SARFAESI Act: quashing of demand notice
Question asked on: 01/02/2019
Under sarfaesi act violation of procedure and proceeded for property auction. In possession notice, date of demand notice was incorrect. Moreover, under 13 (3–A) bank has not responded for the representation given on the demand notice. How to quash or stop the notice of sale and possession notice?
SARFAESI Act is special legislation. IT empowers the banks to recover dues from defaulting borrowers without the intervention of courts.
The borrower has the right to receive a demand notice under section 13(2) of the SARFAESI Act. The said demand notice bears the total outstanding and sixty days time period for its payment.
Sixty days period for payment of outstanding starts from the date of receiving of notice.
As per the provision of the SARFAESI Act, the bank cannot take measure under section 13(4) in violation of mandatory requirements. A demand notice with the correct particulars is necessary under section 13(2).
A notice with wrong information has no effect in the eye of law. You should file an appeal before the DRT (Debts Recovery Tribunal) for quashing the said demand notice.
Section 17 provides you with a remedy to appeal before the DRT if aggrieved by the steps under section 13(4). If demand notice has issued and assets declared NPA the Bank will proceed under section 13(4).
When bank likely to take steps under section 13(4) you can move an appeal before the DRT. The DRT has the power to quash the irregular notice.
Notice is invalid because it bears wrong information. In Chimanlal v Mishrilal (1985) 1 SCC 14 the Supreme Court holds that the validity of notice is the precondition for taking a further step.
Hence, bank authority cannot proceed under section 13(4) by invalid notice.
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