The full form of SARFAESI Act as we know is Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Banks utilize this act as an effective tool for bad loans (NPA) recovery. It is possible where non-performing assets are backed by securities charged to the Bank by way of hypothecation or mortgage or assignment.

  • Upon loan default, banks can seize the securities (except agricultural land) without intervention of the court.
  • SARFAESI is effective only for secured loans where bank can enforce the underlying security eg hypothecation, pledge and mortgages. In such cases, court intervention is not necessary, unless the security is invalid or fraudulent. However, if the asset in question is an unsecured asset, the bank would have to move the court to file civil case against the defaulters.

How it works?

The SARFAESI Act, 2002 gives powers of “seize and desist” to banks. Banks can give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. If the borrower fails to comply with the notice, the Bank may take recourse to one or more of the following measures:

  • Take possession of the security for the loan
  • Sale or lease or assign the right over the security
  • Manage the same or appoint any person to manage the same

The SARFAESI Act also provides for the establishment of Asset Reconstruction Companies (ARCs) regulated by RBI to acquire assets from banks and financial institutions. The Act provides for sale of financial assets by banks and financial institutions to asset reconstruction companies (ARCs). RBI has issued guidelines to banks on the process to be followed for sales of financial assets to ARCs.

Background of the act

The previous legislation enacted for recovery of the default loans was Recovery of Debts due to Banks and Financial institutions Act ,1993. This act was passed after the recommendations of the Narsimham Committee – I were submitted to the government. This act had created the forums such as Debt Recovery Tribunals and Debt Recovery Appellate Tribunals for expeditious adjudication of disputes with regard to ever increasing non-recovered dues. However, there were several loopholes in the act and these loopholes were mis-used by the borrowers as well as the lawyers. This led to the government introspect the act and this another committee under Mr. Andhyarujina was appointed to examine banking sector reforms and consideration to changes in the legal system .

  • This committee recommended to enact a new legislation for the establishment of securitisation and reconstruction companies and to empower the banks and financial institutions to take possession of the Non performing assets.

Thus, via the Sarfaesi act, for the first time, the secured creditors were empowered to recover their dues without the intervention of the court.

  • However, as soon as the act was passed, its implementation was challenged in the court and this delayed its coming into force for 2 years. In the Mardia Chemicals v. Union of India, the Supreme Court upheld the validity of the SARFAESI act was upheld.

Rights of Borrowers

The above observations make it clear that the SAFAESI act was able to provide the effective measures to the secured creditors to recover their long standing dues from the Non performing assets, yet the rights of the borrowers could not be ignored, and have been duly incorporated in the law.

  • The borrowers can at any time before the sale is concluded, remit the dues and avoid loosing the security.
  • In case any unhealthy/illegal act is done by the Authorised Officer, he will be liable for penal consequences.
  • The borrowers will be entitled to get compensation for such acts.
  • For redressing the grievances, the borrowers can approach firstly the DRT and thereafter the DRAT in appeal. The limitation period is 45 days and 30 days respectively


The Act stipulates four conditions for enforcing the rights by a creditor.

  • The debt is secured
  • The debt has been classified as an NPA by the banks
  • The outstanding dues are one lakh and above and more than 20% of the principal loan amount and interest there on.
  • The security to be enforced is not an Agricultural land.

Methods of Recovery

According to this act, the registration and regulation of securitization companies or reconstruction companies is done by RBI. These companies are authorized to raise funds by issuing security receipts to qualified institutional buyers (QIBs), empowering banks and Fls to take possession of securities given for financial assistance and sell or lease the same to take over management in the event of default.

This act makes provisions for two main methods of recovery of the NPAs as follows:

  • Securitisation: Securitisation is the process of issuing marketable securities backed by a pool of existing assets such as auto or home loans. After an asset is converted into a marketable security, it is sold. A securitization company or reconstruction company may raise funds from only the QIB (Qualified Institutional Buyers) by forming schemes for acquiring financial assets.
  • Asset Reconstruction: Enacting SARFAESI Act has given birth to the Asset Reconstruction Companies in India. It can be done by either proper management of the business of the borrower, or by taking over it or by selling a part or whole of the business or by rescheduling of payment of debts payable by the borrower enforcement of security interest in accordance with the provisions of this Act.

Further, the act provides Exemption from the registration of security receipt. This means that when the securitization company or reconstruction company issues receipts, the holder of the receipts is entitled to undivided interests in the financial assets and there is not need of registration unless and otherwise it is compulsory under the Registration Act 1908.

