Can You Save Your Property From a Bank Auction Through DRT?
Bank auction notice can turn the tables on any property overnight. Just when you thought everything was fine – Boom! You see your home, shop or factory being sold at auction. The home you bought with years of hard work and savings, the shop which keeps your family running or the large factory where thouxxxsands of employees work might suddenly end up in one of these bank auction notices.
For the borrower though, only one question matters – Can I save my property from bank auction?
Not every property auction case is the same and relief depends on numerous factors. Where is the case at? What notices has the bank sent? What law applies? Is the property jointly owned? Can the bank even take away my property? These are just some questions to consider.
One thing to remember is that merely filing a case or speaking to an advocate will not stop an auction. Legal relief must be pursued at the correct forum based on merits of the factual situation and the law.
If you are a borrower from Delhi NCR, Noida, Ghaziabad, Gurugram, Faridabad, Meerut, Hapur or anywhere in India facing a bank auction or sale by bank – read on to know why it is critical that you speak to BK Singh Advocate immediately after receiving a bank auction notice.
BK Singh Advocate will first assess whether you have a legal right to stop the auction. Whether the matter calls for a statutory challenge before Debt Recovery Tribunal or perhaps negotiation with the bank or something else.
It’s not our goal to make you feel like your property will definitely be saved from auction. Our job is to review your documents carefully, explain your legal options and help you take timely legal action to protect your interests.
Why Bank Auction Protection is Crucial in 2021
If your home is being sold at bank auction or any other secured asset is facing recovery action that loan is not your only problem. The secured asset could be the house where your children sleep, your wife is currently pregnant with your next child or even the shop, godown, office or factory where you earn your daily bread. Delhi NCR has a mixture of residential and commercial borrowers.
Cities like Lucknow, Jaipur, Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Kolkata and Ahmedabad also witness a large number of banking transactions and related property disputes. While the laws are same across India, sometimes the treatment of a matter varies based on the tribunal conducting the hearing, the conduct of the lender and property located.
A borrower should not be alarmed with every notice sent by the bank. Whether a Default Notice, Demand Notice, Hearing Notice, Possession Notice or a Sale Notice sent by the bank each of these notices signify a separate stage of the recovery process. BK Singh Advocate can help by looking at the notice you have received and pointing this out.
The importance of identifying the stage cannot be stressed enough. Sometimes borrowers call us worried about a sale notice when in reality the bank has only sent a hearing notice. Time is of the essence once notices of possession or sale are received. Hold on to every piece of communication you receive as a borrower if you have been sent a bank auction notice and speak to an advocate immediately.
Visit Bank Auction DRT Lawyer page to understand bank auction details based on the stage of recovery.
Quick Review – Protect Property from Bank Auction
- Once a secured creditor has fulfilled all statutory pre requisites under SARFAESI Act, he has the power to enforce his security interest without recourse to Court.
- Section 13 of SARFAESI empowers a secured creditor to enforce his security interest.
- Section 13(2) reads as a provision for Notice of demand.
- Section 13(4) mentions certain measures where the secured creditor can take enforcement action.
- Section 17 specifies a remedy to a person aggrieved by any of the measures which are mentioned under Section 13(4). This can be done before the Debt Recovery Tribunal.
- Filing an application under Section 17 does not stop the auction automatically. The Tribunal may grant interim relief if it deems fit.
- Grant of Interim relief is subject to facts, documents, grounds mentioned in the application and the discretion of the Tribunal.
- Rule 11 & 12 of Security Interest (Enforcement) Rules,2002 talk about the enforcement of security and sale of the secured asset.
Can an Advocate at Debt Recovery Tribunal Stop Bank Auction?
No. An advocate cannot stop the auction by himself. He can review the facts, look at the notice sent by bank and suitability of filing a proceeding before DRT to seek an interim relief from the Tribunal before auction takes place.
It is only after hearing You, the bank and considering whatever is placed before it (on facts and legal grounds) that the Tribunal will decide the outcome of the application. Hence results may vary from case to case.
Yes. If the borrower thinks he has valid grounds to prevent the bank from taking further action, he should consult a DRT lawyer immediately. Remember the Tribunal has statutory jurisdiction in appropriate cases under SARFAESI.
Depending on the facts and stage of the proceeding, borrower can challenge bank for taking any further action such as enforcement, possession, sale, auction or any other step. Just because a borrower runs to an advocate blindly and files a case, does not mean the Tribunal will grant a stay of sale automatically.
