How to give notice under sarfaise act 13 ( 2 )

755 votes

We have already got familiarized with the term SARFAESI ACT. The name is
derived from clubbing the first letters of Securitisation And Reconstruction of Financial
Assests & Enforcement of Security Interest Act.
Expeditions of recovery and reduction of NPAs of the Banks and FIIs has been a
matter of concern for the Government of India and Reserve Bank of India, as the
judicial recourse took longer time hampering the Development as a whole.
The main success of this act is the discipline it has brought amongst the borrowers
in the matter of timely payment of Bank loans for the fear or dispossession of their
assests.
This is evident from RBI report which says, “The progress under this act has been
significant, as evidenced by the fact that during 2002-2003, reduction outpaced
addition, and especially for public sector Banks reflected in overall reduction of NPA
Loans to 9.4% is 1999-2000.
The Act Combines Three Aspects
1) Securitisation
2) Reconstruction of Financial Assets
3) Enforcement of security assest.
For our purpose as an Enforcement Agency we are interested in the third aspect
namely Enforcement of Security Assets which directly relate to recovery of advances.
HOW TO GO ABOUT
The Act has laid down specific rules to be adopted in executing enforcement for
Recovery.
First the loan should be classified NPA under the norms provided by RBI any loan
where installments fallen due continuously for over a period of 90 days qualify to be
termed NPA. Sufficient care is to taken before terming an account NPA to its genuine
causes that created default.
Once the bank in satisfied to proceed recovery under SARFAESI, it should send a
demand Notice (Notice under sec 13(2) of the act) giving details of the loan availed,
amount outstanding, document executed to created security, description of the
security offered and a time period of 60 days to correct the default. This notice is to
be signed by an Officer who is not before the rank of Scale IV who will be for the
purpose of the act known as Authorised Officer.
This and further procedures can be got from the FLOWCHART attached.

LEGAL INTERCEPTION
As a remedy to the borrower the act provides certain legal remedies in case he has
been wronged by the banks. They are,
1. If the borrower raises any objection to the part or whole of a Demand
Notice he may write to the bank of such objections. The banks on receipt of
such objections should reply the borrower however brief the reason for not
accepting the objection raised within 7 days from the date of receipt of such
objections. Failure of which would deny the bank proceed further against
the borrower on the strength of its Demand Notice.
2. The borrower can approach DRT through an application, after the bank
has taken possession of the secured asset within 45 days of such
possession DRT if satisfied that, the procedures laid down under the
rules of SARFAESI are not adhered to by the banks can order return of
the repossessed assets to the borrower with cost.
3. Borrower can approach DRT for staying Sale proceedings of the Security
Property just before an auction. Such a stay will be conditional and the
bank can later vacate it.
4. The stay becomes null and void if the borrower fails to comply the
condition. The Bank has an option to move DRAT on an unfavourable
DRT final. Though civil courts or any other courts other than DRT or
DRAT have any powers to intervene in a SARFAESI case, sometimes
they restrain operations of SARFAESI ACT which can be and will be set
aside and only after that it is advised to proceed under SARFAESI
further.
OPERATION
“Reyvish” a name no longer new to most of the branches of SBI, BOB and IDBI.
However if it is going to be the first time entry a letter from our Corporate/Regional
Head introducing the company to the particular Branch should proceed a personal visit.
This would facilitate a familiar and cordial reception at the beginning and will remain
happier ongoing.
Always meet on appointment that would yield focused attention on the purpose of
visit.
It is important to make friends with officials down the line too, though the field
officer and the Manager are important to us. If for some reason the officials are on
some other priority even after an appointment to us, we may politely retire and meet
them later.