However, the registration of the security receipt is required in the following cases:

  • There is a transfer of receipt
  • The security receipt is creating, declaring, assigning, limiting, extinguishing any right title or interest in a immovable property.

Is Mortgaged House exempted?
The Sarfaesi act covers any asset, movable or immovable, given as security whether by way of mortgage, hypothecation or creation of a security interest. There are some exceptions in the act such as personal belongings. However, only that property given as security can be proceeded under the provisions of SARFAESI Act. If the property of the borrower is his own mortgaged residential house, it is also NOT exempted from the Sarfaesi act.

Powers of Debt Recovery Tribunal

The debt Recovery Tribunals have been empowered to entertain appeals against the misuse of powers given to banks. Any person aggrieved, by any order made by the Debts Recovery Tribunal may go to the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal.

Role of Chief Metropolitan Magistrate or District Magistrate

The Chief Metropolitan Magistrate or District Magistrate has been mandated to assist secured creditor in taking possession of secured asset. These officers will make sure that once the creditor has given him in writing that all other formalities of the act have been done, the CMM or DM will take possession of such asset and documents relating thereto; and forward such assets and documents to the secured creditor. Now, here, you have to note that such an act of the CMM or DM can not be called in question in any court or before any authority.

Role of High Court:

The act allows taking the matter to high courts only in some matters related to the implementation of the act in Jammu & Kashmir. However, High Courts have been entertaining writ petitions under article 226 (Power to issue writs) of the constitution of India.

Proposed amendments to the Act

The government had approved bill to amend the act. The Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011, amends two Acts — Sarfaesi Act 2002, and Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (DRT Act). Via these amendments:

  • Banks and asset reconstruction companies (ARCs) will be allowed to convert any part of the debt of the defaulting company into equity. Such a conversion would imply that lenders or ARCs would tend to become an equity holder rather than being a creditor of the company.
  • The amendments also allows banks to bid for any immovable property they have put out for auction themselves, if they do not receive any bids during the auction. In such a scenario, banks will be able to adjust the debt with the amount paid for this property. This enables the bank to secure the asset in part fulfillment of the defaulted loan.
  • Banks can then sell this property to a new bidder at a later date to clear off the debt completely.

However lenders will be able to carry this property on their books only for seven years, as per the Banking Regulation Act, 1949.

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  • Anonymous

    laudable presentation of topic…..

    hats off to GK today team….


    I have got doubt whether under SARFAESI Act can the Bank/financial Institutions execute a Sale Certificate under Section 89 of the Registration Act, 1908 as the section provides to execute a Sale Certificate only to Courts under C.P.C. or by Revenue Officials or by Debt Recovery Tribunal. Under this Act a Bank/Financial Institution, in my opinion, is not a court to execute the same. Please enlighten me in this regard.

  • anil


    • kishor vig, advocate

      any two local leading news papers; one in english and other vernacular

  • rohit khajuria

    Can we enforce this act for NPA car loans and other personal loans.

    • kishor vig, advocate

      the recovery amount should be more than Rs. 1.00 lacs and not below the 20% of total disbursed loan. the car sought to be enforced should form security whilst disbursing the loan.
      secondly, you cannot enforce this act for recovery of personal loans as there is no any security offered in such loans.

  • nash

    i think the new papers is Business line.

  • R.K.Menon

    I have till date paid all my installments on time fir a home loan taken from idbi bank – never defaulted

    I have only outstanding of 2.26 lacs against loan of 19 lacs I had taken in 2002

    Bank has sent me documents which state sarfesi act and asking me to sign and give it to them

    Should I sign and give ? Will it be misused by the bank ?

    • Santosh

      No, As per law only applicable on those loan account which is NPA (i.e. no repayment within 90 days).


    The Bank failed to reply to my objections and sold away the property on 18.10.2012 violating Section 13-3A of the Sarfaesi Act 2002.
    Limitation period exceeded as I did not proceed due to paucity of funds.
    Can I challenge this now?

    • Sridhar

      In corrupted India, all acts are on paper only. Practically nothing will workout. Discussing about banking and RBI policies is no value. It is waste.

