Thematic Interiors

Property advocates in Bangalore, advocates in Bangalore, Advocate at south Bangalore

When a single and specific theme or concept emphasizes the interiors of a home, they turn to become thematic interiors. There are different elements used in the process of decorating thematic interiors, and each one of the elements essentially helps in the form and function of the desired theme to create an uninterrupted conceptual flow. The Theme could either be consistent for the entire house or could vary from room to room.

If one single concept could be the common theme for the entire house, it could look monotonous and repetitive, So to avoid that, it is usually recommended that one opts for different themes for different rooms based on comfort and convenience. For instance, one can select a rustic theme for the living room or the bed rooms, but have a modular kitchen and bathrooms with vitrified tiles because of their functionality and ease of maintenance.

Living Room

The Living room in a house is considered to be a formal area where one entertains the guests. Therefore it is natural that the guests could gauge the concerted and complete personality of the entire house just by observing the theme used for decorating the Living room. Depending upon the personal likes and individual tastes of the occupants, the themes used at the Living room could be Local, English or American.

For instance, if an ethnic Indian theme is wished to be highlighted, then accessories like brass inlaid solid teak or rosewood furniture, low divan style seating and bamboo chics instead of curtains could all be incorporated. The ambience could be further accentuated by placing electric lanterns, hookahs, jhoolas, urulis or even real life bullock carts if space permits as design elements in the room. The colour scheme here would most definitely be earthly greens, maroons, browns and mustards. Extra show pieces showing apt luxury would be bright coloured mirror works, throw cushions, or chics in pochampalli patterns. To consummate the ethnic look in total, one can even get mud cladding done of walls, with matchstick drawings.

If an English cottage theme is wished for, one can go for white or natural rattan furniture interspersed with plenty of wrought iron and clear glass, with frilled floral curtains. The colour scheme here could be checked patterns in royal blue and yellow, with wooden flooring in white cedar, oak or pine. Plenty of fresh flowers in pristine white porcelain vases, and a curio shelf with small objects of décor would complete the cottage theme.

Dining Room

Since apartments usually come with a living-cum-dining concept, in most of the modern day houses the dining area is an extension of the Living room. The theme and the colour scheme used in the Living room can hence be extended to the dining space as well.

So if one has an ethnic theme, one could go in for a solid hardwood six-seater or an eight-seater dining table and chairs with intricate inlay work. Or alternately a very low dining table can be tried using chowkies or wicker mats instead of chairs.

Master and Guest Bedrooms

Of all rooms, the bedroom will be the coziest and private of the places. The primary importance is given to comfort. Whatever be the theme, this aspect has to be considered. If the Moulin Rouge theme is liked and wanted to be highlighted, then the bedroom could be done up in fuchsia pink bedspreads with matching sheer or lace valances as window treatments. Even one could go in for a four-poster brass or wrought iron cot and it could be upholstered with a canopy and lace curtains. To complete a romantic picture, soft rugs, lots of throw cushions and soft lighting could be added. 

Children's Bedroom

It will be comparatively easier to find themes for children's bedrooms. The available space is the main yardstick for following and experimenting with any theme. The fuse of bright colours is always recommended for the healthy and overall mental growth of a  child. One can play around with a variety of themes like an aqua theme, a jungle theme, a sky theme, or a space age theme.

If an aqua theme is intended to be installed, one can create the illusion of an underwater world through the use of green and blue colours, colourful cut-outs of aquatic animals, carpet like a seabed and a bed that resembles a ship, wall to wall posters of the sea, ships or the shore, lamps made out of sea shells and conches, and an actual illuminated aquarium can add the required special effects and also heighten the aqua theme.

Deed of Covenant for Production of Title Deeds

Advocates in Bangalore, Advocate at south Bangalore, Leading advocate in Bangalore, property lawyers, real estate lawyers in India.

The transfer of immovable property by way of sales, gift, will, releases etc. presupposes that documents to the title of transferred immovable property are delivered to the transferee on completion of process. This is statutory obligation. Section No. 55(3) of Transfer of Property Act, casts this responsibility on the seller. But the section has a proviso that in case where only a part of the property is sold and the seller retains a part of the property the seller is entitled to retain the original documents, and copies of such documents are delivered to the purchaser.

In case, where the property is transferred to different persons, in different lots, the transferee of greatest portion is entitled to hold the documents of title and others are provided with copies of such documents.

In the circumstances dealt above, the persons holding the documents either the seller or one who hold the greatest portion has some responsibilities. He has to keep the documents in safe custody and in good condition. He has to make available the documents for inspection to other buyers, and also furnish the true copies of such documents; extract from such documents, whenever required.

