Joi

nCAI
IBWI
THASHOKonYouTube&App
RETAI
LMODULE-D
Chapt
er16:RECOVERYOFRETAI
LLOAN(
PART-
VII
)
Whatwewi
llst
udy
?
*
Whati
sSARFAESIACT2002?
DRT:4y
ear
sor65y
ear
s(Pr
esi
dingOf
fi
cer
)
DRAT:4y
ear
sor70y
ear
s(Chai
rPer
son)
SARFAESIACT2002:
SECURI
TIZATI
ONANDRECONSTRUCTI
ONOF
FI
NANCIALASSETSANDENFORCEMENTOF
SECURI
TYINTERESTACT,
2002
*I
nthisactt hepowerwasgiventobank,nowbank
cantakeov erpossessi
onofsecuri
tychargedto
bank.Aftertaki
ngpossessi
onbankcasel lthe
securi
ty(
asset /
goods).
*
Bankcant
akeov
ermanagementofcompany
.
*Thi
spowerwi
llbeexer
cisedbyChi
efManageror
Above.
*Boar
dofbankcandel
egat
epowert
olowerr
ank
off
ici
alal
so.
 Joi
nCAI
IBWI
THASHOKonYouTube&App
Enf
orcementofsecur
it
yint
erest(
Condi
ti
ont
oappl
y
SARFASIAct
):
SARFAESIActcanbei
nit
iat
edonlyift
hel oan
accountsat
isf
iest
hef
oll
owingcondit
ions:
1.Loanaccountmusthav
ebeencl
assi
fi
edasNPA,
backedbysecuri
ty.
2.Secur
edassetshoul
dnotbeanagr
icul
tur
eland
3.Outst
andingint
heaccounti
ncl
udi
ngtheint
erest
accr
ued/appli
edshoul
dbemor et
hanRs.Onelakh.
4.Out
standi
ngduesshouldbe20%orabov
eoft
he
pri
nci
palandint
erest
.agr
icul
tur
all
and.
5.Documentsshouldbeenf
orceabl
eandunexpir
ed
peri
odofami ni
mum of6mont hsmustbeavai
lable
(notspeci
fi
edintheAct
).
Act
ionunderSARFAESIAct2002wi
llnotext
end
l
imi
tati
onperi
odofdocuments.
6.Incaseofmulti
plelenders/consor
tium advances,
ensurelender
shavi
ngami nimum of60%ofdues
outst
andingareagreeabl
ef orini
ti
ati
ngact i
on
underSARFAESIAct2002.
 Joi
nCAI
IBWI
THASHOKonYouTube&App
Condi
ti
onwhennott
oappl
ySARFASIAct
:
1-Outst
andi
ngupt
o1Lac.
2-Possessi
onofagricul
tur
elandcannotbet
aken
butagri
cult
ureequi
pmentcanbet akeni
n
possessi
on.
3-
IfBor
rowerhasr
epai
dthe80%ofpr
inci
pal
amount.

St
epsunderSARFAESIAct(
Summar
y):
1-60daysnoti
cetobot
h,bor
rowerandguarant
ori
s
gi
venundersecti
on13(
2)ofSARFAESIAct.
2-Ifbor
rowerr
aiseanyquer
y/obj
ect
ion,
thenbank
needtorepl
ywithi
n15days.
3-I
fborrowerdoesnotpayt hedueswithi
ng60day s,
noti
cewi l
lbeissuedundersecti
on13(4)thatbank
wil
ltakepossession.Possessi
onwil
lbetakenwi t
h
thehelpofDM.
4-Wi
thi
ng7daysoftaki
ngpossession,
noti
cei
n
twonewspaperneedtobepubl
ishedabout
 Joi
nCAI
IBWI
THASHOKonYouTube&App
possessi
onofpr
opert
y,oneinEngl
ishl
anguage
andoneinver
nacul
arlanguage.
Borr
owercanfi
leappl
icat
ionwit
hDRTwithi
n45
daysoft
akenoverofpossessi
onbybankand
wit
houtdeposi
ti
nganyamount.