BK Singh Advocate recommends borrowers understand the process of filing a petition at Debt Recovery Tribunal. Only a proper legal analysis can determine the available remedy. Plus make the borrower understand the risks involved in pursuing legal action.
Documents Required To Help Stop Bank Auction?
It is not possible to advise a borrower on his bank auction notice without physically seeing the records. Please hold on to all record that you have from the bank. do not dispose off that recent auction notice thinking that it is all you need.
Read below to find out what records you should hold on to.
Loan related documents:
Loan agreement, sanction letter, mortgage/ deed of security/guarantee documents and correspondence with bank requesting or acknowledging information.
Records showing payment history:
Statements of accounts (This can be Bank statement/Loan account provided by bank), EMI details, receipts of payment, recovery or any correspondence on any previous offers of settlements.
Records received from bank during SARFAESI proceedings.
Notice under Section 13(2), borrower’s objection/representation to Notice issued by bank, notice of possession, notice of sale and auction sent by bank, advertisement of auction published by bank and correspondence with bank during physical possession being taken over.
Property-related documents in borrower’s possession.
Title documents, registered sale/purchase/lease agreements, valuation reports if any, received by borrower, detailed property description, any documents showing co-owner (if any) etc.
Any correspondence with bank offering a settlement or taking a settlement.
If borrower has received any communication from bank about restructuring your loan, settling the matter once and for all or OTS. Hold on to the settlement proposal in writing sent by bank, bank’s reply and proof of payment (if any) done by borrower under such agreed settlement.
BK Singh Advocate can go over your records and point out any additional information you may require from bank/proper party. Once collected, send the records to us or bring them along to any of our offices.
What Issues Can Affect Bank Auction?
The facts of every bank auction matter are different. However, below are some issues that are commonly seen and need to be reviewed legally.
Stage of Matter
Is this a demand notice stage, has the bank issued a possession notice, sent a hearing notice or has a sale date been fixed already.
Notice & Mode of Service
The bank sends notices and serves the same in a particular manner. This can become a legal issue if the borrower claims he did not receive notice or the bank has not followed the required protocol.
Loan Account & Amount Due
Is the amount claimed by bank accurate. Has the bank credited all payments made. Is there an issue with the loan account.
Property Description
Is the property described properly. Any discrepancies in the property, owner details offered as security can be challenged.
Property Value & Reserve Price
Borrowers can challenge the value assigned to the property by bank or the Reserve price mentioned at auction if the facts and law allows. Just because you think your property is valued low and cannot be sold below a certain amount in your opinion, does not mean the bank cannot sell the property at auction.
Negotiations with bank
If you are speaking to bank about settling the matter, getting a good settlement or OTS. Ensure you get the terms in writing. Do not rely on the banks oral promise that they will not auction your property or take further recovery actions.
When should I talk to a DRT lawyer about bank auction?
Don’t wait for the auction to be scheduled before you speak to a lawyer.
Legal advice can be sought when you receive a SARFAESI demand notice, hearing notice, possession notice, sale notice, e-auction banner or notice of physical possession.
Guarantor/joint owner of such property can also consult a lawyer about his rights independently.
If the borrower believes the amount claimed by bank is incorrect, recoveries made not deducted from account, borrower has settled for lesser amount but bank has misused the funds or description of property is incorrect in bank recovery notices.
Importantly, if the matter is urgent please ensure you discuss with lawyer the date of auction and the date on which you received each critical notice.
BK Singh Advocate can go over documents and assess whether reaching out to DRT is the right option, negotiating a settlement or something else is the best course of action. You may not get guaranteed relief by consulting a lawyer early, but may severely limit your options by not acting quickly enough.
How Can a DRT lawyer help me save my property?
Lawyer can begin assisting you once he has read the bank recovery record.
He may ask to inspect loan documents, bank notices, possession notices, auction papers, account statements, payment advices and correspondence with bank. The purpose of reviewing these documents is to understand the legal issue faced by borrower. Merely asking the lawyer to find technical defects to challenge bank will only force you into litigation.
If the law provides for a statutory remedy, the lawyer can assist you in filing the appropriate application in the appropriate tribunal. This could include drafting pleadings, adding documents, serving notice on bank, appearance before tribunal and attending hearings.
Negotiations and Settlement is always an option if it makes commercial sense. Lawyer can advise borrower on the terms and consequences of the proposal before agreeing to the offer.
BK Singh Advocate is a DRT, DRAT & SARFAESI law firm representing borrowers, guarantors, MSMEs, companies and owners of properties throughout India.