But the cost has to be met by the buyer who needs such inspection or copies, extracts. Those responsibilities are required to be recorded properly.

The document, which records such obligations of safe keeping the documents; producing them for inspection, providing copies, extracts is called “Deed of covenant for production of documents”

The deed of transfer like sale, gift, will, and release may contain such a covenant by the vendor in favour of purchaser or a separate deed may also be executed by the vendor in favour of purchaser. In case of the person holding greatest portion, a separate covenant deed about his obligations becomes necessary. A separate deed in favour of each of other transferee of other portions or a common deed in favour of all other transferees jointly may be executed.

In the deed of transfer of the greatest portion or of highest value an explicit covenant, that, the transferee shall safe keep the documents in good condition, produce for inspection of other transferee and furnish true copies or extract should be included. Similar relevant covenant should also be incorporated in deed of transfer of other transferees.

Generally all the portions of the property are not transferred at the same time, and the above suggested procedure may not be possible. In such cases, the transferor should give a covenant of production of documents in each of the deeds of transfer and it should further provide that if and when the transferor hands over the documents to any other transferee at a later date he would procure a similar condition from the such transferee. Under a covenant of production of document, the original covenantor remains liable indefinitely unless a condition provides that he is no more responsible after he parts with the remaining portion of the property.

Stamp duty : 

In case the condition is included in the deed transfer itself, no separate stamp duty is payable. If a separate deed is executed, it attracts the stamp duty as that of an agreement depending upon the stamp duty prescribed by the state.

Registration :

This deed of covenant does not require the registration, but it is advisable to get it registered.

KILLING A STORM WATER DRAIN TO STRANGULATE A LAKE

Advocate Selvakumar, property advocates in Bangalore, advocates in Bangalore, Advocate at south Bangalore, Leading advocate in Bangalore

Succumbing to pressure from a series of litigations on protecting the natural canals and storm water drains (SWD) connecting lakes and river, the District Administration carried out a survey. 

But the manner in which the survey was done, especially on the one leading to the Chikka Kallasandra Lake, shows the administration's reluctance to execute the Karnataka High Court order to this effect.

Three years ago, the High Court had ordered the survey of all SWDs, known as Rajakaluve in Kannada, removal of encroachments in and around them and subsequent fencing. The Court was also categorical that no polluted or untreated water should be let into the SWDs.

The legal intervention was critical since these Rajakaluves are the feeder canals for the lake, besides the Vrushabhavathi and Arkavathi rivers. Simply put, reviving lakes in the City will be impossible without ridding these canals of encroachment.

On January 5, the then Deputy Commissioner of Bangalore Urban district, G C Prakash called a press conference with BBMP Chief Engineer (SWD) to announce the completion of the SWD survey. He declared that the entire survey sketch would be handed over to the SWD division of the BBMP. Based on this statement, an RTI application was filed in the SWD division seeking the survey sketch of the Rajakaluve in the upstream and downstream of Chikka Kallasandra lake.

Information held back

BBMP did furnish the survey sketch of the Rajakaluve in the downstream, but held back information about the Rajakaluve in the upstream. The implication was clear: The survey sketches super-imposed on Google Earth images show that the two kilometers long Rajakaluve has been fully encroached upon. An eviction drive, if carried out, will lead to demolition of a large number of buildings.

In its written reply to another RTI query on the survey sketch of the upstream Rajakaluve, the Palike’s SWD division had this to say: The application is forwarded to the Deputy Director Land Records. This official is to provide the required information.

But yet another RTI query addressed to the Deputy Director of Land Records has not yielded any information. The application under the RTI Act was filed 60 days ago.

Aiding encroachers

The Palike has apparently another reason to shy away from furnishing more information: It was instrumental in shrinking the SWD’s size in the lake’s upstream. Central, State and international bankers’ funds besides the Bangalore tax payers’ money were used to construct box drains, thus reducing the size of the Rajakaluve by almost one-tenth of its actual size. The box drain provided a strong foundation to construct multi-storied buildings exactly on the Rajakaluve. 

Private gardens, garages, apartments, shopping complexes and many other structures sprang up in the remaining portion.

Survey sketches super-imposed on Google Earth images show that the two-km-long Rajakaluve has been fully encroached upon. As per Mr. B. S. Sathyanarayana, ex. Mayor, Bangalore, The Lake has been fully encroached upon. Houses, bus shelters and shops have come up. It is shocking that the Bangalore Metropolitan Task Force, an otherwise hyperactive organisation, is sitting idle despite the encroachment of a government lake. This lake also figures prominently in the A.T. Ramaswamy committee report. But Mr. M. Lakshminarayana, Commissioner, BBMP says, “I am not aware of the encroachment of Chikka Kallasandra Lake. I will get details from the lake division of the BBMP. If there is encroachment, we will initiate measures to clear it.”