Bothbankandborr
owercanappealagai
nst
deci
sionofDRTinDRATwith30daysofrecei
vi
ng
thecopyofj
udgement.
I
fbor rowerappealt
henhehast
odeposi
t50%of
DRTj udgementamountwit
hDRAT.DRATcan
reduceitto25%.
Sal
esofPr
oper
ty:
*
30daysnoti
cet
oborrowerandguar
ant
orbef
ore
maki
ngsal
eofproper
ty.
*Publ
icaucti
on–30days’not
icei
n2newspaper
,oneEngli
shandonever
nacul
arpaperaboutt
he
aucti
on.
*Purchaserunderauct
ionwil
lhavetodeposi
t25%
amounti mmediatel
yandbalance75%withi
n15
days.Althoughbankcanal
lowmor eti
me.
 Joi
nCAI
IBWI
THASHOKonYouTube&App
St
epsunderSARFAESIAct(
Det
ail
):
Once,t
heaccountisclassifiedasNPA, theAct
empowerstheSecuredCr edi t
or(
Bank)toissuea
DemandNot i
ceunderSect ion13(2)tot he
def
ault
ingborr
owers/mor tgagors/guarantor
s
cal
li
nguponthem todischar getheduesi nful
l
wit
hin60daysfrom t
hedat eofreceiptofthenot
ice.
ThoughtheSARFAESIActmandat esgi v
ingofonl y
twoparti
cul
ars,vi
z.,
det ai
lsoftheamountpay abl
e
anddetai
lsofsecuri
ties,i
nthenot ice,i
twoul dbei n
ordert
ogivethedetailsofdefaul
ts, overdueper i
od
andthedatefrom whichtheaccounti scl assif
ied
asNPA, f
acil
ity
-wi
sesecur it
iesprov i
dedf orthe
l
oansandpar ti
cul
arsofsecur i
tydocument s
execut
edbyt heborr
ower .
DemandNoti
ceundersect
ion13(2)canbei
ssued
byanyoneormor
eoft hef
oll
owingmodes:
i
.ByRegi
ster
edPostwi
thAcknowl
edgementDue,
i
i.BySpeedPost
,
i
ii
.ByCour
ier
,
 Joi
nCAI
IBWI
THASHOKonYouTube&App
i
v.ByFaxMessage,
v
.Byel
ect
roni
cmai
lser
vice(
e-mai
l)
,
vi.Byhanddeliver
yagainstpr
operacknowledgment
addr essedt
otheborroweratthepl
acewher ehe
residesorcarr
iesonbusinessorworksforgain.
Onr eceiptofthenot
icei
fthebor r
owermakesany
representati
onorrai
sesanyobjection,t
hesecur
ed
credit
or(Bank)hastocommuni catehisrepl
ytot
he
borrowerwi t
hin15daysofthereceiptofsuch
representati
onbasedonfactualpositi
onandon
mer i
ts.
Iftheborrowerfailst
ocompl ywiththedemand
noticethesecuredcr editormaytakerecour seto
recoverymeasur eswhi chincl
udet aki
ng
possessionofthesecur edassetsforthe
reali
zat
iontorecov erhissecureddebt ,t
het akeover
ofmanagement , theappoi nt
mentofanyot her
personasmanagert omanaget hesecur i
tyassets
(possessional
readyt akenov er
),etc.
TheSARFAESIActprovi
desforenf
orcementof
secur
it
ieswi
thoutt
heinter
venti
on/
adjudi
cat
ionof
 Joi
nCAI
IBWI
THASHOKonYouTube&App
t
hecour
t.
Sec13( 13)oftheSARFAESIActprovi
desthatafter
receiptofthedemandnotice,t
he
Borrower/Mor t
gagor/Guarant
orshal
lnottransf
er
anyoft hesecuredasset
sbywayofsal e,
leaseor
otherwisewithoutt
hepri
orwr i
tt
enconsentofthe
Bank.