    • KSVPrasad

      Approach Ombudsmen

    • Rajendra Vanarase Satara

      Due to non applicabliity of the Right of information act.2005 to the Co.Op.Banks and Co.Op.Societies the landloard of morgage given the Co.Op.Bankor societies unable to fight in any court of low/tribunal Hence landloards were cheated nd his property sold out at minimiseing rates. Pl guide in the rule for land loards

  • Nishant

    Thank you GK today

  • Vaibhav Agarwal

    Is a Barren Land SARFAESI Complaint?? Can a Bank Make commercial loans on the Barren Land.

  • Santosh

    As per Act what is the area covered by this law.
    Is the Act applicable on all banks(i.e RRBs, Co-OP Banks,Foreign banks etc. ) in all states ?
    Pl. clarify the issue.

  • kalyan maheshwari

    Can Banks sale any property security at a price much below the market price? A house property which is worth Rs. 200.00 lacs as per the market price but bank proposed to sale it for Rs. 120.00 lacs. Is there any option available to the borrower.

    • S. Iliyas

      No. U can challenge it before high court n obtain stay till u sell at ur own to market price n discharge the loan.

    • Sajeeth

      Usually, banks list the properties at a discount to the market price, Discounts may go upto even 40 – 60 % . Valuation is done by an independent valuer.
      Please note that the bank cannot sell the property to any individual. The property can be sold only through an e-Auction which is a formal process.
      Notices are given in newspapers, bidders participate and the highest bidder wins the property. So, even though listed at 1.2 Crore, the highest bidder gets right to that property.
      You do not have any recourse except to approach DRT or DRAT (second appeal). Any other court will not entertain any plea under SARFAESI Act.
      It is advisable for the borrower to settle the dues amicably ASAP before the highest bidder remits the entire auction amount.

      0091 9884642864

  • sumit

    Dear sir plz tell me that any person (owner of property) can challenge that sale deed which had done by bank/NBFC to the third person ( new owner) in sarfaesi act.



    Some Banks & Financial Institutions themselves create loopholes to safeguard interest of the creditors who are paid handsomely under the table. When a corporate takes loan and mortgages one’s property to one bank and when the same corporate appears another bank and mortgages the same property previously mortgaged to the previous bank, then why does the latter bank give loan against the already mortgaged property and when dispute arises, both the banks do not give noc to each other and the culprits continue to enjoy. Is this not a conspiracy between banks and the corporate taking loans against same property from two or more banks. SKUMARSSHRI ALOKKUMAR KASLIWAL 9820081968

    • Parminder Singh

      On the time of loan borrower has to submit the original registry to the bank
      how can 2 copies of one property….
      bank does nt accept photocopies of of registery,,,

    • anil

      actually rbi created central registry to overcome this loophole, banks need to provide those mortage asset details to that registry so if a person approach any other bank with same mortage details they can caught ..

  • nitish pandey

    thank you GK today good information

  • KSVPrasad

    My self and my brother staying in two portions side by side in the first floor of a residential house.Owner resides in the 1st floor.Because our land lord is default
    borrower bank got 14(1) section permission on the house.Vacating the house will take three months.Whom we have to approach to safeguard ourselves.Very urgent suggestion is required
    Thanking you

  • Nalluru Ravikumar

    Respected sir
    Land lord of 15 portioned apartment is not repaying the loan to the bank.The bank collection agents threatening the tenants to vacate the portions since the bank got the physical possession pemission from District Magistrate.The auction sale was not performed.How the DM pass the possession permission to the bank before auction sale.Please suggest a solution

  • naren

    after publishing in newspaper how many days after will the bank post a sarfaesi sticker to house. And after posting the sarfaesi sticker on wall what are the legal things done by banks and duration of each. Plz

  • Ashwani

    Although the article is commendable, but the website author’s mentality is damn poor, you have locked the whole webpage so that no one is able to copy or print the content here, what type of sharing of knowledge is this? You are a really sick person.!

  • B.N.Chandra sekhar

    This is regarding a legal question on bankers who have done an e auction after proper notices to the defaulters and done through adv. We have been declared as the successful bidder by the bankers after auction.later on the defaulter has gone to hon court and got a stay and time to pay the balance..we the official bidders who were declared officially and now the bankers are colliding with the other party and rendering time to the defaulters showing the court orders.pls suggest the ways to move on the bankers in a legal way…and the rights of the successful bidder …

    • Sajeeth Kesavan

      Dear Sir
      I am in the same situation as you.

      SARFAESI Act seems to favour the defaulting borrower more than the bank :-)

      We emerged successful bidder of an e-Auction conduction by Indian Bank on 25.Feb.2014. The Chief Manager of the Bank seems to be siding with the borrower who has gone to the court.
      The borrower has taken Indian Bank to DRT and DRAT. I was not made a party to the case so far.
      The Advocate Commission took 3 months to take physical possession of property on 07.July.2015(!!!) and asking me for “fees”.