However, Mr. Gurappa Naidu, State Cong Party, has said that without the involvement of public representatives, such encroachment cannot happen. It is daylight robbery. He urge the State government to initiate measures to revive the lake and clear the encroachment at the earliest.

The people’s reaction is different. According to Mr. S RAVI KUMAR, Social activist and area resident said that Government turning a blind eye to the lake encroachment raises many doubts. The water table in the area has gone down drastically. If no action is taken now to save lakes, Bangalore will become an unlivable place. 

Valid Transfer of Property Rights by a Seller

Real estate lawyers in India, property lawyers in Bangalore, lawyers in Bangalore, senior advocates in Bangalore

Marketability of Title is the condition precedent for sale of any immovable property. Under Section 55(1) (a) of the Transfer of Property Act, the seller is bound to disclose any material defect in the property or title and to produce all the documents of title to answer the requisitions on title made by the purchaser. Under Section 55(2) of the aforesaid Act, the Vendor is deemed to warranty the title or the right to sell.

Marketable Title:

The statutory covenant of title is implied in every contract for sale of an immovable property, even if there is no express clause embodying such a warranty. The term “Marketable Title” refers to absolute right, title, interest and ownership of the Vendor to convey the property without any hindrance.

In other words, the title is considered to be marketable if the same is free from encumbrances, claims and beyond reasonable doubts. Thus, if there is any encumbrance or claims and the vendor does not discharge it, the title cannot be said to be marketable.

In fact, Section 55 (1) of the Transfer of Property Act envisages that if the property is sold subject to any encumbrances or claims, it should be so clearly stated and the Vendor will be under obligation to discharge any such encumbrances existing at the time of sale on the property.

On the other hand, if any encumbrance is found to exist and the same is not revealed before completion of sale, then the Vendor is bound to pay for the same or indemnify the purchaser in that behalf.

The primary duty lies on the person intending to sell the property to prove that title of the property is free from any defects and any subsequent transfer will not make such transaction either void or voidable.

For example, if the vendor owns a property as Kartha of the Joint Hindu Family in which minor’s rights and interests are involved, the Kartha is bound to prove the legal necessity for sale or to obtain an order from the competent Court seeking permission to the property on behalf of the minors.

Restrictions on title:

Implied warranty of title on the part of the Vendor, although absolute, will not however apply to cases where there is a clear contract between the parties to the contrary.

Such a contract can be either express or implied, but the contract must be such as would clearly negate the warranty of title.

Thus, certain restrictions are imposed on the purchaser’s right to examine the title in full, which is done when the Vendor is not sure of making out a marketable title, particularly when the Vendor is not in possession of the property.

Though, the restrictions may be contrary to the provisions under Section 55 of the Transfer of Property Act, the same will be binding on both the parties by virtue of mutual agreement and understandings and even if defect in the title is found subsequently, objections in this regard cannot be raised due to such restrictions.

Where the Vendor stipulated that the property would be conveyed as he has received the same from his predecessor or that the title of the Vendor has to be accepted without dispute or that it should not be enquired into and the Purchaser is bound to accept the title of the Vendor as it appears to be, such a stipulation would be contrary to the contract and Section 55(1) (c) and (2) of the Transfer of property Act will not apply. Further, such a condition will not relieve the Vendor from the obligation of making out the best title though the purchaser would be bound by such condition even if the title is proved to be defective.

However, in absence of such a contract to the contrary, the Vendor is bound to remove all the defects even if the purchaser was aware of the same. Again an express covenant does not, in clear and unambiguous terms supersede the implied covenant.

Thus, by virtue of Section 55(2) of the Transfer of Property Act, the purchaser can rest his claim on the implied covenant of title contained therein.

Conditions restricting the title or proof of title to which the purchaser is entitled must neither state nor suggest things which, to the Vendor’s knowledge, are incorrect. The condition will not be binding if it requires the purchaser to assume that what the vendor knows to be false or it affirms that the state of title is not accurately known to the vendor when, in fact, it is known.

Production and Scrutiny :

In order to examine the title of the Vendor, the purchaser has to examine all the relevant title deeds in the possession or power of the Vendor. Under Section 55(1) (b) of Transfer of Property Act, the Vendor is under an obligation to produce not only those documents in his possession but also in his power to produce.

Thus, if the Vendor has deposited the title deeds with a mortgagee, the Vendor has to produce such documents for inspection of the purchaser through mortgagee. However the Vendor is not under an obligation to produce irrelevant documents not in his possession or power but it is the discretion of the purchaser to inspect the same at his own cost.