Sec29oft heActprovi
desthati
fanyperson
contr
avenesoratt
empt stocont
raveneorabetsthe
contr
aventi
onoftheprovisi
onsoftheActorRules,
heshallbepuni
shablewithimpr
isonmentfora
ter
m whichmayextendt ooneyearorwit
hf i
neor
both.
Thepossessionofthesecuredasset
sshouldbe
takenonlybytheAuthor
isedOffi
ceri
npresenceof
twowitnesses.
I
nventor
yshoul
dbeprepar
edbytheAut
hor
ised
Off
iceri
ncaseofmov
ableasset
s.
Expedit
iousstepsfordi
sposalofthemovabl
e
assetsshouldbetaken(par
ti
cular
lywhentheyare
peri
shables)soastoavoidsafekeepi
ngexpenses,
 Joi
nCAI
IBWI
THASHOKonYouTube&App
secur
it
ycharges,
loss/
det
eri
orat
ioni
n
quant
ity
/qual
it
yofgoods.
Authori
sedOff
icershal
ltakepossessi
onoft
he
mor t
gagedi
mmov abl
epropert
ytobetakeni
nthe
fol
lowingmanner:
i
.Bydel
iver
inga‘Possessi
onNoti
ce’
tot
he
mort
gagor(Bor
rower/guar
ant
or)
.
i
i.Byaff
ixi
ngthePossessi
onNoti
ceontheouter
doororatsuchconspi
cuouspl
aceoft
hepropert
y.
i
ii.Withi
n7day softakingpossessi
on,the
Possessi onNoticeshouldalsobepublishedin2
l
eadingNewspaper soneofwhi chshouldbei nthe
vernacularlanguage,havingsuff
ici
entcir
culat
ionin
thatlocalit
ywher ethepropert
yissit
uated.
I
fforanyr easonphy si
calpossessioni stobetaken,
Author
isedOf fi
cershallfi
leanAppl i
cationalong
withanaffidavi
tunderSect i
on14oft heActbefore
theChiefMet r
opolit
anMagi str
ate/Distri
ct
Magistrat
e( Di
stri
ctCollect
or)/
ChiefJudi ci
al
Magistrat
e(CJM) .
 Joi
nCAI
IBWI
THASHOKonYouTube&App
TheChiefMetropoli
tanMagistrate,Chi
efJudici
al
Magistr
ateorDistr
ictMagi
stratesshallaft
er
sati
sfy
ingthecontentsoft
heaf f
idavi
tpass
suit
abl
eor der
sunderSec14f ort hepurposeof
taki
ngpossessionofthesecuredasset swithi
na
peri
odof30day sfrom t
hedat eofapplicat
ion.
I
fnosuchorderi
spassedwi t
hin30day sfor
r
easonsbeyondcontr
ol,
hemay ,aft
errecordi
ng
r
easonsi
nwr i
ti
ng,passtheorderwit
hinsuch
f
urt
herperi
odnotexceedingi
naggregate60days.
Itmaybenot edthatt heDiv i
sionBenchoft he
AllahabadHi ghCour tinthedeci sionsaidthatthe
nomencl atureChiefMet ropolitanMagi st
rateused
i
nt heSARFAESIActi sinclusi
v eofChiefJudicial
Magi str
ate(CJM)f uncti
oningi naNon- metropoli
tan
areaandassucht heCJM shal lhavejuri
sdict
ionto
ent er
tai
nanAppl icationmadebyt hebankf or
takingphysicalpossessi on.
Theborrower,i
ncludingthetenanti
nthemor t
gaged
proper
ty,i
faggri
ev edbyanyoft hemeasurestaken
bythesecuredcreditorf
ortakingpossessi
onofthe
 Joi
nCAI
IBWI
THASHOKonYouTube&App
securi
ty,maymakeanappli
cati
ontotheDebt
s
RecoveryTri
bunal(
DRT)havi
ngjur
isdi
cti
onwit
hin
45daysf r
om thedateonwhi
chsuchmeasuresare
taken.
