It can immediately proceed after timelines of notices

DRT can get involved when borrower approaches for stay or lender for relief

DRT where property is located or where part of cause of action arises

For public auction It dragged takes almost 6 months period but can be dragged

Chances are bright if any techicallities are involved but it's a pro lender legislation

 Yes it can go to them

Under Section 13(4), after the accounts are being declared as NPA and the representation of the borrower/guarantor is rejected, the secured creditor (i.e. bank or FI) can take recourse to any of the measures specified therein to recover its outstanding debt.. It takes around 3 months or so 

2) you have to file objections it would be in state from where bank issued notice and account declared NPA

3)it should not take more than 6 months for public auction 

4) bank can go in for public auction 

5) it is immaterial that guarantor invested more money or that management has changed or POA was used 

1. After issuing notice under the Sarfesai Act , the limitation period is 60 days from the date of service of the notice to the borrower. 

2. After passing 60 days from the date of service of the notice , the bank can approach the DRT.

3. You can file objection in your defence in the DRT where the bank is located.

4. Not fixed and depends upon the discretion of the DRT , however it can take 6 to 9 months. 

5. In the place where the property is located , and you can take part in the auction as well.

6. DRT can pass direction to recover the amount from the Guarantor before auction . 

1. As 3 months have elapsed, the lender bank may very well move to take symbolic possession under Sec 13 (4) at anytime now.

2. The DRT is moved by an aggrieved debtor against the lender's action under Sec 13 (4).

3. It has to be in the State where the property lies. The aggrieved debtor has to apply for an injunction on urgent basis.

4. The auction has to be duly notified first.

5. The bank may opt for a tender process or a public auction or in rare cases, a private sale also.

6 a. The reserve price will be fixed so close to the market value as possible.

6 b. If the PoA has been misused, it shall not bind the principal under the guarantee.

6 c. and 6 d. No impact.

6. Not necessary at all.

1. The bank will give the borrower 60 days time in the legal notice, if the borrower do not respond within the time limit, the bank may proceed with further action as envisaged in the law for the purpose.

2. The DRT will not get involved in this case.

Only the aggrieved person has to approach DRT seeking relief.

3. If you want to file an objection or injunction/stay petition before DRT, you may have to approach the jurisdictional Tribunal within which the bank falls.

If all the requirements to file the petition before the DRT is properly complied, then the DRT will take the same on its file within a week.

4. It depends on the bank which is taking action to bring the property for auction sale, there is no prescribed time limit, it may be immediately or a little later too.

5. The bank will follow the procedures as laid down in the law for this purpose.

6. a. The question is not about the higher value of the assets given as collateral security, if the auction bid amount is in excess then the bank will adjust its outstanding amount and refund the balance to the borrower.

b.  It is very much valid.

c. It is the problem of the company and not of the bank

d. The question is about the default in loan repayment, hence the personal issues of the guarantor will not be entertained by the court.

6.  The bank can take action simultaneously agaisnt the directors and the guarantors. 

Supreme court in a judgment has clearly stated that the guarantor cannot insist that the creditor must first exhaust all remedies against the principal debtor before recovering the debts from surety holders.

“There can be no dispute to the settled legal proposition that in view of the provisions of Section 128 of the Indian Contract Act, 1872, the liability of the guarantor/surety is co-extensive with that of the debtor.

“Therefore, the creditor has a right to obtain a decree against the surety and the principal debtor.

“The surety has no right to restrain execution of the decree against him until the creditor has exhausted his remedy against the principal debtor for the reason that it is the business of the surety/guarantor to see whether the principal debtor has paid or not.

Bank would reject it 

2) bank would consider settlement if they are able to recover their money 

3) legal fees vary depending upon lawyer engaged by you 

4) bank can auction property after taking symbolic possession 

4) guarantor can purchase property in auction 

5) bank is not bound to accept removal of guarantor 

6) if bank is able to recover loan amount they would not proceed against personal property of guarantor 

1. Generally banks don't entertain any such request.

2. It is not under the purview of law. 

3. You are right. 

4. It depends on the decision by DRT.

5. You may have to confirm the same from the lawyer who you may engage for this purpose. 

6. The guarantor is not prohibited from bidding the auction but if he does that then he can very well pay the amount directly without allowing the bank to proceed with the proposed auction sale. 

7. No such exemption available in law. 

8. The bank can demand for replacement of guarantor from the borrower. 

9. No.

10. It depends. 

No it will go only for the secured debt no other property. 

All the other observation stated by you above is correct

1. The guarantors may represent on a 'without prejudice' basis, but it is within the bank's discretion to entertain it.

2. It may if the terms are acceptable. Again, it is within the bank's discretion.

3. Yes, physical possession is not necessary. However, the burden will then be on the prospective buyer to take vacant possession.

4. No, only the 13 (4) notice calls for the DRT action and not otherwise.

5. It depends.

6. Yes, the guarantor may bid at the auction. The bank, once the property is sold, has no further recourse.

7. No difference at all.

8. Yes, the bank has to take notice legally, as the guarantor shall not be responsible for anything lent afterwards.

9. Yes, by invoking the personal guarantee.

10. Yes, CIBIL rating will be impacted.

1. There is no specific rule specifying the time period within which the mortgagee bank should issue Possession Notice u/s13(4) of the SARFAESI Act,2002.

