confirming the bid in its own favor, bank did not take the consent of the borrowers as per the stipulation laid down in the SARFAESI Act. DRT did not notice the cited facts and dismissed our application.

Astonishingly, Bank confirmed the sale in haste before the expiry of the appeal period i.e. before we could file an appeal in DRAT.

Interestingly, DRAT, did not accept our appeal without pre deposit of 25%. We are at a loss to understand when the bank did not pay 25% of the bid amount how their bid could be accepted in violation of SARFAESI Act. Whereas our appeal was not accepted without deposit of 25%, that too when our entire assets were under the lock and key of the bank and our business was also closed due to of attachment of our unit.

In view of the submitted facts one can find that bank has violated not one but many statutory provisions of the securitization act, and, despite the same they are free to take any action against a borrower, whether legal or illegal .Nobody can challenge the authority of a bank so long they are equipped with a SARFAESI weapon. Being banks they are enjoying the status of trust worthy, where as the integrity of businessmen are subject to doubt.

Under the circumstances one may believe that there is no room for justice for honest borrowers. But, is it not violation of one’s fundamental right to get justice? Is it not that a citizen of this country, who has full trust and confidence in his country’s judiciary, is deprived of his right to get natural  justice.

If one is denied his right to represent his cause how truth can be ascertained. Is not the reason that SARFAESI victims surrender  their appeal uncontested before DRAT as they are unable to pay  to defend their cause.

Through this submission, I draw the kind attention of the esteemed members of lawyers club to put this appeal before various legal forums or so, so that appropriate amendment may be made in SARFAESI act so that bonafide  borrowers need not suffer.

In consideration of the above stated facts kindly advise what action should be taken by the borrower who is unable to make pre-deposit of 25% as well as take his case to the Supreme Court in view of the hefty expenses involved?