Legal Question in Banking Law in India

sarfaesi-cause and limitation
i have a cc account above 1 crore for my partnership firm to execute govt. job orders. account default on account of dispute & payments & NSC bonds for EMD pending with govt.initiated legal step for recoveries. account NPA and bank issued sarfaesi in Jan'09. met bank seniors and after establishing my position as not a wilfull defaulter & no diversion of funds other than explicitly sanctioned my account was regularised, however transactions were poor and my a/c was frozen as of 30th oct.no intimation from bank but i have been corresponding keeping bank abrest of my business plans and had again paid the current quarterly interest in Nov.Bank sent letter in Dec. to regularise by 15th but i remitted the same by the 10th.On the 1st week of Feb. when i met the cm of the bank to find out the status of my account, did i learn that my a/c was NPA since Oct 30th & has now been sent to the stress asset management for recoveries.my a/c has been active till 30th Oct as per the bank.Is there a 90 day & 180 day legal time limit before action?Will the sarfaesi issued in Jan'09 still be in force after my a/c was reactivated?If my a/c crosses the 180 day, will the previous sarfaesi notice be in force to initiate possession of property?

Asked on 2/15/09, 5:49 am

3 Answers from Attorneys

Sudershan Goel India Law Offices of Sudershan Goel - Advocate

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Re: sarfaesi-cause and limitation

You may better negotiate a settlement with the bank;

The dispute, if any, may not be in your business interests.

However, if the bank has wrongly declared your a/c NPA, depending upon the Bank, you may be entitled to seek a declaration from the court.

You may want to engage a local counsel to pursue your remedies in tune with RBI guidelines.

Answered on 2/15/09, 9:10 am

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J. Radhakrishnan independent Practice

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Re: sarfaesi-cause and limitation

Technically the Bank has to again issue notice under Sec.13(2) giving u 60 days time to regularize the account. In case the Bank takes action under Sec.13(4) you have to appeal to the DRT under Sec.17 challenging the action.However it is advisable to approach the Bank in a conciliatory manner to arrive at a realistic settlement.

Answered on 2/15/09, 9:14 am

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