SARFAESI- CRIMINAL LAW

Just because the provisions of the  SARFAESI act are stringent it does not mean the borrower can not do the normal transections. The lender is interested for money only nothing else. No criminal action will lie and if initiated counter actions possible both civil and criminal.

The barrower can not sell the secured property without the consent of the Creditor and any secured creditor can exercise its power.The DRT empowers the Bank:

To issue demand notice to the defaulting borrower and guarantor, calling upon them to discharge their dues in full within 60 days from the date of the notice.

To give notice to any person who has acquired any of the secured assets from the borrower to surrender the same to the Bank.

To ask any debtor of the borrower to pay any sum due or becoming due to the borrower.

Any Security Interest created over Agricultural Land cannot be proceeded with.

If on receipt of demand notice, the borrower makes any representation or raises any objection, Authorised Officer shall consider such representation or objection carefully and if he comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate the reasons for non acceptance WITHIN ONE WEEK of receipt of such representation or objection.

A borrower / guarantor aggrieved by the action of the Bank can file an appeal with DRT and then with DRAT, but not with any civil court. The borrower / guarantor has to deposit 50% of the dues before an appeal with DRAT.

If the borrower fails to comply with the notice, the Bank may take recourse to one or more of the following measures:

Ø     Take possession of the security.

Ø     Sale or lease or assign the right over the security.

Ø     Manage the same or appoint any person to manage the same.

If the amount is not paid within specified period, the Authorized Officer can take following steps as per S.13 (4)

1)           MOVABLE PROPERTY:-

1)           Possession of movable property should be taken in the presence of TWO witnesses after PANCHNAMA drawn and signed.  (As per Appendix-I)

2)           Make inventory and give copy of inventory to borrower(Specimen App.-II)

3)           Property taken should be kept in possession of AUTHORISED OFFICER or any person authorised or appointed.

4)           In case property is of perishable nature or the expenses of keeping such property are likely to exceed its value, the Authorised Officer may sell such property.

5)           Authorised Officer to take preservation of Asset. In case of necessity INSURE the same.

All said ABOVE IS THEORY ONLY ,  the lender has to give notice which the creditor should take objection. If not replied within seven days BY THE LENDER  the notice will expire  - THIS IS ALLD HC CITATION.

We are contesting a case where the lender attached the property sold, the buyer paid money to the lender. Now the borrower filed case in DRT for illegalities of lender and so even after sale order , payment by the purchaser  NO POSSESSION.

I HAVE REPLIED ON THE BASIS OF HOW LAW IS PRACTICED IN REAL SITUATIONS.

It not criminal offence the property goes along with charge. the bank can claim only the amount. if in sale deed it is mentioned that the property is free of all charges the altimate buyer can file a complaint.

Yes sir , this is the real legal status.

I agree with Mr. Shashikumar.  And if a borrower has claimed, by direct communication with the Bank or through filing of counter claim with DRT, AND such claim being more than the alleged dues of the Bank, he is well within his right to dispose off the assets without informing the Bank. AND no criminal action would lie against him.

MY CLIENT BORROWED LOAN OF 2,25000/- ON ONE FLAT(IMMOVABLE PROPERTY) AND AFTER THE OUTSTANDING AMOUNT BECOME 3,75,000/- HE INFORMED TO BANK THAT HE WILL PAY THE DUE AMOUNT AFTER SELL HIS MORTGAGED PROPERTY. BANK HAD NOT REPLIED HE WROTE AGAIN THAT HE HAS TO LEAVE THE CITY AND HAS TO SETTLE IN OTHER STATE SO HE APPOINTED A POWER OF ATTORNEY FOR DEALING OF HIS PROPERTY WHICH IS MORTGAGED IN BANK. THEN BANK REPLIED THAT THE POWER OF ATTORNEY WILL NOT ALLOW TO PAY DUE AMOUNT INSTEAD OF LOANEE. THEN MY CLIENT SOLD THE PROPETY WITH THE CONDITION OF MAKING PAYMENT FOR DUE AMOUNT OF THE BANK. THENAFTER HE WENT TO DEBT RECOVERY TRIBUNAL THROUGH HIS POWER OF ATTORNEY AND DRT ORDERED TO DEPOSIT MONEY AND HE PAID AS THE INSTRUCTION OF DRT. THENAFTER BANK PREJUDICALLY MADE COMPLAINT IN RELAVANT POLICE STATION FOR THE CHARGE OF SECTION 420 (IPC),

ACCORDING TO MY EXPERIENCE THIS IS A MATTER OF CIVIL NATURE

CAN ANYBODY GUIDE ME ABOUT THIS MATTER THAT IS IT A CRIMINAL OFFENCE OR CIVIL DISPUTE?