SARFAESI Bank Recovery Lawyer in Odisha

What should I do after receiving a SARFAESI notice from my bank?

A Section 13(2) notice under the SARFAESI Act, 2002 gives the borrower 60 days to repay the outstanding dues or respond with objections. It is important to review the loan account statement and classification as a Non-Performing Asset (NPA) before replying, and to file a written representation if there are valid objections. Ignoring the notice can lead to possession action under Section 13(4).

Can the bank take possession of my property without a court order?

Under the SARFAESI Act, a secured creditor can take symbolic or physical possession of mortgaged property without approaching a civil court, since the Act allows recovery outside ordinary court process. However, the borrower can challenge this action by filing a Securitisation Application under Section 17 before the Debts Recovery Tribunal, which has the power to examine whether due procedure was followed.

What is a Securitisation Application and where is it filed?

A Securitisation Application under Section 17 of the SARFAESI Act is the remedy available to a borrower, guarantor, or any aggrieved person to challenge measures taken by a bank or NBFC under Section 13(4), including possession or sale of secured assets. It is filed before the Debts Recovery Tribunal having jurisdiction over the area where the property is situated or the loan account is maintained.

Can the auction of my mortgaged property be challenged?

Yes. An auction sale can be challenged where the secured creditor has not followed the procedure prescribed under the Security Interest (Enforcement) Rules, such as inadequate notice period, incorrect reserve price fixation, or improper publication of the sale notice. The Debts Recovery Tribunal can examine such procedural irregularities and, depending on the facts, set aside the sale.

Is a one-time settlement (OTS) a legal alternative to SARFAESI proceedings?

Yes, borrowers can approach the bank or NBFC directly for a one-time settlement of the outstanding loan, which most lenders consider under their board-approved OTS policy. A settlement reached this way, once formalised in writing and honoured, can lead to withdrawal of the SARFAESI notice and closure of recovery proceedings, though the final decision rests with the lender.