It is only after production of all the relevant title deeds, assistance of advocates having sufficient experience in the scrutiny of the title documents will help the purchaser to conclude whether the Vendor has got marketable title or not.

When the property market is favorable to the Vendor, the Vendor, many  times, dictates the terms and tries to foist a title on the purchaser.

Adhere to the norms :

Under any contract of transfer, fundamental principles of Transfer of Property Act must be strictly adhered by the parties, without letting out either of the parties to escape from their respective obligations, which will reduce litigations and ensure transfer of marketable title from the vendor to the purchaser, free from encumbrances, liens, claims, etc. When a faulty title is passed on to the purchaser, it is bound to result in the spate of claims and litigations.

Purchasing the property involves various steps such as scrutiny of title deeds, verification of documents, executing the deed of Agreement to sell, making payment as agreed between the Vendor and the Purchaser and transfer of ownership and title deeds  in the name of the Purchaser by executing Sale Deed.

It is not advisable to purchase a property hastily by approaching the brokers and subsequently entangling oneself into litigations in case of any defective title.

Ownership and right over the property has to be passed on in compliance of the provisions as envisaged under law for which services of Advocates having sufficient experience and knowledge in property transactions is necessary to avoid litigations that are likely to arise in future.

PROPOSED MASTER PLAN 2035 BY BDA– MAY END IN MESS UP OF THE CITY

Advocate, Advocate Selvakumar, property advocates in Bangalore, advocates in Bangalore

Much noise has been made about the City growing haphazardly, but far from learning from the lessons of the past, the present Government doesn’t seem to be any clearer on how to go about planning for its future, as on the one hand it has established a Metropolitan Planning Committee (MPC) covering all civic agencies for better co-ordination and administration of its affairs, and on the other hand, the Bengaluru Development Authority (BDA) is in the process of drawing up a Master Plan 2035 on its own for its holistic growth.

Civic activists are now accusing the Government of lacking clarify in its goals. Says N. Mukund, Joint Secretary,Citizens’ Action Forum (CAF). “When the MPC has been constituted with elected representatives as its Members and the Chief Minister himself as its Chairman, the BDA cannot come out with a Master Plan of its own for the growth of the City”. Noting that Chief Minister Siddaramaiah is directly in charge of the BDA, he wonders how he or District In-charge Minister, Ramalinga Reddy could allow something like this to happen. “This shows how little they care for the growth of Bengaluru. The BDA cannot over ride the powers of the MPC”, he insists.

Environmentalist Le Saldanha too asserts that the Master Planning is no longer the BDA’s job. After the creation of the MPC, the mandate for Master Planning has been passed on to it. It is called the MPC for a very simple reason - it is supposed to plan for the Metropolis” he says, also wondering why the BDA has roped in a Dutch Company to help it plan for the City’s future development. “Around 10 Officials of the BDA are supposed to be taken on a foreign jaunt at the expense of the Consultant to study “Best practices in Planning” abroad. It has not been explained why a non-Asian City has been chosen as Bengaluru’s model,” he adds, declaring “The BDA has no business planning our City any more. It is our business to plan our city, and it is the duty of the MPC to assist us in this process”. Recalling that the BDA called for public consultation a few days ago through a newspaper advertisement and later withdrew it, he claims this is an indicator of the Civic body’s lack of competence for the job at hand. “The question is whether the BDA has the power to engage in this exercise at all. Clearly, it does not, definitely nut after the MPC has been constituted with a mandate to prepare, confirm and regulate plans of Bengaluru, once in every five years”, he stresses. But ask BDA Commissioner T. Sham Bhat and he says, there is no confusion in the matter, as the Master Plan 2035 will be presented to the MPC for its approval before it is implemented”. Meanwhile, the base map for the Master Plan 2035 is getting ready.  Once it is ready, we will call for public consultations” he added.

BDA not focused on growth, development:

The BDA’s last Master Plan-2015 was itself not received very well, as it encouraged a mixed zone concept and came out with zoning regulations. For many, it was the beginning of the end for peace in their locality until then entirely residential neighbourhoods. “Scores of hospitals cropped up in residential areas taking shelter under the mixed zone concept and giving hell to the residents as parking became a huge problem on the roads in these localities. The revised Master Plan 2015 was a disaster and drew up a map for erratic and hap-hazard growth of the city, snatching away the peace of residential neighbourhoods”, grumbles Ravindranath Guru of the Banashankari 2^nd Stage Residents Welfare Association (RWA). Against this move, the members of the Banashankari RWA took legal action to challenge the mixed zone concept, the High Court ordered the BDA to withdraw it, but it made no amendments to the Master Plan-2015, he points out. “Now it is getting ready to release another Planning document for development of the city till the year 2035. What has the Planning document incorporated? Has it spoken about providing better water supply, transportation and housing ? If it has not, then what kind of a Planning document it is?  He also wonder as to why the BDA is now preparing a Document planning for 20 years ahead, when it is a practice to draw up plan document for every 10 years. Alleging that the civic authorities panders to the builders’ lobby and turns a blind eye to private layouts that flout town planning concepts, he says it cannot be trusted to work in the best interests of the City.

