Jurisdiction of drt in sarfaesi.
J K Agrawal
(Querist) 29 December 2015
This query is : Resolved
Dear Experts, Namaste.
One of my client has paid entire loan amount to the bank or say even more but the bank carry on a demand and eager to use power under SARFAESI.
My client has enough money to pay but he says that why the bank is not showing accounts and why bank not considering the point of dispute? The bank charged higher amount of interest, debited very huge amount against the exp of Chowkidars to protect property (without any sound reason) and added a huge amount against legal expenses, some insurances and for payment to securitization agents. this all sum is more than Rs 8 lakh.
The Bank managers are keeping mum and not reply any notice as they have property of 2 crore against their demand Rs 5 lakh.
If I go to the DRT under SARFAESI act the DRT says 'just say that what is mistake of bank in procedure and this court is not empowered to settle your accounts related disputes,.
If I go to civil Court for suit for accounts the bank raises objection that the loan is secured and only DRT has jurisdiction.
In proper words it is cheating by bank against my client but he is help less.
One more glitch is there. My client is legal heir of the original borrower. The bank says that 'even if after entire payment, bank will not hand over possession and you are to obtain a succession certificate'.
In rajasthan, a Succession certificate means 3% court fee and 2 years time + advocates fee and expenditure. It cost to my client around Rs 7 or 8 lakh.
Please suggest what is the law. I would be much obliged if you suggest some case law.
Thanks and regards.
c.p.s. ramachary
(Expert) 30 December 2015
Dear Mr. Aggarwal,
Let me know if you have thoroughly examined the statement of account (in the NPA).,if you have examined each debit entry in the statement of account to satisfy your selves that the interest is charged as per the terms of the loan agreements. If you have paid the entire amount of debt accrued, the bank is bound not only to restore the possession but also the documents of title to the property. But according to your (your client’s) version the bank is still holding the possession of the property. Banks are entitled to charge certain charges in the loan account provided those are legally incurred as contemplated in the SARFAESI Act 2002 or the S.I. (E) Rules 2002 framed under the Act. Otherwise they are liable to be scaled down. Another thing is that, when payments are made from time to time, the bank is bound to follow “Rule in Clayton’s case” that is to adjust the payments first towards debits first in order of time of their origin. Further penal interest is neither interest nor portion of interest. It is only penalty. Because it is called “penal interest” by its nick name in practice by banks, the same cannot be compounded [Supreme Court in Central Bank of India Vs. Ravindra]. This aspect also you have to examine carefully while advising your client on course of action. You have not stated anywhere about the action taken by your client u/S.17 of SARFAESI Act. You cannot approach DRT now for seeking adjudication of this aspect or for granting of any declaratory or specific relief for delivery of possession.You cannot approach civil court also in view of bar u/s 34 of the Act.
However your client can approach The Banking Codes and Standards Board of India for redresal of this grievance. The Banking Codes and standards Board of India [Reserve Bank of India Building C-7, 4 th Floor, Bandra Kurla Complex, Mumbai -400 051.Ph. No. 022- 26573715, 26573724 .Fax No.022- 26573719. Website address: www.bcsbi.org.in help desk : help.bcsbi@rbi.org.in]
J K Agrawal
(Querist) 01 January 2016
Respected Ramachary Ji
Namaste
You correctly got my point. Neither the DRT nor the Civil court taking pain to decide my loan amount.
Thanks for the valuable suggestion.
I first been to DRT. Up to that point of time I already deposited more than 100% of original demanded amount so DRT returned the case saying that debt amount is less than 10% so no securitization action can be taken by bank but it did not decide the debt amount.
Then I approached the civil court. Now I am facing the arguments on issue of jurisdiction of civil court.
Please help me further.
Regards
c.p.s. ramachary
(Expert) 01 January 2016
Mr. Aggarwal,
I think you are not thorough with the provision of the Act. What I feel is that, you have to go through them for finding solution to your problem. The secret of success in this profession is hard work.The advise given to you in the present case is sufficient. I cannot give you further spoon feeding in the matter. I am sorry.
