Observations and Comments

On account of legal ignorance, the borrowers and guarantors are highly scared of the physical possession orders for which are obtained by the banks from the Magistrate u/s 14. Our observations and comments are as under:-

(a)

After possession notice u/s 13(4), the borrower is entitled to file application u/s 17 before the DRT within 45 days of receipt and or publication of the said notice in two news papers.

(b) Hence we have been advising our clients to file caveat with the Magistrate so that opportunity is given to the borrower to participate in the proceedings.

(c)

Further we have been advising our clients, to approach to DRT, the moment they come to know that the bank has approached the Magistrate.

(d) The Magistrate is bound to take action on the said caveat as well as to extend opportunity for hearing.

(e)

If there are wrong doings by the bank upto the stage of 13(4), the Magistrate is bound to refuse to act u/s 14.

(f)

In case the Magistrate orders for physical possession, his order is appealable u/s 17 before the DRT.

(g) Keeping all the above aspects and implications in view, we cove all the related aspects when we prepare the objections and representation against the notice u/s 13(2) including the claim for loss and damages. Such pleadings become useful and handy while dealing with the Magistrate as well as the DRT.

(h) The gist of the approach is that on account of huge loss and damages due to the wrong doings of the bank, there is No Debt Due, hence there is no cause for recovery. Until and unless this issue is settled by the DRT, no physical possession can be taken. This will be done only after final order against the SA u/s 17. As per the Supreme Court in the matter of Mardia Chemicals, the said SA is in lieu of a suit. The adjudication of a suit takes time of several years. Since the higher authorities in the bank are also impleaded in the said suit, lot of pressure is created and ultimately, the bank officers have no option but to settle as per the terms desired by the borrower.

(i) In above dealings, one should study and keep in view all the related case laws. Even there may be occasions to file Review and Appeal.

Our Comments:-

The implications are huge. Massive comments are needed. It will only result in numerous legal complications to the bank officials, the Magistrates, Pos of the DRTs, High Courts and the Supreme Court particularly when loss and damages or counter-claims have been raised by the borrowers. On the other hand small borrowers will greatly suffer as they do not have adequate knowledge and resources to he desired legal fight. Ultimately the banks will suffer as the amount recovered will be small but the disrepute will be massive.