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

Bank initiated recovery proceeding – How to defend?

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.

Lawyer’s advice

Illegal use of my boundary wall by my neighbor

Question:  There is an Illegal use of my boundary wall by my neighbor. My father built the 6 ft high 5" thick 60 ft long boundary wall before construction of our 2 storied building within my premises in the year 1990-91 when there was a narrow drain and one 3" thick...

Limitation period for cancellation of probate

Question: I want to file a case for the cancellation of probate. The district court has granted the letter of administration in the course of probate proceedings. The executor of the will did not make me a party in the probate proceeding. Therefore, I could not have...

Can the government equate the two posts?

Question: I’m working as an inspector in the food department. My post is inferior to the post of inspector in the supply department. Can the state government equate the two posts because there is a discrepancy between the salary and status. After ten years of service...

Kanoonirai established in 2014. It provides a facility to consult a lawyer through online media, telephonic consultation and video conferencing.

Contact

mail[at]kanoonirai.com
+91-91400-4[nine][six]54