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Can Bank Auction Collateral Property Before The Main Primary Property
28-Sep-2023 (In Recovery Law)
We Have Take A Loan Against Our Factory L & Bldg & M/C & Also Provided The Collateral Of Our Friends & Relatives , But Due To Many Problems We R Unable To Run Our Business, As 1 Of The Main Reason For Shut Down Is A Litigation Which We R Facing From Govt. On Our Factory Premises, As While Borrowing Loan For Bank & Also Purchasing Land We Had Certified From All The Govt. Bodies As A Cleared Title But After 3 Years Govt. Send As A Notice That Our Land Is A Forest Land & We R Illegally Running Our Plant, For This Our Case In Court, But Bank Have Initiated For Recovery For Us & Collateral
I am assuming that the laon was secured by
1) the land on which the factory premises is located and further
2) by the personal guarantees furnished by your friends and family.
If this is the case then the bank will proceed against you under the SARFAESI Act. They will move the Debt Recovery Tribunal to take possession and title over the factory premises.
However, this process may be stalled as the title to the property itself is under litigation with the government. As far as the personal guarantees are concerned, you may challenge the bank proceeding against them under certain grounds. For example, if the loan was taken in the name of the company, foreclosing the assets of your friends and relatives could be deemed to be illegal.
Feel free to get in touch if I could be of any further assistance.
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Adv. Siddhant Sharma
Delhi | 200+ Answers
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