Sarfaesi / bank guarantee
vishal kumar
(Querist) 20 July 2012
This query is : Resolved
a bank guarantee of Rs 8 lakhs was issued by the bank on 01.11.1993 against equitable mortgage of landed property of the guarantor. BG was invocked on 17.10.1994.Rs 2 lakh was paid by the bank to the beneficiary on 08.11.1995 from FDR of borrower. In between there was injunction against the balance payment of Rs 6 lakhs by civil court. Injunction was vacated on 09.04.2001 by hig court . Balance amount was paid by the bank to the beneficiary on 18.05.2001. Demand notice was issued by the Bank to the borrowers and guarantor and mortgagor on 25.06.2001. Sarfasi notice u/s 13(2) was issued by bank on 21.01.2012 and now going for sale of mortgaged property at very low price after taking possession. Objection was given by mortgagor after issuance of demand notice. My query is whether bank has right to proceed under sarfaesi act when the mortgage was created on 01.11.1993? When does limitation starts, from the date of invocation of BG or from the date of making of balance payment by bank or from the date of issuance of demand notice or from the date of mortgage? Mortgagor / Guarantor has filed appeal to quash the sarfaesi proceedings on the proceedings barred by limitation. what are the chances of success? what is the remedy if DRT dismisses SA? How to stop auction sale when the outstanding dues are disputed by borrower as the beneficiary of bg was not entitled to the invocked amount? Kindly reply.
c.p.s. ramachary
(Expert) 20 July 2012
In case of invoked BG, the bank need not look into the underlying contract the basis for issue of BG. BG is supported by mortgage and the limitation of 12 years begins to run from the date the debt becomes due (See Article 62 of Indian Limitation Act)and not from the date of creation of mortgage. In this case, the limitation period started after 18.05.2001. The bank might have invoked counter guarantee signed by you demanding payment which you have not disclosed here. As you have failed to pay the amount demanded the account slipped to NPA category. Therefore the bank has issued the demand notice dated 21.01.2012 for enforcement of the mortgage. There are no strong grounds to succeed in SA if you file it. If SA is dismissed the situation will further worsen and you will be making unfruitful efforts incurring expenditure / costs by filing appeal to DRAT where you are required to deposit 50% of the amount claimed as condition. Instead of that go to the bank and bargain for some concessions and pay the dues and safeguard your property.
JANAK RAJ VATSA
(Expert) 21 July 2012
the banks when approached by the party to the bg are known to be quite considerate in resolving the issues thru negotiations and willing to accommodate all the guinine demands on the part of the party. make a try with the bank officials explaining them the factuals and the request for a settlement without being dubbed as winners and losers
