#sarfaesi

[lexkhoj]

Bank can forfeit entire 25% deposited amount, if there is a default in payment by auction purchaser: Supreme Court

While hearing an appeal filed by the authorized officer of the Central Bank of India, Hon’ble Supreme Court held that the Bank being a secured creditor can forfeit the earnest money of a successful auction-purchaser if the purchaser fails in depositing the balance amount within the timeline specified under the SARFAESI Rules. Facts of the Case: Applicant Bank had issued an e-auction notice on…

[townpostin]

NCLT Kolkata Hears Explosive Allegations in INCAB Case

Advocate claims widespread fraud in resolution process, challenges loan legitimacy The National Company Law Tribunal (NCLT) in Kolkata continues to unravel complex accusations in the INCAB case. JAMSHEDPUR – The NCLT Kolkata bench, led by Members Arvind Devanathan and Bidisa Banerjee, heard startling allegations of fraud and mismanagement in the INCAB case today. Advocate Akhilesh Srivastava…

[npaconsultant-stuff-blog]

Sarfaesi Act: Security Interest Act, 2002

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (also known as the SARFAESI ACT) is an Indian law. It allows banks and other financial institutions to auction residential or commercial properties to recover loans.

Under this act secured creditors (banks or financial institutions) have many rights for enforcement of security interest under section 13 of SARFAESI Act, 2002. If borrower makes any default in repayment of loan instalment or interest and his account is classified as Non-Performing Asset (NPA) by secured creditor, then secured creditor is required to issue written notice to the borrower for repayment of due in full within 60 days by clearly stating amount due and intention for enforcement. If borrower does not discharge dues in full within 60 days, then Secured creditor may take possession of the mortgaged assets under section 13(4) of SARFAESI ACT WITHOUT INTERVENTION OF ANY COURT OR TRIBUNAL but with a prior notice to the borrower.

The secured creditors will then file an application under section 14 of the SARFAESI ACT, in the Metropolitan Magistrate Court or The District Magistrate Court as per the jurisdiction of the mortgaged assets in order to obtain the order for forceful physical possession of the assets. Generally the orders under section 14 of the SARFAESI ACT are passed in a period of 3 months in favour of the secured creditors.

The borrower may approach competent court to obtain stay against such orders even against the notice issued under section 13(4) of the said Act.

[menjeet]

The deeper impact of the Adani meltdown

A critical aspect of the fallout of the Adani group or any similar large business is how its lenders are going to deal with the aftershock and this is something I haven’t seen addressed anywhere. Post covid all big and small lenders are aggressively liquidating assets of borrowers whose loans have turned NPAs. I know this because I proof read ads of possession and sale notices published by banks…

[bankeauction]

Bank Auctions, Property Auctions, NPA Auctions, DRT Auctions, Forward Auctions

"Find residential and commercial auction properties for sale from the leading Indian banks. View, Bid & Win Non Performing Assets (NPA), Bank Auction, Foreclosure and Sarfaesi Ausction Properties. With Bank eAuctions, Banks can create and publish events in few easy steps and monitor the entire process online. The easy to use interface requires minimal training to the bank users and bidders"

[rnc1]

How Safe is it to Buy an Auction Property in India Auctioned by Various Banks?

Purchasing an auction property in India, especially one auctioned by banks, has become a popular option for buyers looking to secure a property at a competitive price. However, while the deals might seem attractive, they also come with a set of risks and complexities. As a potential buyer, you need to navigate legal formalities, property documentation, and understand valuation aspects. Consulting a valuation firm is essential in such transactions to ensure you make a sound investment.

In this article, we will explore the process of buying an auctioned property, the safety considerations, and the role of a valuation firm in making informed decisions.

1. Understanding Bank Auction Properties in India

When a borrower defaults on a loan, banks have the legal right to seize and auction the borrower’s property to recover the loan amount. These auctions are governed by the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act). The act empowers banks to recover bad debts without the intervention of courts.

Bank auction properties often come with an advantage of lower-than-market prices, which can make them appealing for buyers. However, buyers must also be aware that auction properties often come with certain legal and financial risks.

