Notice under Section 13(4) of SARFAESI Act, 2002

Dear member,

As I could see in the problem submitted by you that a notice is yet to be served by the bank upon the borrower and as per the securitisation act even after the service of notice, the borrower should be given a chance to make a presentation or submit a reply thereby giving reasons why an action under the act should not be taken by the bank. Also if the bank is not convinced and moves forward with the action then the borrower always has a remedy of section 17(1) wherein it can go to the DRT against the action of the Bank.

 

please let me know if this does not satisfy your query.

 

Nitin Satija

 

Dear member,

As I could see in the problem submitted by you that a notice is yet to be served by the bank upon the borrower and as per the securitisation act even after the service of notice, the borrower should be given a chance to make a presentation or submit a reply thereby giving reasons why an action under the act should not be taken by the bank. Also if the bank is not convinced and moves forward with the action then the borrower always has a remedy of section 17(1) wherein it can go to the DRT against the action of the Bank.

 

please let me know if this does not satisfy your query.

 

Nitin Satija

 

"I want to prefer Securitisation Application under section 17(1) of the SARFAESI Act, 2002 in anticipation."

Strictly speaking, I would advise you against it.

S. 13 (3A) provides a specific procedure after issuance of notice u/s 13(2), wherin the borrower is provided with an opportunity to putforth his objections against any action by the Creditor bank. This should be exhausted first if you want to show your bonafides before DRT in an appeal if any action is taken by the Bank U/s 13 (4).

With Kind Regards

 No you cannot prefer an appeal now as the Bank is yet to take possesion of the property. For taking possesion of the property, the Bank is to affix the possesion notice at the propoerty and serve a copy of hte possesion notice on the mortgagor and also publish the notice in two newspapers. Therefore i would like to advise you to wait as the Bank has only kept the possssession  notice ready and not yet taken possesion of the property. Prefeing an appeal now would not be advisable as an appeal under Section 17 would be maintainable only if the possesion is taken. 

Meanwhile you could give a reply to the Bank to the notice under Section 13(2) of the Act. The Bank has to consider the said reply and give you a written reply, without which further proceedings should not be taken.

 

Facts: notice under section 13(2) has been issued to you and you have given letter for extension of time, in the process you come to know that Bank has prepared notice under Section 13(4). now you want to file application before DRT, that too before notice under section 13(4) is served on you (client). in that situation your application will be rejected in first instance as their is no notice under section 13(4), you have to wait for the bank to issue notice only then you will officially come to know that notice to general public has been given that property in question now become banks property. If you chose to file application for stay, your court fee will be wasted. Further DRT jurisdiction will only come into picture when notice under section 13 (4) is issued, untill such time DRT cannot entertain any application. you can file objection till notice under section 13(4) is issued and then Bank has to file reply within week. if they dont then it is one of the ground for stay.

The legal position is made clear by Supreme court in M/s Transcore : Civil Appeal No.3228/06 dated.29-11-2006. The cause of action for mortgagor to approach DRT would be notice u/s 13(4) and not 13(2). To prevent Ex-parte stay orders that the Borrower/mortgagor/or 3rd party  which is likely to obtain, Bank may file "caveat" application. Now caveats are being accepted by DRTs. 

their is no provision of caveat in RDBFI act, therefore it will be difficult for Bank to explain under what povision of law they have filed caveat, further more Hon'ble Apex Court has held that Act of 1993 is complete act.

Even the RDBFI act says that provisions of CPC is not applicable.

I vouch the views of Advocate Ramkumar. Apart from that Andhra Pradesh DRT entertains caveat applications als

@uday under what provision of law caveat application is filed in DRT Andhra Pradesh ??? 

Caveat is filed under CPC before any court.. the same procedure is followed before before the DRT.  regarding the issue of filing objections before DRT against Securitization action by bank. firstly it is to be noted that unless the Bank takes action under 13(4) no cause of action arises. so untill the bank affixes the 13(4) possession notice at the secured asset the borrower/defaulter/guarantor can not invoke the provisions of section 17 merely on the basis of 13(2) notice. once the action under 13(4) is taken by Bank the borrower may make an application under section 17 of the SARFAESI Act before the concerned DRT. Further the objection under 13 (3-A) is not a mandatory one as the act clearly states that it doesn't gives the borrower a cause of action.

@Virender Negi, with due respect, DRT is Tribunal and their is no provision of Caveat in the act. Section 22 of the RDBFI act says provions of CPC are not applicable to DRT/DRAT. Comming back to my question again under what provision of law Bank is going to file Caveat in DRT ? Ofcourse 19(25) of RDBFI Act and Rule 18 of DRT (procedure) rules are their. Still no provision what so ever in the Act for Caveat.

@ A.K.D Sayare. sir with due respect i would like to inform that there is no provisions for Caveat before DRT, all Caveat are filed under CPC only. All DRT doesn't accept the Caveat.. e.g. Delhi DRT, Chandigarh DRT, Kolkota DRT accept the Caveat Application however, Ahmadabad DRT doesn't entertain the same on the same reasons u have given i.e. no provision under the act and CPC not applicable. I saying this because I have practical experience... working for an ARC we have filed numerous Caveat at DRT all accross the country and we do the same under provisions of CPC

Sir,

we inform you that our unit is clasiified as NPA by 30.09.2009.The outstandings of our account is only 30% of the loan sanctioned . As our bankers are prepared to issue the notice under section 13(4) of the SARFESI act for recovery of their loans. Mean while we have approached the bankers along with strategic invsetor who is interested to invest monies and proposed that the outstandings as on date will be cleared before 20th March,2010 . But, inspite of the request made  they are initiating the recovery proceedings for all thier dues and we are seriously binded to pay all the outsatndings by the said date. In this case how do youwe handle the bank notice? Is there any way out ?Please let me  know.

regards

N.Gowri Shankar

 

Dear Sir

 Bank will first sent notice u/s 13 (2) of sarfaesi act, we can get 60 days time to settle. we can file our reply in the last expiry date, in that case we can get another days unless we can not get reply from bank.