      After paying 23.35 Lakhs, I am still waiting for bank to seriously proceed with the case. Bank is not willing to pay a single penny for all the delay ( 1.5 years). SARFAESI Act holds good until the bank auctions the property. No much details are available on a time bound frame or compensation to the successful bidder in case the case drags for ever.
      I am keen to know how your case proceeded. Please share details so that we can collaborate



    If any bank finances, construction of Building and furniture in the new building, if that a/c becomes NPA, what is the position of the Banker. Because Sarfaesi act is applicable only for Immovable goods

  • deepak kumar

    how to recive order to d.m in fast action

  • Ashim

    I have invested in a apartment in Bangalore , when apartment is 80 % complete , Builder asked for 40% escalation charges , Due to which consumers put a case in consumer court , While case was going builder defaulted the bank loan , Now bank is acquriring the property under sarfaesi act 2002 , In case bank is successful in acquiring the property from builder .what is the safe gaurd for the 1000 + appartment owners , what will be their status.



    • subrata dutta


  • Raja

    I have availed home loan from nationalised bank.
    My account classified NPA and sarfeasi notice issued than I have paid overdue amount completly..
    account has been regular.After one year same sarfeasi notice again sent to me I am unable to repay the amount
    Than possesion notice sent to me by the bank…till now unable to pay the amount how to appeal tribunal court such amount reduce my account than I wish to OTS scheme..
    Pls give suggesion

  • RAJA

    While SA cases are supposed to be disposed within 6 months, cases are dragged by filing IAs by defaulters. What is the remedial action to be taken by creditors?

  • BABU

    One of the property is leased to a private Bank which is unregistered for a period of 10 years and is under mortgage in other bank by the landlord. Can it be enforceable when the borrower defaulted!

    • Manojkumar G

      Yes!! Whene ever it was mortgaged, the rights of property are vested with the bank. So it can take any type of decision.

  • vicky

    i got the possession notice from the bank. and cmm ordered and appointed a advocate to take possession .. can i still pay half or full amount and come over this trouble? please suggest the best way.. the circle rate of the property is five times higher then the loaned amount and market value is 10 times higher…

    • Manojkumar G

      Yes.. U can still repay and stop all the processes… no need to pay the entire amount even. Regularise the account first and then continue by repaying EMIs

    • Sajeeth

      Hi Manoj
      It is not clear if the property has been auctioned off by the bank.
      If yes, to appeal in DRAT, the borrower has to remit 50% of the due amount. In case the property has been auctioned off already, there is no option available
      If auction has not been conducted, borrower can pay off the loan and arrive at an amicable settlement with the bank.


  • G.R.Krishna

    Is it safe to buy a auctioned flat were the borrower has absconded and I am the lesse of the flat since 9 years. What are the implications.

  • r c garg

    1.can the appeal before d.r.t. be filed after the date of auction for sale under sarfaesi act2002 ? 2. can d.r.t. cancel the sale deed already registered under sarfaesi act ?

    • Sajeeth

      1. Borrower can appeal before the auction & obtain stay in case of valid reason. After the auction is completed and sale is confirmed to the successful bidder, chances of borrower getting back the property is very very less.
      2. Yes. Under SARFAESI Act, all previous sale deeds can be cancelled. The Bank can get the property registered to the successful bidder.

  • hemant khadke

    Sir, if memorandum of deposdeposits title is not executed in that case can bank issue a demand notice and further action like physical possession under SARFAESI Act . please reply on mail id

  • Mahaveer

    I am pursuing a property which was purchased from the bank under surface act now there was a typographical error while issuing the sale certificate as the survey number was wrongly mentioned on it . Now after six years of fighting with the bank they are finally ready to give an addendum but based on the rules the sale certificate needs to be registered within 120 days now since there was this typographical error the sub registrar refused to register the same. Now my doubts are
    a.can this document still be registered..????
    b.What if the said document couldn’t be registered how can i posses the same. what would be the procedure to follow.
    c.Will there be any complications as the property is not yet transferred to the rightful owners due to the negligence of the bank, also the bank is not ready to issue a fresh certificate they said they can just issue an addendum.

