What Can a Borrower Do After Receiving an E-Auction Notice?

No. While the Notice of e-Auction indicates that the secured creditor intends to sell the secured property on the mentioned date and terms, it does not always mean that all requirements for sale have already been satisfied. Prior possession measures, notice compliance, valuation/report, reserve price, payments made, pending proceedings or supply dates may all need to be reviewed. DRT LAWYER can review all notice history and advise you on the stage the bank has actually reached. While borrowers should not think that the property has already been irretrievably lost to them, neither should they believe that there is unlimited time to take action. Review the date of auction as well as prior enforcement measures without delay.

The Debt Recovery Tribunal will entertain a claim for interim relief if a SARFAESI application is maintainable before the Tribunal. However, a stay of auction is not automatic. The Tribunal will review the legal grounds for the application, current stage of enforcement, documentary evidence provided, urgency of the matter and the relief sought. Merely demonstrating that you are experiencing financial hardship does not guarantee that the Tribunal will restrain the bank from going forward with an auction. First it must be determined by experienced counsel whether a Section 17 remedy is available and whether the file supports a request for interim relief. Advocate BK Singh may be contacted where the auction date is near and borrower needs urgent analysis of possession timeline, auction notice, limitation issues and DRT forum.

No. Simply filing an application under Section 17 will not automatically stop the secured creditor from auctioning off your property. If the borrower needs protection from an upcoming auction, he will normally have to ask the Tribunal for interim relief and the Tribunal will analyze such a request based on facts and law. Borrowers should not assume that the matter will be stayed against the bank once a filing number is received. Prior Section 13(4) measure, possession timeline, limitation, jurisdiction of Tribunal, sale notice dated and urgency should all be reviewed prior to initiating the matter. Legal representation becomes particularly important where sale date is approaching and less time is available to prepare the case.

Low reserve price may be reason to seek professional legal review, but a borrower’s estimate of market value will not automatically lead to conclusion that the price fixed by bank is illegal. Rule 8 of the Security Interest (Enforcement) Rules, 2002 deals with procedure for valuation of immovable secured asset and fixation of reserve price before sale. The valuation report, property description, condition of property, comparable material used and procedure followed would therefore all have to be examined. DRT LAWYER can determine whether a reserve price dispute amounts to a legally sustainable issue or is simply a disagreement over anticipated market value. Ideally this review should take place before the auction, as later stages would entail successful bidder, confirmation of sale and additional complications.

Yes. Section 17 refers to “any person aggrieved by any measures taken under this section”, which includes but is not limited to the borrower. Guarantor or mortgagor whose property is scheduled for auction is therefore eligible to independently review the guarantee/mortgage deed, notice history, possession measures taken by bank and present stage of sale. Legal remedy would depend on facts and cannot be predetermined based on the label of guarantor. Advocate BK Singh can be contacted where personal or family property is going for e-auction because of loans taken by another person/company/partnership/firm.

OTS or settlement may still be possible depending on circumstances, but your mere submission of OTS offer does not automatically suspend bank’s SARFAESI action or cancel e-auction date. Borrowers should therefore be wary of acting upon oral assurances that OTS is “under process”. Printed terms offered, whether OTS was approved or rejected, payment expected, deadline for payment, consequences of failing to pay and further action being taken by bank are all important details. While a lawyer cannot negotiate a commercial settlement offer on your behalf, he can explain how DRT legal remedy is different from asking bank to settle. If OTS is still feasible, double check proposed terms. If auction is proceeding, you may need separate advice regarding any DRT filing permitted and interim relief.

Ideal file would contain loan sanction/registration, security document, recent account statement, Section 13(2) demand notice, borrower objection reply, bank reply, possession notice under Section 13(4), newspaper publication proof, e-auction notice, receipts of payment deposited (if any), OTS/ restructuring correspondence with bank, any emails received from bank, valuation report or any reserve-price paperwork if already received, and DRT/DRAT/District Magistrate /Chief Metropolitan Magistrate papers received (if any). This allows lawyer to reconstruct timeline of bank enforcement action. Absence of certain documents will not necessarily prevent initial consultation, but missing dates and wording can impact advice provided. Try to provide written records instead of relying on recollection/phone conversations.

Near sale date means you should act immediately, but immediate attention does not guarantee automatic stay of auction. Advocate will need to know what stage enforcement has reached, limitation period under which DRT was appointed, relevant DRT forum based on geography and possession dates, date of sale notice issued under Section 13(4) read with Section 36(2) of SARFAESI and documents that support borrower’s account of events. If maintainable challenge is identified, lawyer can file appropriate proceeding on your behalf and request interim relief from auction. Advocate BK Singh may be contacted where time is of essence in SARFAESI matters and bank auction. Borrowers are advised not to spend last few days visiting bank branch, talking to bank manager or relying on phone calls where issued auction notice shows bank is intending to go forward with sale.

Financial difficulties may be the reason why you could not repay, but difficulties alone do not mean that bank is taking illegal action under SARFAESI. Challenge before DRT would normally have to concern the validity of secured creditor’s action, procedural requirements under the SARFAESI Act, or some other legal ground. OTS proposal, settlement and restructuring involve a separate process and may also depend on bank policy and commercial decision. Separate discussions with DRT-focused lawyer can clarify borrower’s legal rights from borrower’s offer to settle. Goal is to identify what legal route is available instead of believing that personal or business financial difficulties will automatically prevent auction from taking place.

This website provides general SARFAESI rules and information, but it cannot opine on whether: (1) the notice was served properly on you, (2) limitation for Section 17 application is running, (3) bank’s possession action needs to be examined, (4) bank’s valuation is legally objectionable, or (5) you can request immediate relief from a particular DRT. All of those questions require knowledge about your documents and critical dates. DRT LAWYER provides borrowed focused assistance with SARFAESI possession, bank auction, DRT and DRAT matters. Background of Advocate BK Singh can also be reviewed prior to hiring the services of our law firm. Meaningful legal decisions can be made once a lawyer applies the law to your actual documentation.