Possession - loan from a bank

Dear Client,
Merger of banks has no role to play in the matter. Section 19 of the DRT Act enables a Bank/NBFC or a financial institution to recover any debt from any person by making an application before the Debt Recovery Tribunal(DRT) having jurisdiction. A secured creditor may also simultaneously pursue its remedies under the SARFAESI Act 2002 as well as the DRT. Section 13(2) of the SARFAESI Act requires the lender to issue a written demand notice to the borrower. Sub-section (3A) of Section 13 of SARFAESI Act 2002 was introduced by way of an amendment in the year 2004 whereby the borrower is allowed to make representation or raise an objection to the notice issued under sub-section (2) of Sec.13 of the Act and the Bank 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. If the borrower fails to pay within this 60-day period, the secured creditor becomes entitled to exercise their rights under Section 13(4) of the Act. Section 13(4) empowers the secured creditor to take possession of the secured assets, manage them, or sell them to recover the debt. The Statue has not fixed any time limit for taking recourse under Section 13(4) of the Act after issuance of notice under Section 13(2) of the Act or rejection of the application submitted by the borrower under Sub-section 3A of the Section 13 of the Act. The execution would follow the legal process and may involve applications to the DRT afresh by the secured creditor, i.e. Bank. Under Section 17 of the SARFAESI Act, the borrower has every right to prevent the auction and seek a stay even if the house is in symbolic possession. The owner/borrower can approach the DRT or the High Court with a view to pointing out that the bank acted improperly or that there are reasons to grant the stay, for example, a pledge to pay the remaining loan. If the court agrees with the owner/borrower, then a stay order can be granted to the owner to stop the bank from taking any further action on the property. Further, Section 18(1) of the SARFAESI Act, 2002 clearly stipulates that any person aggrieved by any order made by the DRT under Section 17, may prefer an appeal to the DRAT(Debt Recovery Appellate Tribunal) within 30 days from the date of receipt of the order of the DRT. The 2nd proviso to Section 18(1) stipulates that no appeal shall be entertained by the DRAT unless the borrower has deposited with it 50% of the amount of debt due from him, as claimed by the secured creditors or as determined by the DRT, whichever is less. The 3rd proviso to Section 18(1) gives a discretion to the DRAT to reduce the aforesaid amount to not less than 25%, provided the DRAT gives reasons for the same which are to be recorded in writing. Hence, it is recommended to consult with a Sr. Advocate specialising in DRT matters to navigate the issue effectively.