    I am desperately in need of the property but need to follow the rules and then acquire please help

  • rishi raj

    in year 2002 i had given a guarantee to a company for the value of property worth 30cr . it was a continuing guarantee , in year 2009 given notice to bank to withdraw my guarantee ,on the day of notice bank didnt apply CLYTON rule and adamant that a continuing guarantee cannot be revoked . later on inspection of documents in the bank it was discovered that my signature on guarantee deed yr 2009 and some other concerned documents were found to be forged . forgery also proven by govt lab . FIR against the bank officials also lodged and investigation in process. year 2013 CDR package proposed and i didnt participate and sign . case in DRT . we also approached civil court . recently bank given auction notice in newspaper to sell property without informing me . please comment . what is jurisdiction of court ?

  • rj

    In case of assets sold under the ACT what happens to the employees working in the asset (immovable property) prior to the sale?

  • B S Raja

    Our’s is a Pvt Ltd our account in Andhra bank has became NPA due to Fraud and Misappropriation of one Director for which FIR has filed and it is under investigation with CCB, Bangalore. NPA amount is 3.75Cr mortgaged property is about 9.81Cr as per reserve price.
    My question is there are 7 different mortgaged properties which consists of Vacant sites, Shops and Dwelling house. Is there any guidelines for actioning the different properties? Dwelling houses can be considered in last? or any priority wise? As NPA amount is less then the Reserve price? Whom to contact ? Any RBI guidelines regarding priority of auctions??

  • Pawar Sandeep

    good information regarding complete things about law and very fluently written up for guise to undrstand only by reading.

  • Puneet Purbi

    Hello sir,
    1) if we got the district magistrate order for taking physical possession in 2010 but due to some reasons we didn’t able to execute at that time, and now bank want to execute the same in 2015,
    so bank can do the same after passing 5 years?? or there is some validity of d.m order,

    2) secondly, during the process of taking physical possession, police force want to deposit their one day salary into treasury deptt. for providing police protection to bank. is this in right direction ?? or their demand is illogical

    kindly suggest me


    Dear Sir,
    i have purchased the property as per SARFAESI ACT 2002 & Paid 35.25 lacs within 15days.After completion of 60 days I have not get it possession. Borrower cum property holder till now living in that apartment.Bank has told to me your sale certificate is ready & please collect it.
    Kindly request to you that please guide me-
    1. I should get it sale certificate or not?
    2.How many minimum days require to receiving the certificate after final bidding?

    • Sajeeth

      Dear Sir

      This is a clear collusion between bank and the borrower. I would advise you that you start communicating through Registered Post only with the Chief Legal Manager of your bank. Approach the Zonal Office and the Complaints/Grievance Redressal Officer through letters and retain copies with you.

      I am in the same situation as you. Its been 1.5 years since I was awarded the property in an auction. E Auction was completed on 25.Feb.2014.
      The bank took physical possession of property on 07.July.2015 !!!

      I am trying to study the SARFAESI Act to see what rights do we , as the successful bidder have and how to get interest for the winning bid till the property is handed over.

      I want to sue the bank for being so careless and deliberately going slow on the case.


  • deepak singh

    What role of authorised officer and power for taking some action in sarfafesi action

  • shailja shukla

    these notice should be publised in newspaper navshakti, free press general.

  • Shivanand Gayakwad

    Sir , At the time of purchased AgriLand’s, Property’s or Building’s etc Can it is mandatory to take the Original sale deed or link deed from the seller’s. and tell me sir what is value of old Sale deed.

  • niku

    bank has send me the notice of sarfaesi for NPA a/c of 1042000. after a few days i have deposited 1050000 in bank. now when i demanded for my property documents bank asked me to deposite 50000 . now i want to know–
    1. should i deposite this fifty thoussands rupees or go for legal?
    2 if i dont deposite this amount, what action can bank take through surfaesi?

  • Sharma

    I wanted to know, can we cancel the auction once the sale certificate is issued? Bank is not accepting to take the responsibility to handle any litigation which may raised by the loan borrower in future

  • himanshu shah

    whether a securities trustee file an application to debt recovery tribunal??
    please provide the related citation

  • Raghavendra Rao

    Can any one give me a write up on taking possession of movable asset in sarfaesi.

  • kakaji

    is this act applicable on education loan (abroad) for loan amount 20,0000 . as per term & condition account will be open as term loan but bank open it as cash credit account?