HOW TO TAKE CASES
1) It is first and foremost to obtain work order for the cases to be handled.
2) Company‟s description Sheet is the guide which can gather complete
Information about the case use then.
3) Insist on photo copies of demand notice 13(2) sent, sale deed, legal
Opinion, valuation report at the time of sanction advance and proof receipt
Of notice.
4) No case less than the value of Rs. 1 Lakh can be handled under SARFAESI
ACT.
5) Obtain Authority of the Bank Head on the description Sheet.
6) Maintain Diary of every visit on every case for convenience.
7) We should maintain a not too close and not too far attitude because as the maxim
goes familiarity breeds contempt at one stage they (The Bank) may try to impose
non SARFAESI jobs also on us. Distancing them too much would result in out
sight will lead to out of mind situation and we may lose business. Never miss out
an opportunity to make the bank feel we are important by using any tact that you
may feel good to do with the approval of the control office.
8) Whatever data we may collect, let that be in full knowledge of the Bank. Never
take a record of the case for photocopying yourself. Insist it is done by any Bank
staff only.
9) Return any file given by an officer back to him only.
10) List out copies taken from the records and take acknowledgement by the
bank of such an action.
11) Make sure the Manager-in-charge is aware of your arrival and leaving.
12) Visit the Branch only at their convenient time which would otherwise save
your precious time also.HOW TO TAKE CASES
1) It is first and foremost to obtain work order for the cases to be handled.
2) Company‟s description Sheet is the guide which can gather complete
Information about the case use then.
3) Insist on photo copies of demand notice 13(2) sent, sale deed, legal
Opinion, valuation report at the time of sanction advance and proof receipt
Of notice.
4) No case less than the value of Rs. 1 Lakh can be handled under SARFAESI
ACT.
5) Obtain Authority of the Bank Head on the description Sheet.
6) Maintain Diary of every visit on every case for convenience.
7) We should maintain a not too close and not too far attitude because as the maxim
goes familiarity breeds contempt at one stage they (The Bank) may try to impose
non SARFAESI jobs also on us. Distancing them too much would result in out
sight will lead to out of mind situation and we may lose business. Never miss out
an opportunity to make the bank feel we are important by using any tact that you
may feel good to do with the approval of the control office.
8) Whatever data we may collect, let that be in full knowledge of the Bank. Never
take a record of the case for photocopying yourself. Insist it is done by any Bank
staff only.
9) Return any file given by an officer back to him only.
10) List out copies taken from the records and take acknowledgement by the
bank of such an action.
11) Make sure the Manager-in-charge is aware of your arrival and leaving.
12) Visit the Branch only at their convenient time which would otherwise save
your precious time also.

BACK OFFICE PROCEDURES
1) All official correspondence and case details to be in respective files.
2) All office files should have INDEX and be kept in prominent place.
3) Strictly maintain the case files with ISO checklist. If any documents missing out,
as prescribed in Checklist of ISO, write explanation and get approval from any
Manager of Reyvish, Chennai Region.
4) Avoid oral communication with Bank, as well as Reyvish. Make it everything in
record.
5) Please write all incidents and developments to Bank/Reyvish on time to time.
6) Arrange to send Monthly Status Report to respective branch with details of action
taken and action to be taken.
7) Diaries your daily visits.
8) Every step in SARFAESI process has a time frame. Kindly make sufficient
arrangement to adhere to that.
9) Make a Weekly/Monthly report and forward to the Regional office.
10) Inform well ahead of possessions to control office so that they can help in
procedural requirement.
11) Use inter office memo (IOM) for any communication to Reyvish, Corp. Office,
Regional Office and Reyvish Branches.
12) Intimate recovery to Regional Office in written and request to prepare Bills and
claims.
13) While sending your claims to RO, kindly send Statement of Expenses along with
supportive documents, like travel tickets, bills, vouchers etc., without supportive
documents, our accounts department may not sanction because of our statutory
auditor will object.
14) Kindly note any other advice that may be forwarded from time to time.

PROCEDURES TO BE FOLLOWED FOR POSSESSIONS
1) Symbolic Possession
Take minimum Three copies of the possession notice duly signed by the Authorised
Officer one to be served if possible to the Borrower / Guarantors / LH, the other to
take acknowledgement from their nearest Kins.(wife,son(major), daughter(major),
Father,Mother). They may in some cases be co-applicant or Guarantor, if they are coapplicant
they have to sign for themselves and as well as on behalf of the borrower.
In other cases they have to sign on behalf of the borrower.
The Third copy must necessarily pasted very conspicuously at a prominent place on
the out door of the Property. This has to be taken photograph as a documentary proof
of possession.
The acknowledged copy of the possession notice should be duly Notarised to make it legally authenticated. The Notary would remark the possession notice was either served and pasted before him or pasted before him as the case may be. All such possession need to be published in 2 Newspapers one in English and the other in Local Language Newspaper within 7 days from the date of possession. Case should be taken to emphasis this point to the respective Branch and the time lapse would
result in Re-serving of the possession notice.
In case of Actual possession where the property is vacant and could be taken actual
possession

1. Inspect the property before actually taking it over. This would help to assess the need for a carpenter, Hardwares required and number of locks that may be needed.
2. Ensure the availability of the Authorised Officer and without his presence Actual possession should not be attempted at all.
3. On availability of the A.O. arrange for Notary Public, Key smith and as per requirement carpenter. Any of the Banks panel valuer may be arranged for valuation of the property. Take sufficient locks, sealing material (As per our Possession Kit).
4. Panchnama and Inventory along with duly signed possession notice are to be readied and properly filled in and signed by those concerned and also Notarised.
5. After locking and sealing the property in presence of the A.O and the Notary Public, put the keys in a cover mark the property it belongs to and hand over to the bank then and there under acknowledgement. Take photo evidence of possession taken.
6. Possession whether symbolic or actual needs to be published in Newspaper as indicated earlier.
7. A Sale notice is to be sent to the borrower / Guarantor / LH informing about the intending sale of the possessed property if he fails to clear the dues within 30 days from the date of the notice.