2. You can file a Sarfaesi Application (S.A.) within 45 days from the date of receipt of the Possession Notice.

3. You shall have to file the S.A. before the DRT having jurisdiction on the address of the property mortgaged.

4. No. No S.A. can be filed before the issuance of 13(4) Notice by the Bank.

5. After issuing the 13(4) Notice, the Bank can issue sale notice and publish the same in News papers after taking physical possession of the property with DM's permission against application filed under section 14 of the Act or even without taking its physical possession.

6. If the property has been mortgaged by the POA holder, then the said mortgage is valid and under the given circumstances, the Bank can successfully initiate SARFAESI action to sell the said property to recover the outstanding amount. Any excess amount collected will be refunded to the mortgagor.

7. It is up to the Bank as to what step they will choose to take first to recover the outstanding amount.

1. & 2. It depends on what type of representation/settlement proposal  you send. The Bank will recover the outstanding public money they have lent to the Borrower,

3& 4. You can file S.A. on receipt of the 13(4) Notice and try to obtain stay order on acceptable ground and the Bank can sell the property without taking physical possession.

5. Stay order can be obtained only if there is a validly acceptable ground. Ordinarily I take Rs.50 K for filing S.A. before the Kolkata DRT against payment of Rs.5 K towards appearance fee.

6. It will be prudent if you bid in the name of your wife or children and buy the property being the highest buyer.

7. NRI status of the guarantor is of no consequence in the instant case.

8. Not at all. The bank will not release the mortgage unless another property is mortgaged or the loan is paid of.

9. Yes, if the outstanding amount is not recovered  after selling of the mortgaged property, the lending bank can file an Original Application ( O.A.) praying for order to attach, take possession of and sell other properties standing in the name of the Guarantor to recover the balance outstanding loan amount. 

10. Yes, the CIBIL score of the Guarantor will go to dogs disentitling him in availing any further loan from any Indian Bank.

1. How long does it take for the bank to go to the next stage (13/4)?


My property is located in a different state than the bank. 
notice period is 60 days

2. At what stage does DRT get involved? After or before 13/4 is issued?
DRT gets involved only when the borrower/guarantor approaches it to challenge any 13/4 action

3. In case we need to file an objection in DRT, would it be in the state where the property is located or where the bank is located? How many months would it take for the DRT to respond?
where the property is located. how many months - what sort of question is that....how can lawyers know that... if the aggrieved party who has filed a challenge petition before DRT showing some urgency then only the DRT will grant some stay, else not

4. How long does it take between 13/4 and the public auction (approximately)?
public auction is a part of 13/4. it is one of the actions under 13/4. you will get a 30 days notice before public auction is held in order to redeem your property

5. Can the bank go for a public auction ( property is in a different state than the bank and also there are no branches of the bank in the city where the property is located)?
yes it can

6. What are the chances of success given:

a. the primary asset is much more than the loan
success of guarantor/borrower is 0 unless you pay the dues of the bank. this means bank will mostly succeed

b. POA was used to sign up as a guarantor
is it your case that the POA was fraudulently obtained from you? why did you give such a POA in the first place? the action of the agent binds the Principal

c. management had changed
that is irrelevant

d. the guarantor invested more than the value of the property he pledged
that is irrelevant 

6. Does the bank have to go after the MD and the directors first before issuing notices to the guarantors?
not necessarily 

1. Can the guarantors send a RO (Representation and Objections) to the bank? Would the bank even consider this or just reject it flat out?


you can. bank may or may not consider. 
2. Would the bank consider a settlement in exchange for release of property mortgaged by the guarantor?
try !

3. Looks like the bank can auction properties even after symbolic possession and not wait for the physical possession. Is this true?
very few banks would do that since it will find any bidders in case of symbolic possession

4. Can the guarantor obtain a stay order from DRT even before a 13/4 notice is issued?
only after 13/4. not prior to that. if you do that then it will be considered to be premature

5. How much would it cost (approximately) to obtain a stay order from DRT?
what if i say 1 crore!!!! what stupid questions are you asking! depends from lawyer to lawyer

6. After the bank auctions the mortgaged property, would the guarantor be allowed to purchase the property at the successful bid price? If this happens, would the bank again try to take away the property, if the loan given to the borrower is not paid off?
the borrower and guarantor both have defaulted. i doubt the bank would even allow them to bid in the auction or match the bid of the highest bidder. if the loan is not fully paid up the property will not be released

7. Would it make a difference if the guarantor is an NRI who was not involved with the company, but was merely trying to help get a term loan?
completely irrelevant 

8. The guarantor wrote to the bank, after the management changed, to remove them as a guarantor since the guarantor has no confidence in the new management. Is the bank required to honor this?
no

9. Would the bank go after other personal properties (not pledged with the bank) of the guarantor after the mortgaged property is sold? 
yes but only if the bank's dues still remain outstanding even after the public auction

10. Would the credit rating of the guarantor be impacted if a 13/2 or 13/4 is issued?
yes, unless the dues of the bank are fully repaid