  • umesh maske

    sir my car seize by bank my account in npa but my car marketable proice is 3 lakh and loan on car is 7 lakh but my other security is agri land

  • harish mavani

    surfacia notice was given u/s13(2) by Karur Vaishya bank,app;ication for taking possession was done tocollector,during that time bank sold it to arcil,
    can arcil be the applicant on behalf of karur vaishya bank before district collector.?

  • shrey

    who can make payment for default done, case is in DRT for the house. Can any third party make the payment to bank for outstanding amount or full loan outstanding?


  • shrey

    I have a question: on non payments for a year, bank has given notice to borrower under Sarfaesi act. borrower’s wife (a third party) has moved to DRT, where she paid all outstanding within 45 days as per court’s order. bank has not taken any further action. House and loan both are in borrower’s name.
    same has happened again, no EMI payment made by borrower, now borrower’s wife has filled in court to reconstruct loan and on full payment, bank should give papers to her.
    Ques1. Is this case in DRT still valid? Borrower’s wife moved to court against sarfaesi and paid the outstanding.
    Ques2. if case is still valid and open for DRT, on non payments, borrower’s wife asking for reconstruction of loan. is this valid?
    Ques3. is borrower’s wife as third party or for argument sake, can any third party pay the outstanding amount to bank in DRT court?
    Ques4. if yes, Can DRT court order that papers of house shall be handed over to borrower’s wife on full payment?

    pls help me and guide me.


  • S.kumar

    Hello”sir URGENT NEED
    One of retail store is NPA , and banker seized Proprety and the stocks is it possibile to seize both ?? The loan amount is lower than property value ; Why the banker seize the stocks ? ; if loan is C/C limit the banker go first to sold out the stocks ( is any rule in serfaci Act * ) First the banker want to sold out moveable stocks and after come to sale property ” if No why the banker collect Insurence fee on against of Stocks ?
    If any Sections as per Serfaci act to ask banker ??
    Please kindly help **
    Thank you

  • spsingh

    hell sir

    one our property is purchase of sarfaesi- act 2002 ? it is sale certificate is compulsory of the registration or stamp duty to pay by the SDM office but stamp duty is exempted for registration or registry please advice .

  • vasanti

    we have done agreement to sale , paid property tax for 2 years ….but not done sale deed for some reason from the seller ….. now we received bank notice that the property has been mordgage and the account is NP of the seller we have done all formalities like paper ad , servey etc. now bnk has issued a notice under sarfasi act … kindly help as we are innocent buyer and paid 90% of the amount to the seller all the document

  • sanjay kumar mittal

    Dear Sir,

    The possission of our property has been taken directly by bank authorised officer under section 13(2) and 13 (4) under sarfaesi act. with the help of police force by the order of additional district magistrate through the order of Superiendent of Police.

    As per SARFAESI ACT an additional district magistrate can not issue such type of order and the bank can not taken the direct possission.

    Pl. advise as early as possible.

  • Amit Raut


    I book a flat with a builder in Pune. Builder taken loan for property development from bank but not make its repayment to the bank. Now builder loss court case against bank and Builder attached my flat to bank. Now bank paste securitization notice on my flat. Builder is not ready to give me flat asking for current market rate. Can I stop bank to resale the flat in market.

  • Rajani Kanth

    Dear Sir,

    What are options for tenants to secure or recover the lease amount from the owner who has let out the property and bank is coming forward to seize the property

    • Moin babu

      Dear Sir,

      If you are a tenant with a valid tenancy contract, the supreme court says you cannot be evicted before the tenancy get terminated , provided the tenancy contract was executed before the bank started their proceedings against your landlord. you can approach the district judge before they pass orders for eviction or approach the DRT/ high court if the eviction order under section 14 is already issued.

  • Avik

    Very Nicely Explained thank you



    • Mohnil

      In the first place all provisions of the Banking Regulation Act
      do not apply to Co-operative Banks. But according to your case, as the bank is a state co operative bank, it may initiate the action. Also, the SRFAESI Act, states in the definitions that
      bank” means–
      (i) a banking company; or
      (ii) a corresponding new bank; or
      (iii) the State Bank of India; or
      (iv) a subsidiary bank; or
      (v) such other bank which the Central Government may, by notification,
      specify for the purposes of this Act;
      I hope it helps. Also, try contacting the bank if possible.

  • minesh maisuriya

    If customer is ready to pay the outstanding, then is it in rules under this act that bank can force to pay the whole loan amount by any way? if customer is ready to pay the whole dues or outstanding EMIs and bank reject to take the dues and force to pay the whole loan amount under thi act.. then what should customer do?