Before they make Master Plans - Let the BDA ask the Citizens of Bangalore what they want

A few days ago the BDA organized a public consultation meeting for its new Master Plan for the city. Predictably, there were so many protests and complaints that it was forced to cancel the event. I say ‘predictably’ for three reasons,

- the first being that the BDA does not know how to make Master Plans; there is no one in the BDA who has done this task successfully and time & again the people have figured this out. The city is full of problems owing to this and people are now determined not to allow such glaring errors to be repeated.

- secondly, the Master Planning is no longer the BDA’s job. After the creation of the Metropolitan Planning Committee (MPC), the mandate for it has been passed on to that body. It is called MPC because it is supposed to plan for the Metropolis.

- thirdly, people are tired of being given some document or the other from the Government and told that they must accept it. Instead, they have begun to remind the Government that it is their city and they should have primary say in determining its future, which means that the very first step should be to ask the citizens what they want before planning for the city.

Rather than a Master Plan from the BDA, what we need is a simple plan to close it and establish a Bengaluru Infrastructure Development Authority (BIDA), which can act as the primary anchor agency for all public infrastructure needs. That would atleast make one integrated entity responsible for the over all physical appearance of the city. 

VALID TRANSFER OF PROPERTY RIGHTS

Advocate at south Bangalore, Leading advocate in Bangalore, property lawyers, real estate lawyers in India, property lawyers in Bangalore

Marketability of Title is the condition, precedent to sale of any immovable property. Under Section 55(1) (a) of the Transfer of Property Act, the seller is bound to disclose any material defect in the property or title and to produce all the documents of title to answer the requisitions on title made by the purchaser. Under Section 55(2) of the aforesaid Act, the Vendor is deemed to warranty the title or the right to sell.

Marketable Title

The statutory covenant of title is implied in every contract for sale of an immovable property, even if there is no express clause embodying such a warranty. The term “Marketable Title” refers to the absolute right, title, interest and ownership of the Vendor to convey the property without any hindrance. In other words, the title is considered to be marketable, if the same is free from encumbrances and claims, beyond reasonable doubts. Thus, if there is any encumbrance or claim and the vendor does not discharge it, the title cannot be said as marketable. In fact, Section 55(1)(g) of the Transfer of Property Act envisages that if the property is sold subject to any encumbrances or claims, it should be clearly stated and the Vendor shall be under obligation to discharge any such encumbrances existing at the time of sale on the property. On the other hand, if any encumbrance is found to exist and the same is not revealed before completion of sale, the Vendor is bound to indemnify the purchaser in that behalf. Primary duty lies on the person intending to sell the property to prove that the title of the property is free from any defects and any subsequent transfer will not make such transaction either void or voidable.

For example, if the vendor owns aproperty as Karta of the Joint Hindu Family in which minor’s rights and interests are involved, the Karta is bound to prove the legal necessity for sale or to obtain an order from the competent Court seeking permission for sale of the property on behalf of the minors.

Restrictions on title

Implied warranty of title on the part of the Vendor, although absolute, will not however apply to the cases where there is a clear contract between the parties to the contrary. Such a contract can be either express or implied, but the contract must be such as would clearly negative the warranty of title. Thus, certain restrictions are imposed on the purchaser’s right to examine the title in full, which is done when the Vendor is not sure of making out a marketable title, particularly when the Vendor is not in possession of the property.

Though, the restrictions may be contrary to the provisions under Section 55 of the Transfer of Property Act, the same will be binding on both the parties by virtue of mutual agreement and understandings and even if defect is found in the title subsequently, objections in this regard cannot be raised due to such restrictions.

Where the Vendor stipulated that, the property would be conveyed as the same received from the predecessor or the title of the Vendor has to be accepted without dispute or it should not be enquired into and the Purchaser is bound to accept the title of the Vendor as it appears to be, such a stipulation would be contract to the contrary and Section 55(1) (c) and (2) of the Transfer of property Act will not apply. Further, such a condition will not relieve the Vendor from the obligation of making out the best title though the purchaser would be bound by such condition even if the title is proved defective. However, in absence of such a contract to the contrary, the Vendor is bound to remove all the defects even if the purchaser was aware of the same. Again an express covenant does not, in clear and unambiguous terms, supersede the implied covenant. Thus, by virtue of Section 55(2) of the Transfer of Property Act, the purchaser can rest the claim on the implied covenant of title contained therein.

