Selling a house that is collateral with bank to clear debts?

Hi Kunal it is sad to read such devastating effects of Pandemic; however having left with no other option except to sell the house, it can be suggested that (1) your uncle should find a customer without informing bank (2) take permission to sell the property from bank which is easily given subject to some conditions.

Enter into Agreement to sell with customer & and take part of consideration amount as advance (disclose everything to customer in most honest manner so that he is mentally prepared & does not act capriciously). From that advance liquidate outstanding of bank & close Loan/CC facility & also collect No dues certificate & all other property papers (mortgaged at the time of availing loan facility) from bank. This will make house, marketable property. Sell property thereafter, Collect remaining part consideration from buyer, and live happily tension free.

1. YES .... it is possible. Obtain NOC from Financing Bank, wherein the "PURCHASER" party  undertakes to pay the Bank in full, before actual Registration of Property & Possession thereof.

2. The above is a usual thing in your type of cases.

Keep Smiling .... Hemant Agarwal 
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I agree with suggestion of experts, however,  there is encumbrance on the house mortgaged with the Bank, hence make it clear to the intending purchaser.

Legally the Bank has a charge over the property, which can not be sold without clearance given by Bank.

Yes i do endorse experts suggestions .

Negotiate with the bank itself, and they may arrange a mortgage loan against house and credit such loan proceeds to the credit of overdraft account now NPA.  But the fact is that when there is an overdraft, there should be the availability of primary security namely stocks with such margins.  Such limits are to be availed only against stocks and the bank maintains sufficient margin.  EX:  If the stocks are valued Rs.100/-.  The overdraft should be Rs.60/- secured on the primary security of stocks.  If there are no stocks, it means that either borrower provided false stock statements or disposed of stocks and not repaid bank overdraft.  The other bank may also take up a mortgage loan with the consent of the present banker, and on receiving the proceeds, the title deeds can be taken by another bank.  

In banking terms, collateral security refers to an asset(s) which is pledged with lenders by the borrowers for the purpose of obtaining a loan.

While the property is mortgaged, one may want to sell it. Since all the original property documents are in the custody of the lending institution until the loan is closed.

 You can't sell an asset pledged as collateral on a small business loan unless you have the lender's consent and you've paid the appropriate price for the release. If you've sold the collateral without the lender's consent, the lender has legal recourse against you and the buyer.

To avoid legal entanglements in the sale of your collateral, you should negotiate release provisions before closing. This allows you to conduct your normal business including the sale of assets. You will agree to pay the lender a percentage of the principal balance on the loan every time you sell a piece of collateral. The lender will then file the appropriate lien release documents ensuring the buyer has clear title. This arrangement is far preferable to being declared in default for selling collateral without the finance company’s knowledge.