2. Steps Involved in Buying a Bank-Auctioned Property

Before we delve into the safety aspects, let’s first understand the general steps involved in buying an auction property in India:

Identification of Property: Banks advertise auction properties in newspapers and on official bank websites. You can shortlist properties based on your budget and preferences.

Due Diligence: It is crucial to conduct a thorough check on the property’s legal status. This includes verifying the title, checking for encumbrances, and ensuring there are no outstanding dues such as property taxes or maintenance charges.

Property Valuation: You should engage a valuation firm to assess the property’s current market value. A valuation expert can help you understand whether the auction price is justified, preventing you from overbidding.

Participating in the Auction: To participate, you will need to submit a bid along with an Earnest Money Deposit (EMD), typically 10% of the property’s reserve price.

Winning the Bid: If you win the auction, the bank will issue a Sale Certificate after you pay the full amount. The Sale Certificate is the legal document that transfers ownership.

Registration and Possession: After receiving the Sale Certificate, the property needs to be registered in your name at the local sub-registrar's office. Once registered, you can take possession of the property.

3. Safety Concerns in Buying Auction Properties

While buying an auction property can offer value for money, it is essential to be aware of the associated risks. Here are some common concerns:

a. Legal and Ownership Disputes

One of the primary risks is the possibility of legal disputes regarding the property’s ownership. Often, properties under bank auctions are mortgaged, and the previous owner may contest the auction process, delaying the transfer of ownership.

To mitigate this risk:

Conduct a title search to ensure there are no pending litigations or third-party claims on the property.

Request all property documents from the bank, including the Sale Deed and NOC (No Objection Certificate) from relevant authorities.

b. Physical Possession and Encumbrances

In some cases, buyers face difficulties in taking physical possession of the property after winning the auction. The previous owner may refuse to vacate, resulting in a legal battle.

Moreover, there may be unpaid utility bills, property taxes, or other encumbrances on the property, which you may inherit after the purchase.

Always inspect the property physically before bidding.

Ensure the bank provides a clear encumbrance certificate.

Verify if the property is free from dues and legal conflicts.

c. Overvaluation or Misleading Reserve Price

Banks set a reserve price for auction properties based on an internal valuation, but this may not always align with the actual market value. Engaging a valuation firm is crucial to avoid paying more than the property’s worth.

A professional valuation firm will:

Provide an accurate estimate of the property’s current market value.

Analyze factors such as the location, condition of the property, and future market trends.

Help you make an informed decision about the bidding price.

d. Incomplete Documentation

One of the biggest challenges with auction properties is the lack of complete documentation. Banks may not always have access to all the relevant property documents, especially if the original owner is uncooperative.

Ensure you receive all critical documents from the bank, including the Sale Deed, Encumbrance Certificate, and details of any outstanding loans or liabilities.

Seek legal counsel to verify the authenticity of the documents.

e. Delay in Registration

Once you win the auction, it is your responsibility to get the property registered in your name. There may be procedural delays, especially if there are pending legal disputes.

Ensure the property is legally free from encumbrances before making full payment.

Work closely with legal experts and the bank to expedite the registration process.

4. Role of a Valuation Firm in Buying Auction Properties

Hiring a valuation firm is highly recommended when considering the purchase of a bank-auctioned property. Here’s how a valuation firm can assist you:

Accurate Property Valuation: A valuation expert provides a clear picture of the property’s current market value based on factors such as location, infrastructure, and potential growth.

Risk Assessment: Valuation firms assess the potential risks involved in buying the property, including legal disputes, encumbrances, and the condition of the property.

Investment Advice: The firm can provide insights into the future market potential of the property and whether it is a good investment based on long-term value appreciation.

Avoid Overbidding: Many buyers get caught up in auction excitement and end up overbidding. A valuation expert helps you set a realistic bidding limit based on the true worth of the property.