Conditions restricting the title or proof of title to which the purchaser is entitled must neither state nor suggest things which, to the Vendor’s knowledge, are incorrect. The condition will not be binding if it requires the purchaser to assume such things which the vendor knows to be false or it affirms that the state of title is not accurately known to the vendor when, in fact, it is known.

Production and Scrutiny of Title Deeds

In order to examine the title of the Vendor, the purchaser has to examine all the relevant title deeds in the possession or power of the Vendor. Under Section 55(1)(b) of Transfer of Property Act, the Vendor is under an obligation to produce not only those documents in his possession but also in his power to produce. Thus, if the Vendor has deposited the title deeds with a mortgagee, the Vendor has to produce such documents for inspection to the purchaser through mortgagee. However, the Vendor is not under obligation to produce irrelevant documents not in his possession or power but it is the discretion of the purchaser to inspect the same at the cost of the purchaser. It is only after production of all the relevant title deeds and assistance from advocates having sufficient experience in scrutiny of the title documents, the purchaser will be able to conclude whether the Vendor has got marketable title or not.

When the property market is favorable to the Vendor, the Vendor, many a times, dictates the terms and tries to foist a title on the purchaser. Under any contract of transfer, fundamental principles of Transfer of Property Act must be strictly adhered by the parties without letting out either of the parties to escape from their respective obligations, which will reduce litigations and ensure transfer of marketable title from the vendor to the purchaser free from encumbrances, liens, claims, etc. When a faulty title is passed on to the purchaser, it is bound to result in the spate of claims and litigations.

Purchasing the property involves various steps such as scrutiny of title deeds, verification of documents, examination of Agreement to sell, mode of payment as agreed between the Vendor and the Purchaser and transfer of ownership and title will be transferred in the name of the Purchaser by way of executing a Sale Deed. It is not advisable to purchase a property hastily by approaching the brokers and subsequently entangling yourselves into litigations in case of defective title. Ownership and right over the property has to be passed in compliance of the provisions envisaged under law for which service of the Advocates having sufficient experience and knowledge about property transactions is necessary in order to avoid litigations that may likely arise in future.             

THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002

Leading advocate in Bangalore, property lawyers, real estate lawyers in India, property lawyers

1.  What is the main purpose of introduction of this SARFAESI ACT, 2002.

There was an acute need being felt for assistance to the Banks and other financial Institutions in the recovery of loans, for there were heavy losses being incurred on account of unpaid debts, in exercise of the powers conferred by clause (1) of Article 123 of the Constitution of India, the President on 21^st August 2002, promulgated the SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST( second ) Ordinance 2002. This was introduced and passed by both the Houses of Parliament in the winter session of 2002 and it received the assent of the President on 17^th December,2002.

2.  What is the minimum amount of debt for the recovery of which this SARFAESI Act can be invoked.

Under Sec. 31 (h) of the Act, any security interest for securing repayment of any financial asset not exceeding one lakh rupees.

3.  Is it necessary for the Secured Creditor to be invariably get registered with RBI for taking steps for recovery of dues against the borrower under this SARFAE SI ACT.

Any Securitisation Company or reconstruction Company shall obtain prior approval of the RESERVE BANK OF INDIA under sub-section (6) of Section 3 of the SARFAE SI Act, 2002.

No Securitisation Company or reconstruction Company which has been granted a Certification of Registration under sub-section (4) of Section 3,  shall commence or carry on the business of securitization or asset reconstruction without

(a)  obtaining a Certificate of registration granted; and

(b)  having the owned fund of not less than two crore rupees or such other amount not exceeding fifteen per cent of total financial assets acquired or to be acquired by the securitization company or reconstruction company, as the RESERVE BANK OF INDIA, may, by notification, specify.

           Provided that the RESERVE BANK, by notification, specify different amount of owned fund for different class or classes of securitization companies or reconstruction companies.

4.  Is it necessary that the Secured Creditor should proceed against those properties which are mortgaged in its favour by the borrower for recovery of outstanding dues.

Yes. In case the borrower fails to discharge his liability in full within the period specified in sub-section (2) of Section 13 of the Act, the Secured Creditor may take recourse to one or more of the following measures to recover his secured debt, namely:

(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured assets;

(b) take over the management of the secured assets of the borrower including the right by way of lease, assignment or sale and realize the secured asset;

(c) appoint any person ( hereafter referred to as the MANAGER ), to manage the secured assets the possession of which has been taken over by the Secured Creditor.

