Sale of mortgaged co owned property

You cannot sell the property if there is a loan against the property without the consent of the lender especially if the loan account has been declared NPA. 

The lender will initiate action under sarfaesi act to take physical possession and bring the property to auction sale and would ajdust the consideration amount towards loan and  interest and then may disburse the remaining amount to the borrowers.

When a property becomes an NPA, the bank will usually send a notice to the borrower to pay the outstanding amount or sell the property. If the borrower can't repay the loan, the bank will auction the property. 

If the sale proceeds are more than the default amount, the bank will return the surplus to the borrower. 

1. You may persuade your brother and make some settlement mutually regarding amount, otherwise balance 50 lakh will also go in interest or penalty.

2 Then enter an agreement with buyer who will first pay 50 lakh to the bank to clear the property free from mortgage and receive the original registry and other documents. Then take balance 50 lakh amount from buyer and complete registry and other formalities. Be careful in future while dealing with brother and other family members.

The bank will not give the original property documents unless the entire loan is cleared. However, the banks will give copies of the original property documents, but they will be given only to your brother, who took the loan. 

You can also get certified copies from the registraion office. 

The first step  is you get all the copies of all relevant documents. 

Secondly, the sale deed would show both you and your brother as the co-owners of the flat in Mumbai. So, you must immediately file a suit for partition against your brother and the bank which gave the loan. You must write all the events which happened till today, including the your purchase of flat and the loan taken by your brother. probably, it may be unnecessary to include the business partner of your brother in the suit. He may be not relevant. Check with lawyers by showing all the information you have. 

If your brother made an unreasonable claim of 20 lakhs extra, it shows that he is unreasonable, to say the least. 

I suggest that you IMMEDIATELY file a partition by consulting at least two or more lawyers. 

First, you must get certified copies of all relevant documents. You need to prepare a list of all events along with their dates.

Do not reveal your plans to file a partition suit to your brother. You do that silently. You may send a legal notice in the last minutes, after you are completely ready to file the partition suit. 

It may be better to sell the flat through the Court. You may get your 50% share in the value of the flat. 

It is necessary to file a partition suit immediately. It will be advantageous to you. Otherwise, it may be a disadvantage to you. You consult a couple of lawyers near you and decide. 

Kakoli B. 

You and your brother are co-owners of the flat in Mumbai. 

Did you and your brother jointly take the loan to start the business?

Did you and your brother sign the business loan papers with equal responsibility? 

Are you and your brother equally liable to pay the loan? 

What is the liability of the business partner, who started the business along with your brother? 

What is the contribution of the business partner of your brother to the business? 

If you and your brother jointly took the loan from the bank, then you cannot escape from the responsibility now. Both of you are equally responsible, if that is how the loan papers are drafted. 

Since both you and your brother are borrowers of the loan, you get all the relevant information from the bank. Ask them to give you copies of all relevant loan papers and all the payments made and all the dues. 

Under the above circumstances, nobody will come forward to buy the flat. Even if anybody comes forward, it will be a risky affair and they will only cheat you by taking advantage of your situation. 

The best option for you is to approach a court against everybody. Drag everybody to the Court including the business partner of your brother. 

Keep in mind that since you signed the loan papers, you cannot escape from the liability. 

Approach the Court will all relevant facts, without omitting anything or anybody, you, your brother, his business partner and the bank which give the loan. 

Do not delay any further. 

Good luck!