How Can a SARFAESI Lawyer in Jaipur Help Stop a Residential Property Auction?
Notice of home auction is the fear in the heart of every family member.
Till now you thought your home loan default is some loan amount problem. EMIs not paid on time. Calls from the bank, requests to restructure loans, crying to let you settle up. Once the bank sends you notice of auction of your residential property, your problem has arrived at your home. The borrower starts thinking about losing their house, shifting the family to another place, unknown people coming to see your home which is so near to you.
Hence a SARFAESI auction stay lawyer in Jaipur will first examine whether bank/secured creditor has followed the process of recovery as per the law and whether the borrower has any legal angle to fight against the bank in the respective Debt Recovery Tribunal.
Lawyers for loan settlement help borrowers having problems with secured loans against home property, home possession notice, auction notice, DRT process and loan settlement related problems.
Notice of home auction is not always stayable.
Just because the property is your home or you have a family dependent on your home does not become a reason to stay the auction. If your home was validly created as a security interest for the loan and all the conditions for enforcement are satisfied then SARFAESI Act empowers the secured creditor to enforce its security. Section 31 does give exemptions to security interests created on agricultural land, but that does not imply SARFAESI does not apply to properties where a person lives.”
What this implies is having all the right documents at the right time.
BK Singh Advocate will generally review the loan documents, mortgage documents, notice served under Section 13(2), borrower’s reply to objection (if any), notice of possession, valuation report, proposed reserve price, auction notice, account statements and correspondence with bank before advising the legal course of action.
The longer you wait, the more time you give your creditor to proceed with auction in case the auction date is close by.
Why Is a Residential Property Auction in Jaipur So Urgent?
REPOST: Auction Under Sarfaesi is NOT Another Recovery Notice: Approach
Do not treat a SARFAESI auction notice as another recovery notice!
A SARFAESI auction notice is a statutory tool whereby an enforceable security interest can be sold on satisfaction of certain conditions.
The property being enforced against for a Jaipur borrower could be his flat at Vaishali Nagar; his house at Mansarovar; his residential plot near Jagatpura; his colony house at Malviya Nagar; or some other mortgaged premises in Rajasthan.
An Auction notice will raise many questions in the minds of borrowers. On receiving the notice, borrowers tend to ask:-
Can the bank sell the property?
Was the property properly valued?
Did the bank serve all the notices?
Did the bank consider my objections?
Was the Reserve price fixed on the basis of valuation?
Did the bank follow the prescribed timeline?
Can I settle with the bank at this stage?
Loan Settlement Lawyer understands that borrowers cannot rely on the information provided in the auction notice to address their queries.
While Loan Settlement Lawyer takes action on EMi default notices, we treat the auction stage with a different strategy. This is because the risk has now graduated from pressure to recover to a risk of losing the mortgaged property.
As per the latest (CIVIL)20 dates on the Debt Recovery Tribunal Jaipur website the DRT Jaipur is OPEN and allowing Securitisation Applications to be filed as well as Cases relating to applications for interim relief to be filed.
The grant of an application for interim relief is always based on the facts and circumstances of the case and the discretion of the Tribunal.
Just because a suit has been filed does not mean that the auction will automatically be stayed.
Quick Facts About SARFAESI Auction Stay
Section 13(2) provides for issuance of demand notice to borrower to repay the secured liability within 60 days before initiation of enforcement measures under Section 13(4), subject to fulfilment of statutory requirements.
Section 13(3A) requires borrower to be given opportunity to make a representation/objection to demand upon receipt of which secured creditor is required to act in compliance with the Act.
Section 13(4) contains the enforcement measures which could be invoked upon fulfilment of statutory conditions.
An application can be made to Debt Recovery Tribunal under Section 17 against action taken under Section 13(4) typically within 45 days from the date of action complained of by an aggrieved person.
Rules 8 and 9 make provision for valuation, reserve-price and notice requirements in cases of first sale of immovable property, including a period of 30 days within which sale-notice must be given.
Section 13(8) deals with statutory redemption i.e. payment of secured creditor’s dues, along with costs, charges and expenses prior to the date of publication of sale notice under circumstances mentioned in the provision itself.
Stay against actions initiated by secured creditors is not automatic with Debt Recovery Tribunal. Borrower has to show that he has a legally tenable case with respect to the recovery measures challenged and the law invoked.
Why Do Valuation and Reserve Price Matter Before an Auction?
Residential properties have high emotional value, but SARFAESI sale matters are decided only on paper. Here’s what the law says.
Before selling any immovable property, the authorised officer shall, under Rule 8 of Security Interest (Enforcement) Rules obtain the valuation of such property from the approved valuer and after consultation with the secured creditor, fix the reserve price.
It LAW and DAMAGES CAUSE
The two important documents here are valuation report and the details of reserve-price fixed.
The borrower in Jaipur, whom we’ll assume wants to buy the house should check all the relevant data instead of jumping to conclusions seeing the reserve price on an auction notice or an online website. If he feels that the property worth much more is being sold via auction at a shockingly low reserve price, he must not take his broker or a friend’s word for it. He should see all the information about the valuation process followed for that property, the property details as on date including encumbrances on the property, condition of the property,Comparable sales data, bank records.