(d) Require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured Creditor, so much of the money as is sufficient to pay the secured debt.

5.  Whether the Secured Creditor can proceed against the guarantor for realization of outstanding dues,  without first taking action against the borrower.

Yes, as per sub-section (11) of Section 13 of the Act, without prejudice to the rights conferred on the Secured Creditor under or by this section, the Secured Creditor shall be entitled to proceed against the guarantors or sell the pledged assets without first taking any of the measures specified in clauses (a) to (d) of sub-section (4) in relation to the secured assets under this Act.

6. Whether it can be deemed that the borrower has acknowledged the receipt of notice, in case the borrower did not respond to the notice even after completion of statutory period of 60 days.

Where any borrower, who is under a liability to a Secured Creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the Secured Creditor as Non-performing Asset, then, the Secured Creditor may require the borrower by notice in writing to discharge in full his liabilities to the Secured Creditor within sixty days from the date of notice, failing which the secured Creditor shall be entitled to exercise all or any of the rights under sub-section (4).

The notice referred to above shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the Secured Creditor in the event of non-payment of secured debts by the borrower.

The service of DEMAND NOTICE shall be made by delivering or transmitting at the place where the borrower or his agent, empowered to accept the notice or documents on behalf of the borrower, actually and voluntarily resides or carries on business or personally works for gain, by registered post with acknowledgement due, addressed to the borrower or his agent empowered to accept the service or by Speed Post or by Courier or by any other means of transmission of documents like fax message or electronic mail service.

Provided that where the Authorised Officer has reason to believe that the borrower or his agent is avoiding the service of the notice or that for any other reason, the service cannot be made as afore said, the service shall be effected by affixing a copy of the demand notice on the outer door or some other conspicuous part of the house or building in which the borrower or his agent ordinarily resides or carries on business or personally works for gain and  also by publishing the contents of the demand notice in two leading news papers, one in vernacular language, having sufficient circulation in that locality.

Where the borrower is a body corporate, the demand notice shall be served on the registered office or any of the branches of such body corporate.

Any other notice in writing to be served on the borrower or his agent by authorized Officer, shall be served in the same manner.

Where there are more than one borrower, the demand notice shall be served on each borrower.   

7.  Is it sufficient for the Secured Creditor/Bank to mention the outstanding dues payable by the borrower, as on a given date.

Yes, it will suffice to mention the outstanding dues payable by the borrower, which are legally recoverable as of a given date or on the date of demand  notice.

8.  In case the borrower fails to pay the outstanding dues payable and if the Secured Creditor / Bank proceed with sale of such properties held under mortgage, whether the Secured Creditor /Bank can include the expenses incurred, legal charges and the interest accrued from the date of notice to date of realization of outstanding dues.

Yes, the Secured Creditor /Bank is having every right to claim the interest due thereon together with such additional amount that may be sufficient to meet the contingencies  or further costs, expenses and interest as may be determined by him which are legally recoverable.

As per sub-section (7) of Section 13 of the Act, it is envisaged that where any action has been taken against a borrower under the provisions of the Act, all costs, charges and expenses which, in the opinion of the secured creditor, have been  properly incurred by him or any expenses incidental there to,shall be recoverable from the borrower.

9. What is the time to be given to the borrower for repayment of outstanding dues, before actual sale of such properties?

The Authorised Officer shall serve to the borrower a notice of thirty days for sale of the secured assets. If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the Secured Creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the Secured Creditor, and no further step shall be taken by him for transfer or sale of that secured asset.    

10. Whether the borrower himself can participate in the sale proceedings.

No, the borrower cannot participate in the sale proceedings.  However, If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the Secured Creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the Secured Creditor, and no further step shall be taken by him for transfer or sale of that secured asset.    

11.Whether the PURCHASER of property shall have right title over the property purchased by him in the sale proceedings, as in case of normal sale transaction.

As per sub-section Rule 7 (2) of The Security Interest (Enforcement) Rules,2002, on payment of sale price, the Authorised Officer shall issue a Certificate of sale in the prescribed form, specifying the movable secured assets sold, price paid and the name of the Purchaser and there after the sale shall become absolute. The Certificate of sale so issued shall be prima facie  evidence of title of the Purchaser.

In respect of immovable properties, on confirmation of sale by the Secured Creditor and if the terms of payment have been complied with* ,the authorized officer exercising the power of sale shall issue a Certificate of sale of the immovable property in favour of the Purchaser in the prescribed format.

Further, the Authorised Officer shall deliver the property to the Purchaser free from encumbrances known to the Secured Creditor on deposit of money as specified. The Certificate of sale issued by the Authorised Officer shall specifically mention that whether the Purchaser has purchased the immovable property free from any encumbrances known to the Secured Creditor or not.  

