Notice u/s 13 2 of SARFESI ACT 2002
6 months ago
what to do after receipt of above subject notice ,i am not able to pay EMI of my home loan in future due to bad financial condition and some house hold loans to repay ,and not interested to keep property , i am ready to sale it or let dispose it thru NBFC bank with any best price and want to get rid of the home loan of NBFC bank , my outstanding amt is 18 lacs .....pl adv
A.Dear Client, Once the EMI against a loan is not repaid for consecutive 3 times by the borrower for any reason whatsoever, it is treated as NPA. Accordingly, a suit for recovery of an outstanding loan from the borrower is filed by the Bank before a Debt Recovery Tribunal under the SARFAESI Act, 2002. Section 13(3A) of said Act primarily lays down that any security interest created in favour of a secured creditor is enforceable without the intervention of any court or tribunal. As per sub-section (2) of Sec.13 of the Act, a creditor is required to issue a notice in writing to the borrower to discharge his liability within sixty days of the notice when such borrower has defaulted in repayment of secured debt or any installment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset(NPA). If the borrower fails to discharge his liability despite the service of notice, the creditor is free to recover the debt through the modes prescribed in sub-section (4) such as – taking over possession of the secured assets of the borrower, taking over management of the business of the borrower etc. Sub-section (3A) of Section 13 of SARFAESI Act was introduced by way of an amendment in the year 2004 whereby (3A) the borrower is given an opportunity to make representation or raise an objection with respect to the notice issued under sub-section (2). A further duty is imposed on the creditor to consider such representation/objection and if the creditor concludes that such representation or objection is meritless, he shall communicate within fifteen days of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower. It was held by the Delhi High Court that the provisions of Section 13(3A) of the SARFAESI Act are mandatory and it is necessary for the lender to consider the representation/objection made by the borrower in response to the notice issued under Section 13(2) of the SARFAESI Act. The Delhi High Court observed that the intention of the Legislature in introducing sub-section (3A) is to ensure that objection/representation of a borrower against any action for enforcement of security interest is considered before a creditor proceeds to take possession of the secured assets in terms of Section 13(4) of the SARFAESI Act. So in the prevailing situation, you need to negotiate the matter with the Bank requesting permission or NOC considering your financial crisis, to sell out the secured assets/property on your own to get better market value that may yield considerable savings after the discharge of outstanding loan of the Bank and if the Bank agrees to your proposal, then you may go ahead otherwise, Bank will proceed to take possession of the secured assets in terms of Section 13(4) of the SARFAESI Act. and put it on auction for recovery of outstanding loan from the sale proceeds. Further, a quick counseling session with a certified credit counselor can help you to discover your options and choose the right path forward.
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A.Dear Client,
Firstly, review the notice received under Section 13(2) of the SARFAESI Act. This notice typically provides details of the outstanding loan amount, the default, and the bank's intention to take possession of the property. If you are unable to negotiate with the bank and do not wish to retain the property, you can explore selling it in the open market. The proceeds from the sale can be used to repay the outstanding loan. If you are unable to repay the loan and do not take any action, the bank may proceed with the auction of the property under the SARFAESI Act. It's important to be aware of the auction process, and the property may be sold at a lower price than its market value.
Firstly, review the notice received under Section 13(2) of the SARFAESI Act. This notice typically provides details of the outstanding loan amount, the default, and the bank's intention to take possession of the property. If you are unable to negotiate with the bank and do not wish to retain the property, you can explore selling it in the open market. The proceeds from the sale can be used to repay the outstanding loan. If you are unable to repay the loan and do not take any action, the bank may proceed with the auction of the property under the SARFAESI Act. It's important to be aware of the auction process, and the property may be sold at a lower price than its market value.
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