Lawyer looking for Debt Recovery Tribunal cases in Delhi can find information on borrowing helping Delhi residents dealing with bank loan recovery matters on the DRT Lawyer in Delhi page.
What Happens After I Consult a Lawyer About Bank Auction?
This would depend on the facts of your case. Typically, a lawyer will first read the documents sent by bank and point out what action the bank has already taken. Next step could be drafting a legal reply to bank, discussing a possible settlement or filing the appropriate application before DRT, seeking interim relief (if legally permitted) or exploring another legal remedy.
The least that you should expect from a lawyer is an honest, plain- language explanation of the issue you face, the remedy available and key risks involved. A reputable lawyer will not make you feel your property will be safe from loss or that auction is guaranteed to be canceled.
Knowledge is power. With the right information, borrower can make his own decision on how to proceed rather than panic because the bank has sent multiple calls/messages or an auction date is scheduled.
FAQs
1. Will bank auction be stopped by DRT lawyer?
Possibly. A lawyer cannot automatically stop an auction sale. If the facts of the borrower’s case allow him legal relief, the lawyer can file an application before appropriate Tribunal and request interim relief from the auction sale. Bank has already complied with all prerequisites for sale. Notice of auction has already been sent. Grant of interim relief is subject to facts, documents, legal grounds raised by borrower and stage of recovery.
2. Can I file an objection to bank auction before DRT?
Yes. As a borrower you can file an application before the Debt Recovery Tribunal against certain actions mentioned under Section 13(4) of SARFAESI Act. Please read the specific limitation and procedure to file a challenge against each action taken by the secured creditor.
3. Does filing a case at DRT stop auction sale?
No. Merely filing a case does not give you a automatic stay of auction or recovery. If immediate relief is required, borrower should understand the correct procedure to seek interim relief from Tribunal and such relief would be granted at their discretion.
4. Can bank auction house for loan default?
If there is a valid security interest created on your property, yes they can enforce its rights under the law. Whether your house or residential property can be auctioned/sold off to recover the bank loan depends on your loan documents, security documents and actions taken already by bank.
5. What should I do if bank saying outstanding amount is wrong?
Please compile bank account statements, payment advices/receipts, bank correspondence and get those numbers double checked. If the bank has made an error in the account or misused payments made by borrower, it can help you in legal proceedings/negotiations with bank.
6. Will low property valuation stop bank auction?
No. Valuation or reserve- price can be challenged during auction if facts and law allow for such challenge. The fact that you think your property is valued too low or is way more than what bank is saying it’s worth does not invalidate the auction.
7. Will OTS proposal prevent bank auction?
Submitting an OTS proposal or offer to settle will not stop bank auction unless the terms are worked out and agreed to by bank. Borrower should ask for written confirmation on terms agreed and know what conditions are required to be met beforehand.
8. Can guarantor apply to DRT to stop bank auction of property?
Guarantor can challenge recovery proceedings and auction of property if facts allow. Whether a guarantor has any remedy against auction depends on what the guarantee says, other security documents executed, liability guarantor has agreed to pay and any action bank has taken against guarantor already. Please refer to documents executed before consulting a lawyer.
9. Do I have to travel all the way to Delhi to discuss my bank auction case?
Consulting a lawyer can usually be done over appearance. Where you need to physically be present in Court depends on the local Tribunal your matter is transferred to, type of proceeding and logistics worked out with your lawyer.
10. When should I call BK Singh Advocate about bank auction?
Immediately. Once you receive any communication from bank demanding money, asking for hearing, giving notice of possession, fixing sale date or putting your property for auction – CALL US. We will guide you on reviewing recovery proceedings before bank takes any further action. Please call with urgent matters and inform us of specific dates of each notices sent. If unable to call, write back with as much detail as possible.
Conclusion
Don’t Panic. Don’t feel high and mighty.
Start by appearing before bank auction in person. Understand the level of recovery, keep documents safe and understand if bank can be challenged legally. If situation allows, borrower can also think of compromise/settlement or any other legal option.
Own Flat in Delhi NCR, Noida, Ghaziabad,Gurugram, Faridabad, Meerut, Hapur, Lucknow, Kanpur, Jaipur or else where in India. If Bank has sent you notice for auction or has already put your flat for auction then get your documents analyzed at the earliest.
BK Singh Advocate can help you analyze your DRT, DRAT and SARFAESI cases related to your mortgaged property, its possession and bank auction process. We don’t want to give you false hope. We just want to understand your documents, tell you the legal course available and take timely action.