  • James

    Dear sir plz tell me that any person (owner of property) can challenge that sale deed which had done by bank to the third person ( new owner) in sarfaesi act.

    • Moin babu

      section 17 of the sarfaesi act says ‘ any person ‘ effected by the enforcement of this act can approach the DRT within 45 days. it can be the owner , lease, tenant or anyone. your case since its already sale deed is completed, I would suggest to approach the high court for a remedy if the DRT cannot hear your grievance

  • Ajit L

    Can a Bank / NBFC has a right to recover a Hospital Cum Residential Property under Surfacee Act ? in case of default

  • Keerthi mahesh, IBP

    Thank for your valuable Explanations.

    • dev

      did borrower will get chance after auction of property and what notice bank will send to borrower

  • mohan

    Dear Sir,
    I have availed home loan from state bank. My account classified NPA and sarfeasi notice issued than I have paid overdue amount completly.. account has been regular.After six months same sarfeasi notice again sent to me and the manager advised there is collection agency charges rs.15000 debitted. But he has not issued any debit note for that. Then i have paid the said amount and also the monthy dues reguarly. After six months again that collection agency people coming and affixing sarfaesi notice to my home. After contacting the manager he informed that the amount is previous year unpaid interest. but he has not informed this amount by earlier through debit advice or anyother. Can i go for legal for


    • Mohnil

      Yes, you must contact the Banking Ombudsman of your state, and complain about the grievances, with proof.

  • Mohnil

    Does the act enforce something about employee compensations? My father worked for 22 years in a factory that became a willful defaulter. Who will protect the employees, Magistrate, the act, or the employer…………..???

  • shyam kambam

    Dear Sir,

    I have purchased a property in Nov 2013 where in the seller has provided all the link documents (I have applied for EC which is all clean) and took a bank loan for it. After 2 years I see a notice given to my property that one of previous sellers(not the one I purchased from) has defaulted the bank and they are claiming property on sarfaesi act 2002. I found that loan amount is less than 10 Lakhs. I have all the original documents with my bank. What should I be doing. Please help me with my situation.


  • Sundaram T

    I had availed a housing loan @ floating interest rate. It is stated by the Bank in the loan agreement that the ” Bank has the option to reduce or decrease or increase the EMIs in line with the change in SBAR. however the Branch failed to transfer the due EMIs from my sb a/c to my loan ac and collected only the flat EMI fixed at the start of the loan. This has caused me a loss of about Rs.1.5 lakhs through increased interests paid to loan ac; this despite me maintaining surplus funds (2 to 3 installments ) in my sb a/c. When questioned how this lapse occurred, the BM gave excuses like ‘ branch having more than 850 loan /cs to manage./ the borrower has to give his consent. Bank has issued SARFAESI now. Is that justified. Can Bank issue SARFAESI when they make the a/c become NPA by not transferring due EMIs as per loan terms. . . ?

  • salsara

    Sir I got a property six years ago my seller got a loan in SBT but I don’t know that now the bank announced that the property is in eauction I have cheated but as per registration all documents are in my name my family is staying there I files a case in DMC they give injunctions bit today the bank came and ordered me to vacate the house they put it in eauction what can I do

  • itssswati

    In sarfaesi act any notice came before sealed the property by bank .
    if any notice in the 20 to 25 days then what should I do,because I don’t receive any notice from bank????

    • Vijay909

      Pls send details properly, so that a proper reply can be given accordingly. Pls mention 13(2) served or not , when NPA declared ETC.
      Regards ,

  • rishi kalra

    Hi! Our Company account is on the verge of becoming NPA with a nationalized bank. We have given my residential property where i live with my famaly as a security to the bank.
    Can the bank under SARFAESI act take possession / liquidate my house to recover its dues.

  • deshbir26

    Notice under section 13(2) SARFAESI Act was served in the year 2009. residential house was also listed in the list of properties but the housing loan against which the house was mortgaged has been settled long back and is not a pert of primary security mortgaged in the main loan account. Is section 60(c) Punjab amendment section 60 (ccc) applicable on the said residential property as the account in which it was mortgaged stands settled and has only been kept by the bank as additional security along with the primary security but not being the part of primary security. The said account has also been restructured in March 2014. Please advise how i can get back my residential house back from the bank as it has not been mortgaged presently but is only kept as an additional security not being part of primary security.