5. Benefits of Buying a Bank Auction Property

Despite the risks, purchasing a bank auction property can offer several advantages:

Lower Prices: Auction properties are often sold below market value, providing an opportunity for buyers to acquire valuable assets at a discounted rate.

Immediate Sale: Unlike traditional property purchases that can take months, auctions offer a quicker transaction process once the bid is accepted.

Transparent Process: Bank auctions are usually transparent, with terms and conditions clearly laid out, giving buyers a sense of security compared to private deals.

6. Final Considerations: Is It Safe to Buy an Auction Property?

Buying an auction property in India can be safe and profitable if approached cautiously. While there are risks associated with ownership disputes, unclear documentation, and hidden liabilities, conducting thorough due diligence and working with a valuation firm can mitigate these risks.

Here are a few key tips for safety:

Always inspect the property physically before bidding.

Get legal advice to verify all property documents.

Engage a valuation firm to ensure you are paying the right price.

Verify that the property is free from legal encumbrances and outstanding dues.

With the right precautions, buying a bank-auctioned property can be a lucrative and secure investment opportunity.

Conclusion

Purchasing an auction property in India is an attractive proposition, particularly when auctioned by banks. However, it is essential to perform thorough due diligence, including title verification, valuation, and legal assessments, to ensure a safe purchase. Hiring a reliable valuation firm is critical in this process, as they can provide an accurate property assessment and help you avoid overpaying. With careful planning and professional advice, you can make a sound investment in a bank-auctioned property.

[acquisory]

Insolvency and Bankruptcy Code — IBC-BOON OR BANE

Introduction

The Insolvency and Bankruptcy Code (IBC), 2016 has been enacted to merge the existing laws related to insolvency and bankruptcy. The IBC involves standard steps which is viable and understandable. So, everyone, be it creditors, debtors, companies, or shareholders etc. shall have a standard perform for any matters relating to insolvency.

“The IBC has been a real game changer in the Indian economy’s business reform initiatives in the last twenty five years. Ease of doing business is ironically the base premise for enacting the comprehensive Code to exit from the business.”

The IBC has made a spectacular progress in short span. The recent orders issued by the Adjudicating Authorities are beginning to have profound impact on defaulting business owners as the message is loud and clear “settle dues or cede control”.

Why was IBC enacted?

Initially there was Presidency Towns Insolvency Acts, 1909 which was applicable in Kolkata, Chennai and Mumbai and the Provincial Insolvency Act 1920 for the rest of India, for regulating the insolvency laws. The Act applied to individuals and partnerships but exempted corporations from within its ambit. Post Independence, the bankruptcy and insolvency were specified in Constitution and with the passage of time there were numerous acts which governed Insolvency and bankruptcy issues such as the Sick Industrial Companies (special provision) Act, 1985 (“SICA”), SARFAESI Act, 2002, the Recovery of Debts due to Banks and financial institutions Act, 1993 (“RDDBFI Act”), Companies Act, 1956 as well as Companies act, 2013.

But these regulations have not yielded satisfactory results. These regimes were high fragmented, borne out of multiple judicial forums resulting in lack of clarity and certainty of jurisdiction. Further, we had various adjudicatory bodies/Tribunals to deal with such issues and matters under different Acts stated above.

So, this led to the unclear knowledge about the authority as to whom the parties should approach in the related matters. Hence, this resulted in overlapping of decisions. There was no common regulatory authority to regulate the rights of the secured or unsecured creditors, employees etc. or to determine the priority of their claims. Large number of stressed assets such as NPAs with low recovery rates due to a lack of enabling environment for the enforcement of creditor’s rights. Moreover there was no adequate or credible data regarding the assets, indebtedness etc. of companies which further heighten the problems. Hence large number of legislations and non-statutory guidelines have made the recovery of debt a complex and time consuming process.

The IBC is a welcome overhaul which has directly addressed in resolving the insolvency and bankruptcy issues of corporates and simultaneously serving creditors and public financial institutions by helping them in recovery of bad and distress loans and ultimately tackling Non Performing Assets. The Main objective of Code is distribution of the effects of a debtor in the most expeditious, equal and economical mode. The Code lays down the complete procedure of Insolvency Resolution process which involves collating claims and reviewing the requisite financial and other relevant records of the company. The introduction of this Code has brought in ample opportunities for professionals ranging from being appointed as official liquidator to managing the financial health of corporates in case of distressed assets.