PROCEDURES TO BE FOLLOWED AFTER POSSESSION

1. Once the bank arrives at the reserve price, in consultation with the A.O. & the Branch a date for disposal of property through auction is to be arrive at.

2. This is to be published in two newspapers calling for TENDER CUM AUCTION SALE NOTICE giving a clear 30 days notice period for such sale.

3. A date at least 10 days period to the date of Auction will be notified for inspection of the possessed property and we are expected to assist the bank in such inspections opening the locked premises for inspection and maintaining a record of the intended buyers who inspected the property.

4. Organised buyers for participating the auction and on the day of Auction assist the bank with the Auction procedures.
5. Need to maintain the minutes of Auction Sale.
6. Prepare and hand over the SALE CONFIRMATION ADVICE after concluding the successful bidder.
7. Prepare and hand over the DRAFT SALE CERTIFICATE to the successful bidder and co-ordinate with AO and successful bidder for REGISTRATION OF SALE CERTIFICATE .


Below is the format/sample of the notice:

ANNEXURE . 3
In the Letter Head of Bank
NOTICE TO THE BORROWER
Name & Address of the Borrower
------------------------------------
------------------------------------
Sub : Notice U/s 13(2) of Securitisation and Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002

Ref : M/S ABC & Co . A/c # 320043189684

Dear Sir/Madam,
At your request, M/s ABC & Co represented by its Proprietor Mr.XYZ, (Herein
after called as Borrower) have been granted by the Name of the Bank (Herein after
called as Bank), through its Name of the Branch from time to time, and various
credit facilities by way of financial assistance against various assets creating security
interest in favour of the Bank. The relevant poarticulars of the said credit facilities and
the security agreement(s)/document(s) executed by you are stated in Schedule B
respectively excluding pledge of movables. You have availed the financial assistance
with an undertaking for repayment of the said financial assistance in terms of the said
agreement(s)/document(s).
You have also created mortgage by way of deposit of title deed / registered mortgages
created security interest in favour of the State Bank of India. The documents relating
to such mortgage are also stated in Schedule B.
The relevant particulars of the secured assets are specially stated in Schedule C.
You have also acknowledged subsistence of the liability in respect of the aforesaid
credit facility by executing confirmation of balances and revival letters and other
documents from time to time. The operation of and conduct of the above said
financial assistance/credit facilities have become irregular and the debt has been
classified as non performing assets in accordance with the directives/guidelines
relating to asset classifications issued by the Reserve Bank of India consequent to the
derault committed by you in repayment o principal / debt and interest thereon.
The said financial assistance is secured by the personal guarantee of Mrs.Flora w/o
Mr.XYZ. Despite repeated requests, you have failed and neglected to repay the said
dues/outstanding liabilities.
Page 1 of 3
13
Therefore, The Bank, hereby calls upon you U/s 13(2) of the said Act by issuing this
notice to the discharge in full your liabilities stated hereunder to the Bank within 60
days from the date of this notice. Your outstanding liabilities (in aggregate) due and
owing to the bank is in the sum of Rs.796518/-(Rupees Seven Lakh Ninty Six
Thousand Five Hundred and Eighteen Only) as on 30th March 2006, plus
Unapplied interest from the date of 01.04.1998, at the contractual rate on the
aforesaid amount together with incidental expenses, cost, charges, etc.,¡¦
If you fail to repay to the Bank the aforesaid sum of Rs.796518/-(Rupees Seven
Lakh Ninety Six Thousand Five Hundred and Eighteen only) as on 30th March
2006, plus Unapplied interest from the date of 01.04.1998, at the contractual
rate on the aforesaid amount together with incidental expenses, cost,
charges, etc., as stated above in terms of this notice U/s.13(2) of the Act, The Bank
will exercise all or any of the rights detailed under subsection (4) of Section 13 and
under other applicable provisions of the said Act.
You are also put on notice that in terms of sub section 13 of section 13 you shall not
transfer by sale, lease or otherwise the said secured assets detailed in Schedule C of
this notice without obtaining written consent of the Bank.
The Bank reserves its rights to call upon you to repay the liabilities that may arise
under the outstanding Bills Discounted, Bank Guarantee and Letter of Credit issued
and established on your behalf as well as other contingent liabilities.
The notice is without prejudice to the Bank.s right to initiate such other actions or legal
proceedings, as it deems necessary under any applicable provisions of law.
Yours faithfully,
Authorised Officer
Name & Address of the Bank & Branch.

Advocate Siddhant Sharma LawRato