  • amitgunit1991



  • Saurabh Gupta


    I purchased a property from a person (lets say his name is A) and got the 1st registry done by paying all stamp duty and 50% of the total sale amount. Later I applied for the loan for balance amount and got it sanctioned. Before I can get the the final registration done the seller’s a/c become NPA (Mr. A has earlier mortgaged the property papers with the bank) and now the bank is claiming its right to auction his property. I am already living in this house with my family and have spent a lot of amount on renovation of flat plus the 50% of sale amount. Now the bankers are threatening me with police eviction and auction of this property.
    Kindly help as how I can save my flat in this case as I am ready to pay the balance amount (but the bankers are asking me to pay again the full sale value of the flat as the sum borrowed by Mr. A from bank is more than the balance amount i have to pay). Urgent help will be a lot appreciated. My email id [email protected].

  • Rohit Singh


    • Prahalad Pradhan

      Dear Rohit Singh Sir, you go to high court and file a writ petition against bank by article 226.

  • jadhav2308

    My question is if borrowers requesting bank for 3months to settle dues as per OTS duly revaluing the date of OTS, can CMM ORDER TO HOLD PHYSICAL POSSESSION?

  • jadhav2308

    Pls read revalidate instead of revaluing

    Also inform if borrower is ready to pay within extended time period due to guarantors pressure, can guarantors request CMM TO HOLD PHYSICAL POSSESSION PF PROPERTY TILL EXTENDED PERIOD

  • Preet K

    I had been living in a house which was purchased against a loan. The owner’s incapability to pay back the loan resulted in seizing of the property in which i was living. At the time of sealing process i was not at home but one of my relatives was there. In my absence the owner signed on the papers of the bank stating that the belongings which were kept inside were of him. I have been struggling to get back my belongings for 1 and a half month. How can i get back my belongings. Some one suggested to go to women cell. Pls give me the solution of this problem as i have heard that after 2 months the process to get my belongings back will become more complicated as bank will sell this property to some other company. Plz help…

  • changebihar2

    I have purchased a house.The house was encroached by the seller and occupied by him. I dont have money to fight with was purchased thro a non banking financial Institution by home loan. Now I have stopped to pay EMI because of this encroachment. I requested the bank to sell the house thro Sarfesi Act but banks are issuing notice to me only. They are not implementing the sarfesi act 2002 to make auction to recover money and insisting me to pay the due amount. What Can I do now?

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  • vijay srinivas Madhuravada

    Dear Sir/Madam,

    My property was siezed on Sarfesi act based on 21st july, 2016. As their is an issue with my property not registering(Registartion stopped due to an legal issue at my place). Still bank seized my property even it knows that no registratons happen at my place. Now, on july 31 st i paid an amount of rs 5lacs towards loan payment. Bank has sent an message to my mobile number but no email has sent. When asked for it bank people telling that now payment reciept sent through only mobile and o physical receipts are given and also no e-mail alert will be sent. Not sure what fishy is happening their? Now when I called up customer care number , to my shock they told that my loan was closed and asked whether to request for NOC and property documents. I am surprised for that. If my Home loan account is cosed then why bank people are continously calling and asking me to for further payments?

    Not sure what fishy happening with my account.
    Please anybody help me in this regard. I am in deep trouble.


  • Manan Mehta

    Bank has issued notice under sarfeci act in June 2014 after that within time frame we have paid all dues .. till July 2016 account was active and on As on today account before NPA …now bank manager threaten us that they will take possession of property within 7 days….please guide me..

  • ambalika04

    I have purchase an old property in the year 2009 from the promoter of the property.2 months before ie in the month of October 2017 we saw some pampletes from a consultancy agent stating that the property has been mortgaged to ICICI bank by an anonymous person I the year 1997.We went to the promoter and he informed us he did made a sale agreement with that person in the year 1997 however he did not receive any amount from bank and returned the money taken by him during sale from him as he intended not to buy that property any more.He provided me with both the sale agreement and cancellation agreement of the same.we consulted a lawyer and sent a notice to the bank asking the bank to provide the documents to us on the basis of which they are claiming the entire home loan thing as the original deed is in my name and the mutation is already been done and during purchase I have not taken any loan from any come some1 else take a loan against my property as the original deed is lying with me.
    We got no response from bank .5 days before 5 people along with the bank manager and a government valuer came to my property where my retired dad and mom stays and wanted to value the property.Knowing that the property belongs to us and niot to the persons who has taken the loan the wet away saying that they would come back again.
    My parents are old and it is a harrasment for us.