Bank loan
Querist :
Anonymous
(Querist) 30 December 2011
This query is : Resolved
The Lender Bank has settled with the principal borrower as FULL SETTLEMENT under OTS with a clause that Bank reserves its right to proceed against security of Land given by Third Party.
1. Can the Bank proceed against the surety of land having settled in full and received the settled amount from the principal borrower.
2. Does the clause in the settlement letter that Bank reserves its right to proceed against security of Land given by Third Party has the legal sanctity.
Deepak Nair
(Expert) 30 December 2011
Insufficient detials.
Cannot comment unless more details of the settlement deed is given.
Devajyoti Barman
(Expert) 30 December 2011
The clause has been wrongly incorporated and you should have raised objection at the time of settlement.
1.When the final settlement has already been done the Bank has no authority to enforce the security in future.
2. It has no legal sanctity.
Advocate M.Bhadra
(Expert) 30 December 2011
If the lending Bank already received the amount from the borrower by settlement of loan account then Bank have no right over the secured assets.File a case u/sec.17(1) of the SARFEASI Act in DRT as an aggrieved party and raised an objection.
prabhakar singh
(Expert) 30 December 2011
The surety was created for principal debtor and when principal debtor has discharged the debt in full and final satisfaction by OTS or otherwise BANK is bound to release surety papers; the agreement clause binding surety behind his back is not enforceable in law against the surety.Quite unlawful agreement Not binding on surety .
Querist :
Anonymous
(Querist) 31 December 2011
The settlement was reached without the knowledge or involvement of the surety. Hence there was no oppurtunity to oppose the same. Thanks for the valuable advise. We will file the case under section 17(1) of the SARFESI ACT in DRT as an aggrieved party and raise the objection. Once again many thanks to all the experts for their very valuable advise.
R.Ranganathan
(Expert) 31 December 2011
Since this was a OTS the bank has no right to claim from you. Usually the banks incorporate such clauses before the amount is paid to safeguard its interests. If the bank takes any action against you then you can defend yourself.
Advocate. Arunagiri
(Expert) 31 December 2011
The OTS itself is meant for dropping for any case pending and closing the account.
After closing the account the bank has no right to initiate any case against the borrower or surety.
prabhakar singh
(Expert) 31 December 2011
I would like to advise you that before filling any case against bank u/sec.17(1) of the SARFEASI Act in DRT as advised by Mr Minansu Bhadra you must move an application addressed to bank asking for NOC against your property and if title deed was deposited that should also be demanded back,then if Bank refuses,only then proceed to prob legal remedies but not before that.
Querist :
Anonymous
(Querist) 31 December 2011
The limitation period for making an application before the DRT as prescribed under the Section 17(1) of the SARFAESI Act is forty five days from the date of any action taken under sub-section (4) of Section 13 of the said Act by the secured creditor and the same is generally not condoned beyond that period since the Act is silent about the same. Section 5 of the Limitation Act is not applicable to the same.Is the fate of a debtor or surety will be sealed in a period of 45 days from the date of initiation of the measures under Section 13 (4) and that he would be left remediless after the expiry of the said period on account of nonapplicability of Section 5 of the Limitation Act, would it not defeat the right to property.
Do we have the remedy in our instant case where the bank has settled with principal borrower behind our bank, and we came to know of this only after the lapse of 45 days.
Anirudh
(Expert) 31 December 2011
Dear Anonymous,
Unless the bank takes any action against you under the SERFAESI Act, no cause of action arises to you. Just because bank has done OTS with the principal borrower where it has said that it reserves its right to proceed against security of Land given by Third Party, in itself will not give you any cause of action. To put it simply, the bank has not taken any action against you, so you do not have any cause of action as of now.
Querist :
Anonymous
(Querist) 31 December 2011
The bank has already initiated the action under section 13 of SERFAESI Act,long ago and put the property for auction. Since there were no bidders for the same it is still not materialized. Meanwhile the bank has now settled with principal borrower behind our back with a clause that it reserves its right to proceed against security of Land given by Third Party. Hence now how should we get our title papers back from the bank. Kindly advise.
Anirudh
(Expert) 31 December 2011
In your entire above posts, you never brought out this fact. It is for the first time that you are bringing.
In any case, in the fact situation, please approach a lawyer, show your papers, discuss the matter and take appropriate immediate action instead of unnecessarily wasting precious time in seeking suggestions and answers here.
Devajyoti Barman
(Expert) 31 December 2011
Yes in this circumstances no proceeding u/s 17 lies against the Bank before it takes any cation.
The bank can do nothing. So rest assured.
