Dewesh Agarwal
Asked September 30, 2016

Loan against property

  • 1 Answer
  • 391 Views

We are a small NBFC into vehicle financing business, we want to start loan against property, so we want to know the process for taking physical possession of the mortgaged property, and the process of sale of property, and the time the whole process can take?

Answer 1

In 2002 the Central Government enacted the Securitisation And Reconstruction of

Financial Assets and Enforcement of Security Interests Act (SARFAESI Act

2002) to ease the recovery of debts by secured creditors which also include Non-

Banking Financial Companies like yours. For taking physical possession of the

mortgaged property a creditor must move the Court of Chief Metropolitan Court of

relevant jurisdiction (Jurisdiction of Court under which the property lies) under

Section 14 of the Act.

Section 14 states that on request by the creditor the Court can initiate proceedings to

take possession of the property and forward the same to the creditor. It further allows

the Court to use necessary force to do so.

After taking possession the creditor may sell the property to recover his debt. But the

debtor is supposed to be furnished with a demand notice for payment, before

invoking proceedings under Section 14, the procedure for which is laid down under

Section 13 of the Act.

The debtor is also allowed appeal in the debt recovery tribunal and High Court and

the amount of time taken for the entire transaction depends on the stay given by the

above mentioned authorities.

Agree Comment 0 Agrees almost 4 years ago

Please Login or Register to Submit Answer

Directory ads
Need to talk to a lawyer?

Book a phone consultation with a top-rated lawyer on Lawfarm.