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However, if the requirements as to valuation or sale have not been complied with in respect of such property in accordance with law and those documents disclose any infirmity in the sale process so advertised, the matter would certainly become material for challenge.
Loan Settlement Lawyers can help you go through those documents and the auction notice thoroughly rather than focusing only on reserve price.
How Much Notice Is Required Before a Property Auction?
Rules 8 & 9 deal with key sale protections in relation to enforcement of security interests over immovable secured assets.
Under Rule 8, the secured asset is valued & the reserve price determined prior to sale. Under subection(2) (my emphasis), a notice of public auction/ tender sale shall be published in TWO newspapers (one of which is a vernacular newspaper having wide circulation in the locality) as the circumstances contemplated by the Rule would permit.
Rule 9 provides that no sale shall be held until at least 30 days from the date of the relevant publication of public notice/service of sale notice to the borrower as the case may be (again, emphasis mine) contemplated by the Rule have elapsed. That is to say, this is the minimum prescribed notice before sale in the event of a FIRST sale. But there is a (different) minimum notice requirement where this is a SUBSEQUENT sale and there has been a prior unsuccessful attempt at sale.
(The) Dates matter.
Therefore, keep the envelope, email, newspaper cutting, possession notice AND auction publication. Don't just screenshot the auction date.
BK Singh Advocate can help you determine if dates & mode of service meet the statutory requirements when it comes to time sensitive residential-property auctions.
Which Documents Should You Keep Ready for an Urgent Auction Review?
Documents can normally be expected to be in a bit of a mess around the time of auction. Here's a list of documents you should attempt to gather :
- sanction letter; loan agreement;
- mortgage deed/ memo of deposit of title deeds;
- schedule of repayment;
- full loan account statement;
- evidence of payments made towards the loan which are not reflected in lenders statement;
- NPAs / recall letters, if any;
- Sec 13(2) demand notice;
- representations / objections made under Sec 13(3A);
- lenders reply to such objections;
- notice of intention to take possession u/ s 13(4)
- any communication/ notice under section 14/ material received regarding possession;
- valuation report, if any;
- notice of reserve- price;
- auction / e-auction notice;
- newspaper advts;
- title documents of the property lent against;
- any correspondence regarding restructuring of the loan;
- OTS or settlement proposals;
- emailsids & letterheads to / from the bank / ARC;
- evidence of deposit of any amount post default.
- Orders of DRT / court (if any cases have been filed).
Do not withhold any documents even if they look adverse. Your lawyer will need all the documents to advise you on the entire timeline.
Loan Settlement Lawyer can cross check if demand amount quoted is same in all notices. Demand notice , possession notice and auction notice should not be read in isolation specially if amounts mentioned or property description differs.
Can a Borrower Still Negotiate an OTS Before Auction?
Negotiations for settlement may continue during enforcement actions. But a borrower should never expect that an OTS request will automatically postpone a scheduled auction.
A letter to the bank asking them to “settle my loan” is not a stay order.
Even if a recovery officer orally communicates to you that bank is “trying to settle” with you, such oral communication should not be viewed as proof that statutory recovery has stopped.
If the lender has opened negotiations for a compromise, then issues such as amount to be paid, schedule, deadline for completion, treatment of pending auction, what happens if full payment not received on time etc. should all be documented.
Click here to read OTS – One Time Settlement for borrowers who want to try settlement as an option.
Click here to read Home Loan Settlement if you are looking for home loan specific settlement tips.
BK Singh Advocate has shared our views on why settlement and litigation should be on parallel tracks. The borrower should protect his legal rights by fighting the case while simultaneously exploring whether a commercially workable solution can be worked out with the lender.
The lender is under no obligation to accept a settlement offer just because it is made by the borrower.
When Should You Contact a SARFAESI Auction Stay Lawyer in Jaipur?
Law exam becomes Most urgent when Enforcement has begun. i.e. at stage of possession/ sale.
Following are few sample particular/ red flags:
- Order for possession has been received;
- date of auction fixed;
- auction date is approaching in few weeks/days;
- borrower alleging that he was not issued Section 13(2) notice;
- Has filed raises which you have filed on his behalf but they do not seem to have credited;
- description of the property is incorrect;
- account is missing payments(crucial payments) ;
- reserve price is inconsistent with valuation report;
- Bank going ahead with disputed settlement agreement;
- ARC has purchased the loan from bank and you are seeking history of assignments/demands from bank.
- Relative/family member/third party claiming independent right on property;
- borrower has already filed an application in DRT and wants urgent interim relief;
- seeking possession from District Magistrate under section 14.
- borrower wants to explore OTS and auction has been already fixed.
They can see general information under Borrower Protection & Rights too if the matter pertains to wrongful conduct during recovery process.
