Shuaib Ahmed 31 December 2020

Will the bank do the auction of secondary property (house) ?

Hello Experts !

I need ur precious advice in the following matter. I obtained a loan of 3.95 crores from SBI by providing two properties for surety. The primary property is a commercial property worth 10 crores where as the secondary is my house worth 1 crore. Thereafter, I failed to repay the total outstanding amount and the bank took possession of the primary property and held its auction during the lockdown period without providing any prior notice to me. After lockdown I came to know that the property has been auctioned and was purchased by a party and the bank registered in its name and gave it possession also. Thereafter, I approached The Hon'able High Court and it granted a stay order on all further proceedings while it declared the auction as impugned, it sought reply from the bank as why it should not provide the owner another chance to clear its dues and save the property. Its been 6 months and the building is closed as of now and no reply has been given by the bank to the court as of now. Few days ago, the bank manager came to my house and gave me an OTS letter RINN SAMADHAN 20-21 to clear outstanding dues that is Rs.5000 only and he will release the house property document, with condition that I should withdraw the case pending in High Court and there will be no matter between us concerning the primary property thereafter. Now, I am in a dilemma whether to accept or refuse this offer. My question is whether the bank has the right to auction the house as a stay order has been obtained on all further proceedings. Also, I would like to mention that before obtaining stay order the bank posted a letter mentioning to clear outstanding dues remaining after sale auction of the primary property within 10 days or it will go for auction of the house property. But, then came the High Court order and 10 days passed by but it didn't opt for auction. Its after 6 months now that the Bank manager came up with this offer. What am I supposed to do now ? Is my house property safe given that I have a stay order on all further proceedings or do the bank have the right to go for auction of the house if I dont accept this offer ? Please reply.

Thank you all for your time and effort !

Reply Follow

4 Replies

SHIRISH PAWAR, 7738990900 (Advocate) 31 December 2020

Hello,

As per your query offer letter for OTS is Rs. 5000/- and thereafter they shall release the property document. So as per my opinion, it is the very offer to settle the loan of Rs. 3.95 cr. to Rs. 5000/- therefore I will suggest you go for it.

I can guess the bank name - its "DENA BANK"

Shuaib Ahmed 31 December 2020

Yes, the offer is of Rs.5000 but only the house document will be released and I shall withdraw the pending case in the High Court on the primary property which is 10 crores worth. The bank is SBI.

SIVARAMAPRASAD KAPPAGANTU (Retired Manager) 01 January 2021

For such a huge loan outstanding an OTS of mere Rs. 5000- is unbelievable. Better get the papers properly scrutinized and checked for authenticity with the Bank Officials.

By any chance, the loan was for the purchase of a house/construction of the house/shopping complex? In such a loan for a house, only the property created out of the loan shall be called primary security and if any other property also was mortgaged as additional security it will be collateral security. Otherwise, when more than one property is mortgaged to secure a loan, there is no such thing as primary and secondary. The bank shall try to sell whichever property fetches a good amount and quickly to clear the dues of the borrower. If the sale proceeds of one property are not sufficient to clear the dues, the bank shall surely dispose of the second property too to ultimately get whatever amount from the market to the credit of the borrower's liability with them.

It appears a stay was given on sale proceedings on technicalities. It is better the Bank concerned is approached and the matter is discussed with the competent Officials properly to ensure that matter is amicably settled, inter-alia through a reasonable OTS.