Present Scenario

Today we have IBC, 2016, which provides a…

Read more: https://www.acquisory.com/ArticleDetails/52/Insolvency-and-Bankruptcy-Code--IBC-BOON-OR-BANE

[seosmmexpert1]

Debts Recovery Tribunal Lawyers Bangalore-Legal conclave

For many companies debt collection has become a critical worry, particularly in a city like Bangalore that is expanding and sees a lot of daily financial activities. Businesses and banks are always searching for methods to make up their losses because more people are taking out loans and some are unable to repay them. This is where Bangalore's Debt Recovery Tribunal (DRT) specialists come in, offering much-needed legal assistance to speed up and manage the debt recovery process.

The Recovery of Debts Associated with Banks and Financial Organisations Act, 1993 formed the Debts Recovery Tribunal (DRT), which helps banks and financial institutions in recouping debts from non-paying borrowers. The tribunal offers a speedier alternative to traditional courts for resolving disputes in cases when the outstanding amount is over ₹20 lakhs. DRT lawyers play a more crucial role in Bangalore, a busy metropolis where payments are becoming more advanced.

DRT lawyers in Bangalore have a deep understanding of the legal system surrounding debt recovery. They are familiar with laws like the Recovery of Debts Act and the SARFAESI Act, which help banks recover their money. These lawyers handle everything from filing the case to representing it in front of the tribunal and guiding clients through appeals if needed. Their job is to make sure all the paperwork and evidence are solid, giving their clients the best chance at a quick resolution.

One of the main benefits of hiring a DRT lawyer is the speed at which they can help recover debts. The tribunal is designed to resolve cases faster than civil courts, and with the right lawyer, businesses and banks can reclaim their dues more efficiently. DRT lawyers also make sure all possible options are explored, whether it’s attaching assets, selling off secured properties, or issuing recovery certificates, to help their clients get their money back.

A knowledgeable DRT lawyer is necessary for any Bangalore bank or company dealing with debt recovery issues. Their experience ensures that your case is handled correctly, increasing the likelihood that you will be awarded what is rightfully yours. Legal Conclave can put you in touch with qualified specialists who have the ability to help you with the debt gathering procedure if you're searching for reliable legal help.

[soolegal]

𝐍𝐨𝐧𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐢𝐧𝐠 𝐀𝐬𝐬𝐞𝐭 - Interpretation of Section 2(o) SARFAESI Act and RBI circular

To Read more, click on the article by Adv. Nishant Mehrotra.

[seemabhatnagar]

"High Court Dismisses Writ Petition Citing Alternative Remedy under SARFAESI Act"

The Allahabad High Court reinforced the judiciary's adherence to procedural propriety. The Court emphasized the principle of exhausting available statutory remedies before knocking on the door of the High Court by way of Article 226 of the Constitution of India. The writ petition was dismissed on this ground as an alternative remedy is available under the SARFAESI Act.

Kasturi Devi Sheetalaya Pvt Ltd & Another v. The Presiding Officer Debt Recovery Tribunal And Another

Writ Petition 18388/2024

Before Allahabad High Court

Heard by Hon'ble Mr. Justice Ajit Kumar, J.

Facts

The petitioners invoked the extraordinary jurisdiction of the High Court under Article 226 of the Constitution challenging the order passed by the Debt Recovery Tribunal (DRT) on a miscellaneous application arising out of a Securitization Application.

Preliminary Objection of the Bank (Bank Of India): The petitioners had an alternative and efficacious remedy to appeal before the Debt Recovery Appellate Tribunal (DRAT) under Section 18 of the SARFAESI Act, 2002.

Supreme Court Precedent: The respondent bank relied on a recent Supreme Court judgment (PHR Invent Educational Society v. UCO Bank) emphasizing that High Courts should not interfere in matters arising out of the SARFAESI Act when a special forum is prescribed.

