Legal Question in Banking Law in India

I am not paying EMIs for the last 5 months, but am working in the same company from which we have applied for the housing loan.

a. as soon as the salary is debited we are withdrawing the funds, and hence the EMIs of housing loan are bouncing bank. The bankers (home loan) says that we will be prosecuted under section 138 NI act. how far is this feasible.

b. in the housing loan agreement copy, there is a clause which says that the bank can ask the employer to directly debit the housing loan EMI from my salary. is this possible?

2. Now the account is NPA, as per the bankers information, they said they will issues me SARFERSI notice sec 138, section 13(2) and section 13(4)

a. what is the process for this, and what legal consequences if any that we would need to face.

3. I have taken the housing loan for 21 lacs, and paid 22 EMIS. now the property value has come down to 15 - 16 lacs

a. the bankers say that after they take posession of the property, the will auction the flat, and if the bankers fall short of the principal outstanding, they will then file a recovery suit for the balance amount (say if they sell it for 14 lacs remaining 7 lacs balance amount) against me. Is it true, if so what should be done.

4. I have asked the banker to acquire the property as i am not in a position to pay the EMI

a. i have heard that if i wish to forgo the property then banks should not take legal action against me. Correct me if i am wrong? and what should be done?

Any help would be greatly appreciated.

Thanking you in advance


Asked on 7/02/10, 12:48 am

1 Answer from Attorneys
J. Radhakrishnan independent Practice

If the employer with your consent has agreed to pay out of your salary the EMI, the employer can deduct the same from your salary and pay. If he fails, bank may not have any recourse against him. For default the Bank will first issue notice of 60 days demanding the entire loan outstanding. If it is not paid they will take possession of the property and sell it. The Bank cannot excuse you from payment merely by your asking them to take the property. They will have to follow the procedure under the SARFAESI Act.

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Answered on 7/04/10, 8:51 am


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