TheDRT, aspertherecover
yofdebt sduetoBanks
andFinanci
alInsti
tuti
onsAct,1993(RDB1993)and
theRulesmadet hereunder
,isrequir
edtodispose
oftheappli
cat
ionasear l
yaspossi bl
e,butwit
hin60
days.
Ift
heapplicati
onisnotdisposedwit
hin4months,
anypartytotheappli
cati
oncanapproachthe
Appell
ateTribunalf
orseekingdir
ect
ionsf
orthe
earl
ydisposaloftheappl
icati
on.
Anyperson, i
faggri
evedbyanyor dermadebyt he
DRT,canpr eferanappealt
ot heAppell
ateTribunal
(DRAT)wi t
hin30day sfr
om thedateofreceiptof
theorderofDRTupondeposi ting50%oft hedebt
demandedbyt hebankordeterminedbytheDRT
whicheverisless.
DRAThaspower,forr
easonstoberecor
ded,
to
reducet
heupf
rontdeposi
tto25%.
 Joi
nCAI
IBWI
THASHOKonYouTube&App
Incasethepossessioniswrongful
lyt
akenbyt
he
securedcr
edit
or,heisrequir
edtopay
compensati
ontot heborrower.
Aft
ertakingpossessi
on,t
heAuthor
isedOf
ficer
shouldobtai
nvaluati
ononl
yfr
om theappr
ov ed
Valuerasrequi
red.
Afterval
uati
on,theAuthor
isedOffi
cershoul
dfix
the“Reserv
ePr i
ceofthepropert
yinconsult
ati
on
withtheSecuredCredi
tor(Bank)
.

TheAuthor
isedOf f
icershoul
dserve30days‘
Sal
e
Noti
ce’
onthebor rowers/mort
gagors/
guar
ant
ors
gi
vi
ngthedet ai
lsofthefoll
owing:
i
.Reser
vePr
icef
ixed,
i
i.Dat
e,ti
meandplaceofpubl
icauct
ionorthet
ime
aft
erwhichsal
ebyanyothermodeshallbe
complet
ed.
I
ntheFi
rstAuct
ion,
reser
vepri
ceshoul
dbef
ixedat
95%oft
heFairMarketVal
ue.
 Joi
nCAI
IBWI
THASHOKonYouTube&App
SaleofImmov abl
eProper
ti
es(othert
hanAgri.
Land)invol
vi
ngsaleconsi
derat
ionofRs.50.
00lakh
andabov eatt
ract
s1%incomet ax.
I
fther
eisnobi
dder
,inthenextauct
ion,
reser
ve
pr
icemaybefi
xedattheForcedSal
eValue.
Ever
ySaleNoti
cei
ssuedtothebor
rowershoul
d
al
sobeaffi
xedinaconspi
cuouspl
aceofthe
i
mmov abl
eproper
ty.

Therul
esalsoauthor
isethatthesal
enot
icemaybe
putonthewebsit
eoft hebank.
30days'salenot
iceshoul
dbegi v
enforthef
ir
st
sal
eandmi nimum 15days'not
icewouldsuf
fi
cefor
subsequentsal
e.

Themor tgagorhastheri
ghttopaytheduestothe
bankandr edeem thepr
opertyatanyti
mebefore
thedateofpubl i
cati
onofnoticef
orpubli
cauct
ion
orinv
iti
ngquot ati
onsortenderfr
om t
hepubli
c.
 Joi
nCAI
IBWI
THASHOKonYouTube&App
e-
Aucti
oniscompulsoryf
orpubli
csal
ethr
ough
SARFAESIexceptf
orthecaseswher
e:
a.
Thebookout
standing(
o/s)att
het
imeofauct
ion
i
slesst
hanRs.5lakh,OR
TheFSVoft hepropertybeingbroughtforauct
ioni
s
l
esst hanRs.5lakh.Intheabov ecases,amanual
aucti
onispermitted.Aucti
onshallbeconducted
onlyonthedateandt imealreadyfi
xedand
communi cat
ed.