Petitioners' Argument: The petitioners contended that an order on a miscellaneous application regarding court fees does not fall under Section 17 of the SARFAESI Act, and thus, an appeal under Section 18 is not applicable.

Issue before the Court:

Whether the High Court should entertain a writ petition under Article 226 when an alternative remedy is available under the SARFAESI Act, specifically regarding orders passed on miscellaneous applications by the DRT.

Order:

Preliminary Objection Upheld: The High Court upheld the preliminary objection of the Respondent Bank, that an alternative remedy is available.

Dismissal of Petition: The petition was dismissed on the ground of alternative remedy, with liberty granted to the petitioners to approach the appropriate appellate forum.

[npaconsultant1234]

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (also known as the SARFAESI ACT) is an Indian law. It allows banks and other financial institutions to auction residential or commercial properties to recover loans.

Under this act secured creditors (banks or financial institutions) have many rights for enforcement of security interest under section 13 of SARFAESI Act, 2002. If borrower makes any default in repayment of loan instalment or interest and his account is classified as Non-Performing Asset (NPA) by secured creditor, then secured creditor is required to issue written notice to the borrower for repayment of due in full within 60 days by clearly stating amount due and intention for enforcement. If borrower does not discharge dues in full within 60 days, then Secured creditor may take possession of the mortgaged assets under section 13(4) of SARFAESI ACT WITHOUT INTERVENTION OF ANY COURT OR TRIBUNAL but with a prior notice to the borrower.

The secured creditors will then file an application under section 14 of the SARFAESI ACT, in the Metropolitan Magistrate Court or The District Magistrate Court as per the jurisdiction of the mortgaged assets in order to obtain the order for forceful physical possession of the assets. Generally the orders under section 14 of the SARFAESI ACT are passed in a period of 3 months in favour of the secured creditors.

The borrower may approach competent court to obtain stay against such orders even against the notice issued under section 13(4) of the said Act.

[mylawyeradvise]

The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act of 2002 is quite a convenient tool for banks and other financial institutions which includes Non-Banking Financial Company (NBFC) to recover the debts from their borrowers as financial creditors. But the borrowers are also entitled to certain rights under this SARFAESI Act of 2002 to claim damages if there is default on the part of these financial institutions. Read more

[npaconsultant-stuff-blog]

Get an overview of the Sarfaesi Act Security Interest Act, 2002, including its provisions, impact on the banking sector Visit our website to know more

[npaconsultan]

𝗡𝗼𝗻 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗶𝗻𝗴 𝗮𝘀𝘀𝗲𝘁𝘀 𝗶𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀, 𝗟𝗶𝗺𝗶𝘁𝗮𝘁𝗶𝗼𝗻𝘀 𝗼𝗻 𝗿𝗲𝗰𝗼𝘃𝗲𝗿𝘆 & 𝗺𝗲𝗮𝘀𝘂𝗿𝗲 𝘁𝗼 𝗡𝗣𝗔

Non Performing Asset is a status of a borrower when he commits default in repayment obligations against the various loan facilities availed from the bank. If there is a continuous default of 90 days, the borrowers account is categorized as a Non Performing Asset. The NPA in India has grown and is growing at a very past pace.

The implications of NPA are very serious, as post NPA classification, the bank  starts initiating the recovery process aggressively through SARFAESI ACT, RDDBFI Act, MCS Act or IBC Act etc as applicable or as the Bank may deem fit. The entire focus is on maximum recovery of dues rather than helping the borrower to revive the business.

The business thus likely comes to a standstill. Non-performing Assets are confiscated. The personal assets and personal guarantees of borrowers and guarantors are also encashed. The borrowers and guarantors can lose their mortgaged assets within 170 – 200 days from the date of receipt of the first notice under Section 13(2) of the SARFAESI Act.

