Question: The Bank is not giving time to repay the loan and auctioning my house. I am a 70 years widow. My son in law took a loan of 27 lakhs from the bank against my property. But due to covid and other reasons the account became NPA. Bank gave notice for auctioning my house and my son in law paid 12 lakh. We are requesting the bank to give some time and we are ready to pay in EMI. Bank is refusing to do so. Please advise.
Asked from: Gujarat
When the borrower does not repay the loan as per the payment schedule the bank has the right to issue notice under Section 13(2) of the SARFAESI Act. Your property became the non performing assets for the bank hence, notice under Section 13(2) of SARFAESI Act is valid.
Your son in law is ready to pay twelve lakh rupees instantly to protect his property from auctioning. Therefore, he should have made a representation under Section 13(3A) of SARFAESI Act. It is mandatory for the bank to reply the representation of the borrower. The bank either grants extra time for repayment of loan or rejects his representation.
Also Read: Bank initiated recovery proceeding – How to defend?
It is not necessary for the borrower to make representation in response to the notice under Section 13(2). If the borrower has made any representation to the bank and wants time for repayment the bank must decide that representation. In ITC Limited v. Blue Coast Hotels Limited and Others, (2018) 15 SCC 99, the Supreme Court has held that:
It was not necessary for the Borrower to specifically mention that the representations were in response to the notice under Section 13(2) of the SARFAESI Act.
Also Read: Quashing of demand notice under SARFAESI Act
If the bank has rejected your request and not giving time to repay the loan. The bank has also refused to accept twelve lakh rupees. Therefore, you should approach the Debt Recovery Tribunal for stay of auction proceedings. The bank has violated the mandatory provision of Section 13(3A). You have a right to want time or settle the loan with mutual agreement. The bank has violated the mandatory procedure hence, you have the right to stay the auction of your house.