"In my opinion degree of urgency should be decided on the basis of stage of litigation and not on basis of how loudly the recovery agent shouts on phone." Says BK Singh Advocate
How Can Loan Settlement Lawyer Help With a Jaipur Property Auction?
First things first. A Loan Settlement Attorney can begin by summarizing the borrower’s SARFAESI timeline.
It can include the default date, NPA-history, Sec. 13(2) notice, objections if any, possession attempt, property evaluation, reserve price, auction notification, etc. Including any settlement communication.
A Loan Settlement Attorney will understand what can be worked on. Section 13(4) proceedings can be challenged in court and worked on before the relevant DRT. Settlement – if applicable – can be negotiated separately with the secured creditor. Redemption/Payment – if the borrower is attempting – can become time sensitive.
Borrowers can even verify service if the recovery notices themselves are being challenged. (Read – SARFAESI Notice Guide on how to SERVE SARFAESI Notices to Banks & NBFCs)
BK Singh advises borrowers not to follow blanket online notices for urgent auction matters. Loan Defaulters Case Study: Borrower A and Borrower B can have identically worded notices (verbal or header doesn’t matter) with a notice title of “Sale Notice”. But the legal predicaments can vary completely depending on when it was served, previous actions, property type, their objections and/or existing DRT Judgements.
Loan Settlement Lawyer will not raise your hopes to stop every auction of your Pune property. Loan Settlement Attorney just wants to see if the borrower is entitled to any legal relief and what can be done practically before the property auction takes place.
Frequently Asked Questions
1. Can bank auction residential house under SARFAESI ?
Yes they can. If the residential house was mortgaged as security for a covered loan and the statutory conditions for enforcement are satisfied, the secured creditor can proceed under SARFAESI. Occupation of the mortgaged property by itself would not get you relief from SARFAESI.
2. How many days Section 13(2) notice?
The statute provides for a 60 day time frame to comply with the demand contained in the Section 13(2) notice prior to taking action under Section 13(4).
3. Can BK Singh Advocate file stop auction before DRT Jaipur?
BK Singh Advocate can review the facts and apply the law to determine whether the borrower has any remedy with the appropriate DRT and what kind of interim relief can be requested. There is no way to know in advance whether the DRT would actually grant a stay.
4. Am i get 45 days to file against section 13(2) notice from DRT?
Not quite. When we refer to the 45 day limitation under Section 17, we mean from the date of action taken under Section 13(4). Identify the particular action taken and its date before we can compute limitation.
5. Can we stop auction as reserve price is very low?
Just because the amount of loan is less than the property value does not help you. Firstly a valuation has to be completed by a registered valuer at least 30 days before the sale as per Rule 8. Secondly the reserve price has to be determined in consultation with the secured creditor. Both these processes need to be reviewed legally.
6. If i send OTS application, will the auction be stopped?
Submitting an OTS proposal does not automatically stay the auction. Unless the lender explicitly calls off the recovery action or a competent authority grants relief, the borrower cannot assume that the auction has been halted.
7. Can Loan Settlement Lawyer help me if the auction is in few days?
BK Singh Advocate can review the documents available to you and provide an opinion on the applicable laws. Yes it is time sensitive since the auction is seemingly scheduled but that does not mean there are no remedies available.
8. Can bank auction agricultural land under SARFAESI?
No, Section 31 of SARFAESI clearly states that nothing in SARFAESI shall apply to a security interest created on agricultural land. It needs to be established whether the particular property falls under the definition of agricultural land.
9. DRT refuses my SARFAESI application, what now?
File an appeal to the Appellate Tribunal under Section 18 against an order passed by the DRT under Section 17. The appeal has to be filed generally within 30 days from receipt of the order by the DRT. Borrowers should be aware that the statute also requires a pre deposit when filing such appeals.
10. Which document to send first for quick review of Jaipur auction case?
Please send all the relevant documents starting from Section 13(2) notice, notice of possession, notice of auction, loan statement, mortgage/deed of security signed, any objections you have already filed along with lender’s response if any, valuation papers, orders passed by DRT etc. BK Singh Advocate would then be able to assess the timeline and notify you if any additional documents are required.
Final Thoughts
A residential- property auction under SARFAESI is not to be treated as just another routine recovery notice!
Dates start mattering only when possession actions and auction notices have been initiated. Specific documents start mattering too.
Granting sweeping enforcement powers to secured creditors, SARFAESI has done that within a matrix of statutory provisions. Provisions relating to Rights, obligations, time limits and remedies under Sections 13, 17 and 18, (SARFAESI Act read with the Security Interest (Enforcement) Rules) are to be read on their facts.
DRT Jaipur is the SARFAESI specialist forum dealing with SARFAESI Securitisation Applications (SAs) and Interim- relief applications within its territorial limits for a borrower located in Jaipur.
Loan Settlement Attorney can review the loan documents, notice of possession and auction, payment history, valuation reports and offers to settle.
BK Singh Advocate can advise you if seeking a remedy from DRT, negotiating a settlement, paying up for redemption or some other legal remedy is worth considering.
No predictions can be given to your questions on stay of auction or settlement response. All cases are different.
