Sarfaesi and contract act
Terry DCruz
(Querist) 15 December 2014
This query is : Resolved
My Case is :-
SME Loan was sanctioned in 2007.
There was change is Govt. Policy and my Business was under Prohibited list and thereby not generating profits to repay the installments as per the agreement.
Declared NPA 30.06.2010
Sarfaesi Notice was issued u/s 13(2)on 29.11.2010
Objection / representation filed within 60 days i.e on 26.01.2011. No reply was ever given by the Bank.
Business was sealed by the Government on 09.02.2011.
Though Bank had full knowledge did not make any efforts to help the borrower during this difficulty instead filed a money suit on 31.03.2011.
In written statement all facts were brought before the court and thereafter bank did not attend the court. Finally Money suit was dismissed for default on 1.10.2013. The restoration petition filed by Bank has also been dismissed on 27.11.2014.
With the efforts of borrower in other court cases Business was de-sealed and handed over to the borrower on 26.12.2013 in a dilapidated and damage condition.
Damage suit against the Government was filed on 06.04.2014
On 25.11.2014 Bank issued a fresh Notice u/s 13(2) making a demand of Principal + interest upto 24.11.2014.
The date of NPA is 30.06.2010.
The business was sealed on 09.02.2011, Causing supervening impossibility.
Ignoring all these aspects bank is making a money claim u/s 13(2) on 25.11.2014. the notice says to discharge in full the liabilities i.e the Total Amount.
1. Is it not barred by limitation of 3 years for money claim?
2. Can bank proceed after its money suit got dismissed?
3. When the business was sealed, repayment stopped as such the agreement is hit by section 56 of contract act, can the security agreement be enforced in such circumstances?
4. The account is classified as NPA due to fault of Union of India, ignoring such facts can Bank proceed against the borrower?
Devajyoti Barman
(Expert) 16 December 2014
Under SAEFAESI Act, limitation 3 years prescribed for money suit does not apply.
Terry DCruz
(Querist) 16 December 2014
But what about the other queries? and why did u make the status as resolved Sir?
RAJU O.F.,
(Expert) 16 December 2014
You may ignore the Status.
As bank had invoked SARFAESI, it may be presumed that there was mortgage of properties for which limitation is 12 years and hence not barred by limitation.
All your objections and representations can be put on record when you send reply to the SARFAESI Demand Notice. Better engage an expert who is conversant with the SARFAESI proceedings, for sending your objections to the bank. Bank cannot proceed further unless they reply to your objection letter within 15 days from the date of receipt if it. If bank issue further Possession Notice u/S 13(4), then immediately prefer a Securitisation Appeal before jurisdiction DRT through an expert advocate.
Rajendra K Goyal
(Expert) 16 December 2014
After any reply the query automatically marked as resolved, if you are not satisfied you may do it again as unresolved.
1. The time limit for mortgaged suit is 12 years.
2. Both are different means to proceed till some authority comes against it.
3. Yes.
4. Bank is concerned with its money and not for the policy of Govt. of India. No term of agreement restrain it claiming outstanding if unit closed due to govt. policy.
Bank should have lodged its claim with the Guarantee corporation. Even after recovery of claim from Guarantee corporation, Bank can proceed recovery from borrower.
malipeddi jaggarao
(Expert) 19 December 2014
I agree with the steps suggested by expert Mr.Raju. Since the activity is prohibited by Government, because of which you could not run the business, and you fought for allowing your activity and won the same, the Bank should reschedule the loan instead of invoking the provisions of SARFAESI ACT. You can mention these facts in your reply asking for reschedulement of EMIs. If the Bank does not agree, as suggested by expert Mr.Raju file an appeal before DRT.
K.K.Ganguly
(Expert) 19 December 2014
1. No. The SARFAESI proceeding has not been barred by limitation and the Bank is entitled to issue Demand Notice afresh,
2. Yes, very much. In fact the Bank has probably filed the Money Suit since the outstanding was still less than Rs.10 Lkahs. Had it been more that Rs.10 Lakhs, the Bank would have been file Original Application before the DRT,
3.SARFAESI Act is callled a draconian act. It propagates the theory that you have taken loan of public money which you shall have to pay,
4. Then talk to or claim from Union of India without claiming the alost amount from public money,
5. Actually you should file SARFAESI Application u/s17 of SARFAESI Act,2002 before the DRT making the givt. of India as a party detailing the facts,
6. If lost at DRT, you should file a Writ Petition (avoiding DRAT showing the ground of inability to deposit 25% of demanded amount for mentioned reason) before the High Court claiming damage from the Union Govt.
T. Kalaiselvan, Advocate
(Expert) 23 December 2014
agreed with the views of experts, especially to that of expert Mr. Raju on the subject query. You have remedies and options open before you as suggested, you may proceed as advised.
Terry DCruz
(Querist) 28 December 2014
Thank u all.
I am making a reply making Govt. of India also a party. If Bank proceed further application under section 17 will be filed against the same parties
Raj Kumar Makkad
(Expert) 28 December 2014
I completely do agree with the reply of expert Ganguly ji.