𝐋𝐞𝐭𝐬 𝐂𝐨𝐧𝐧𝐞𝐜𝐭 𝐍𝐨𝐰! 📱 +𝟗𝟏𝟖𝟗𝟐𝟖𝟐𝟖𝟗𝟎𝟕𝟎 📧 𝐢𝐧𝐟𝐨@𝐧𝐩𝐚𝐜𝐨𝐧𝐬𝐮𝐥𝐭𝐚𝐧𝐭.𝐢𝐧 🌐 𝐡𝐭𝐭𝐩𝐬://𝐰𝐰𝐰.𝐧𝐩𝐚𝐜𝐨𝐧𝐬𝐮𝐥𝐭𝐚𝐧𝐭.𝐢𝐧

[bhattandjoshiassociates-blog]

DRT under SARFAESI and RDB Acts: A Critical Examination in the Context of IDFC First Bank Limited v. Union of India and Ors.

The Delhi High Court recently delivered a seminal judgment in the case of *IDFC First Bank Limited v. Union of India and Ors.*, clarifying the jurisdictional bounds of the Debt Recovery Tribunal (DRT) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), vis-à-vis the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act). This judgment is pivotal in understanding the applicability of pecuniary limits to claims pursued under the SARFAESI Act and delineates the interplay between the SARFAESI and RDB Acts. The Core Issue The court was tasked with determining whether DRTs could entertain claims under Section 13(10) of the SARFAESI Act that are below the pecuniary threshold set by the RDB Act. The question arose from IDFC First Bank Limited's challenge against the DRT's decision, which rejected their application for recovery of an outstanding amount under the SARFAESI Act on grounds of lacking pecuniary jurisdiction. Factual Background IDFC First Bank entered into a loan agreement, which eventually led to a non-performing asset classification. Upon the sale of secured assets and adjustment of proceeds, a balance amount remained, for which the bank sought recovery under Section 13(10) of the SARFAESI Act. The DRT's refusal, citing jurisdictional limits, prompted the legal challenge. "The principal question to be addressed is whether the Debts Recovery Tribunal has the jurisdiction to entertain a claim for less than ₹10,00,000/- under Section 13(10) of the SARFAESI Act." Legal Analysis: DRT Jurisdiction under SARFAESI & RDB Acts IDFC contended that Section 13(10) of the SARFAESI Act provided an independent remedy and should be distinguished from the RDB Act's provisions. In contrast, the respondent argued that any outstanding amount, post-sale of secured assets, could be recovered under the RDB Act, emphasizing the pecuniary threshold defined therein. The court meticulously analyzed the statutory framework, emphasizing the integral relationship between the SARFAESI Act and the RDB Act in adjudicating claims related to debt recovery. It underscored the absence of express provisions within the SARFAESI Act specifying which DRT would hold jurisdiction over original claims following the enforcement of security interests. "The SARFAESI Act does not contain any express provisions that stipulates which Debts Recovery Tribunal has the jurisdiction to decide any original claim as to the outstanding amount that remains after the secured creditor has enforced the security interest." Quoting directly from the SARFAESI Act, Section 13(10) states: "Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery Tribunal having jurisdiction or a competent Court, as the case may be, for recovery of the balance amount from the borrower." Conclusion: DRT Jurisdiction Clarified under SARFAESI & RDB Acts The judgment firmly established that the remedy under Section 13(10) of the SARFAESI Act cannot be considered in isolation from the RDB Act. It elucidated that applications under Section 13(10) for recovering the balance amount are inherently akin to Original Applications under Section 19(1) of the RDB Act, thereby subject to the same pecuniary limits. "An application under Section 13(10) of the SARFAESI Act is required to be adjudicated as an Original Application under Section 19(1) of the RDB Act and is subject to the pecuniary limits therein." The court's decision underscores the integrated nature of debt recovery laws in India, affirming that DRTs' jurisdiction under the SARFAESI Act aligns with the pecuniary thresholds outlined in the RDB Act. This clarification harmonizes the procedural aspects of both acts, ensuring a streamlined approach to debt recovery and enforcement of security interests, thereby reinforcing the legislative intent behind these statutes. Read the full article