bank auctioned secured asset for a lower value than market value
4 months ago
bank auctioned secured asset for 25% of the market value in october 2015. The purchaser mortgaged the property to another bank in November 2015 and availed loan Rs.8.50 Cr. The valuator given the market value of the property was Rs.9.81 Cr, which was mentioned in sanction letter. We came to know the fact in 2022. Original application was pending before the DRT still. What are the options available to a borrower/guarantor in this regard.
A.Dar Client,
As per Section 13(4) of SARFAESI Act, 2002. , Banker can sell the Assets and 13(1), may be enforced, without the intervention of the court or tribunal. Mere pendency of the recovery suit is not going to serve any purpose, until and unless a stay is ordered by DRT on your Security Assets, otherwise law will take its own course and the receiver appointed can not be stopped from attaching and or selling the property by way of auction. Though you can take a chance that matter is “sub-Judice” but chances to succeed are remote. On 10 November 2022, a three Judge bench of the Supreme Court of India (“SC”) in Bank of Rajasthan Limited v. VCK Shares & Stock Broking Services Limited, 2022 SCC OnLine SC 1557, resolved the conflict regarding the position of a suit instituted by a borrower against a bank while a bank’s claim was pending before DRT. Further, a quick counseling session with a certified credit counselor can help you to discover your options and choose the right path forward.
As per Section 13(4) of SARFAESI Act, 2002. , Banker can sell the Assets and 13(1), may be enforced, without the intervention of the court or tribunal. Mere pendency of the recovery suit is not going to serve any purpose, until and unless a stay is ordered by DRT on your Security Assets, otherwise law will take its own course and the receiver appointed can not be stopped from attaching and or selling the property by way of auction. Though you can take a chance that matter is “sub-Judice” but chances to succeed are remote. On 10 November 2022, a three Judge bench of the Supreme Court of India (“SC”) in Bank of Rajasthan Limited v. VCK Shares & Stock Broking Services Limited, 2022 SCC OnLine SC 1557, resolved the conflict regarding the position of a suit instituted by a borrower against a bank while a bank’s claim was pending before DRT. Further, a quick counseling session with a certified credit counselor can help you to discover your options and choose the right path forward.
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A.Dear Client,
In light of the situation you've described, as a borrower or guarantor, there are several options to explore. Firstly, it's essential to gather all relevant documentation and evidence to support your case. Given that the property was auctioned for only 25% of its market value in October 2015, which was then mortgaged to another bank in November 2015 for a loan of Rs.8.50 Cr based on a market value of Rs.9.81 Cr, there appears to be a significant disparity. Considering the pending original application before the Debt Recovery Tribunal (DRT) and the awareness of this discrepancy in 2022, it is advisable to engage legal counsel promptly. A legal professional can assess the situation, potentially highlighting irregularities in the auction process and subsequent mortgage, and strategize the best course of action. Options may include filing a counterclaim or challenging the auction and subsequent mortgage based on the apparent undervaluation of the property. Additionally, seeking a stay on any further proceedings until the matter is thoroughly investigated could be crucial. Timely and well-documented legal representation is key to presenting a strong case and safeguarding the rights and interests of the borrower or guarantor in this complex scenario.
It is recommended to consult with legal experts who specialize in property and debt recovery matters to navigate the complexities of your specific situation and ensure the best possible outcome.
In light of the situation you've described, as a borrower or guarantor, there are several options to explore. Firstly, it's essential to gather all relevant documentation and evidence to support your case. Given that the property was auctioned for only 25% of its market value in October 2015, which was then mortgaged to another bank in November 2015 for a loan of Rs.8.50 Cr based on a market value of Rs.9.81 Cr, there appears to be a significant disparity. Considering the pending original application before the Debt Recovery Tribunal (DRT) and the awareness of this discrepancy in 2022, it is advisable to engage legal counsel promptly. A legal professional can assess the situation, potentially highlighting irregularities in the auction process and subsequent mortgage, and strategize the best course of action. Options may include filing a counterclaim or challenging the auction and subsequent mortgage based on the apparent undervaluation of the property. Additionally, seeking a stay on any further proceedings until the matter is thoroughly investigated could be crucial. Timely and well-documented legal representation is key to presenting a strong case and safeguarding the rights and interests of the borrower or guarantor in this complex scenario.
It is recommended to consult with legal experts who specialize in property and debt recovery matters to navigate the complexities of your specific situation and ensure the best possible outcome.
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