Home | Legal Advice | Civil Law Cases | Bank initiated recovery proceeding – How to defend?

Bank initiated recovery proceeding – How to defend?

Shivendra Pratap Singh


18/06/2021/ 9:44:14 AM

Reading Time:

Question: I have agricultural land in Bareilly and against which I had taken a loan from Bank of Baroda (Bareilly) for Agricultural activity. The bank has sent a recovery notice under SARFAESI Act because of some reasons for the loan. Sir, How to defend when the bank initiated recovery proceeding under SARFAESI Act? The loan has gone Non Performing Assets (NPA) and the bank has initiated legal proceedings. I wish to pay the bank but currently do not have the funds to pay off. I wish to dispose of the property and pay it to the bank but I do not want any legal proceedings.

Question from: Uttar Pradesh

You are a borrower under section 2(f) of the Securitisation   and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). When the loan has declared non performing assets then the security creditor i.e. Bank may initiated recovery proceeding under section 13 of SARFAESI Act.

The borrower has a right to file a representation to the secured creditor under Section 13(3A) of the SARFAESI Act. In the said representation the borrower can object to the recovery proceeding or give his plan of repayment of loan. 

Also read: How to quash demand notice?

In ITC Ltd. v. Blue Coast Hotels Ltd., 2018 SCC OnLine SC 237 the Supreme Court has held that provisions under Section 13(3-A) were mandatory and failure on the part of the creditor to respond to the representation of borrower vitiate the recovery proceedings.

What to do when bank is initiated recovery proceeding under section 13(2) SARFAESI Act?

When the bank initiates recovery proceeding the borrower should send a representation to the Bank as soon as possible. If the bank is initiated the recovery proceeding arbitrarily then raise your object thereon. It is your right to object to the recovery proceeding before taking possession of secured assets by the bank under Section 13(4) SARFAESI Act. 

Hence, if you have legal grounds to assail the recovery proceeding initiated under Section 13(2) of SARFAESI Act you must do it. The bank will reply to your representation within fifteen days. However, in Kannu Aditya India Ltd. v. SBI, 2018 SCC OnLine Del 12208 the Delhi High Court has held that fifteen days period is directory. 

Also read: Bank cannot auction agricultural land

When the bank has initiated recovery proceeding without reply to your representation, the proceeding becomes void. Hence, before taking possession of secured assets then you should file a Securitisation Application before the DRT. You can seek stay of the proceeding under 13(4). The compliance of provisions of Section 13(3A) is mandatory. Hence, the DRT will stay the proceeding under Section 13(3A) with immediate effect.

shivendra pratap singh advocate

Shivendra Pratap Singh


Practising lawyer in the High Court Lucknow. You can consult on Criminal, Civil, Matrimonial, Writ, Service matters, Property, Revenue and RERA related issues.

Cancellation of Sale Agreement

Question: Cancellation of sale agreement without consent of party. I executed an agreement of sale for a 497 sq.yards site with a condition that I will get clearance from ULC. I took advance of 2 lakhs cheque and 2 lakhs cash, totalling to 4 lakhs. It's been 22 months...

Landlord does not provide a rent receipt

Question: After making rent payment, the landlord does not provide a rent receipt. Also not picking up calls & responding to messages. What action can be taken against him? Asked from: Maharashtra You should send to him a legal notice on his residential or postal...

Forfeiture of earnest money in withdrawal of tender

Question: I am a contractor and have some tenders in BHEL. The Bhel has forfeited earnest money because I have withdrawn a tender. So I want to know whether forfeiture of earnest money in withdrawal of tender is legal in India. BHEL has published tenders for the...

Arbitration in respect of non-arbitrable issues

Question: Some tenders were issued during last financial year. Tenders were in respect of fencing and drainage on both sides of the road. The department has allotted those tenders to my company. Company has to conduct a survey of land and demarcate slope angle for the...

Mud road on my land :  How to get it back?

Question: Government has laid a mud road on my land a few years ago. I have all documents stating the land where the road is laid belongs to me. We do not know about this. How to get my land back? I have all documents stating the land where the road is laid belongs to...

Can mother execute a registered will

Question: Can mother execute a registered will towards the property which she had received from my deceased father? My father died in the year 2021 and he has named my mother as the 100% owner of the existing house in the registered will. I have 4 older brothers and 1...

Appointment of arbitrator under the agreement

Question: My firm is doing business of gravel supply to the government. I want to know whether the appointment of an arbitrator under the agreement is possible? Our firm got a tender from the public works department of Uttar Pradesh. According to the tender agreement...

Kanoonirai has been advising in legal issues since October 2014. You can consult a lawyer through online media, telephonic consultation and video conferencing.