13(4) of sarfaesi act
Querist :
Anonymous
(Querist) 25 March 2010
This query is : Resolved
Ours is a export company(since closed)and was having a turn over of 10 crores or so per annum.Due to meltdown in USA,we did not get payments worth 5 cr and rest money went down the drain as fabricators also kept with them the raw materials.Our a/c was declared NPA with Rs 902 lac as principal and Rs 82 lacas penal interest as on 31/3/08.We had pledged two properties against this loan.
On our request an OTS was agreed for Rs943lacs on 26th june 2008 and by 23rd july a sum of Rs 583 lacs were deposited by way of disposing the factory.We were ready to pay balance by disposing of the second property(pledged with bank)but bank imposed another condition that a case filed by one of our suppliers against bank and us be quashed or withdrawn.or we pay Rs 48.69lacs to bank as security as the sum demanded /claimed by our suppliers,we have allegdly cheated them.
To show our bona fide we deposited Rs 25 lacs with the bank and asked for six months to get the case quashed.
We went to J & K High Court which was pleased to quash the case against us and as bank did not file quashing of criminal proceedings,the case against them was not quashed then.Now they have filed the quashing.
In the meantime the bank approached the district Megistrate under 13(4)of sarfaesi act for taking over our remaining residential property pldged with bank and now from remaining Rs335.10lacs the demand of bank has gone to Rs 485lacs(can not understand calculations).As late as 30thsep2009 the bank has written to D M that the outstanding of us is Rs 335.10 lacs plus interest for ten months(roughly 35lacs).The next date of hearing with D M is 30/3/10.
In a separate development,one of our of family members(with whom we have a case under IPC 498A)has moved civil courts locally and have obtained a stay from alienating the property against us,and BANK.There case is that this is a inherated huf property and hence could not be awarded to us by lok Adalat(in fact they have challanged the award of lok adalat award giving me the property)
My question is
Is district Megistrate bound by civil courts?Does he have to honour the stay of civil judge??
Can bank dictate terms to us to get a criminal case withdrawn or else they would take property?
Thanking you
H. S. Thukral
(Expert) 25 March 2010
Usually the CMM or District Judge while entertaining an application under section 13(4) does not go through the merit and also to hear the borrower. Only thing to be seen is that a notice should have been issued under section 13(2). However in your case there are developments. Bank has accepted payment against the declared NPA impliedly in satisfaction of your reply to the notice. This can not be agitated before the CMM or DJ You can file an appeal after issuance of attachment orders, before DRT but the second development is important where the Civil Judge has stayed the alienation of property. Your family member can approach the HC to get a stay of proceedings before DJ.