*On every sale of immovable property, the Purchaser shall immediately pay a deposit of twenty-five per cent, of the amount of the sale price, to the authorized Officer conducting the sale and in default of such deposit, the property shall forthwith be sold again. The balance amount of purchase price payable shall be paid by the Purchaser to the Authorised Officer on or before the fifteenth day of confirmation of the sale of the immovable property or such extended period as may be agreed upon in writing between the parties.       

13. In case the sale proceeds of the secured assets,are insufficient of amount payable by the borrower, what is the remedy available to the Secured Creditor /Bank for the recovery of balance amount payable by the borrower.

As per Rule 11 of The Security Interest (Enforcement) Rules,2002, an application for recovery of balance amount by any Secured Creditor pursuant to sub-section (10) of Section 13of the Ordinance shall be presented to the Debt Recovery Tribunal in the prescribed format, by the Authorised Officer or his agent or by a duly authorized legal practitioner, to the Registrar of the Bench within the jurisdiction his case falls or shall be sent by Registered Post addressed to the Registrar of Debts Recovery Tribunal. Such an application shall be accompanied with fee as specified under DRT Rules,1993.   

14. What is the remedy available for the borrower to stall the sale proceedings initiated by the Secured Creditor under  SARFAE SI Act.

In terms of Section 17 of the Act, any person ( including Borrower ),aggrieved by any of the measures taken by the Secured Creditor or his Authorised Officer, may prefer an appeal to the Debts Recovery Tribunal  having jurisdiction in the matter within forty-five days from the date on which such measures had been taken. Where an appeal is preferred by a borrower, such appeal shall not be entertained by the Debts Recovery Tribunal unless the borrower has deposited with the Debts Recovery Tribunal seventy – five ( now amended and reduced to fifty ) percent of the amount claimed in the notice referred to. Provided that the Debts Recovery Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited.

 

15. Is it mandatory that the borrower should deposit an amount equivalent to 50% of the amount claimed by the Secured Creditor /Bank in the notice referred to.  

In terms of sub-section (2) of Section 17 of the Act, the Debts Recovery Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited.

However, any person aggrieved, by an Order made by the Debts Recovery Tribunal, may prefer an appeal to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal.

16. In case the DEBT RECOVERY TRIBUNAL to whom the borrower approaches for redressal of his grievance, waive the amount to be deposited by the borrower and allows its appeal, whether the Secured Creditor /Bank can prefer an appeal against such decision of the DRT, since the very purpose of initiating action for recovery of outstanding dues from borrower,under SARFAE SI Act itself failed.  

Yes, as per Section 18 of the Act, any person aggrieved, by an Order made by the Debts Recovery Tribunal, may prefer an appeal to an Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery Tribunal.

17. Whether the agricultural land properties held as security by way of mortgage can also be put for sale, for recovery of outstanding dues payable by the borrower.

No. Provisions of this Act shall not apply to any security interest created in agricultural land.

18. What is the procedure to be adopted by the Secured Creditor in taking possession of movable properties of the borrower.

If the amount mentioned in the demand notice is not paid within the time specified there in, the Authorised Officer shall proceed to realise the amount, for taking possession of movable property –

Where the possession of the secured assets to be taken by the Secured Creditor are movable property in possession of the borrower, the Authorised Officer shall take possession of such movable property in the presence of two witnesses after a Panchanama drawn and signed by the witnesses.

After taking possession, the Authorised Officer shall make or cause to be made an inventory of the property and deliver or cause to be delivered, a copy of such inventory to the borrower or to any person entitled to receive on behalf of the borrower.

The Authorised Officer shall keep the property taken possession either in his own custody or in the custody of any person authorized or appointed by him, who shall take as much care of the property in his custody as an owner of ordinary prudence would, under the similar circumstances, take of such property.   

Provided that if such property is subject to speedy or natural decay, or the expense of keeping such property in custody is likely to exceed its value, the Authorised Officer may sell it at once.

The Authorised Officer shall take steps for preservation and protection of secured assets and insure them, if necessary, till they are sold or otherwise disposed of.

In the case of other movable property, calling up on the borrowers and the person in possession to hand over the same to the Authorised Officer and the Authorised Officer shall take custody of such movable property in the same manner as furnished supra.

Movable secured assets other than those covered above, shall be taken possession of by the Authorised Officer by taking possession of the documents evidencing title to such secured assets.

  

19. What is the procedure to be adopted by the Secured Creditor in taking possession of immovable properties of the borrower.

As per Section 8 of the Act, where the secured asset is an immovable property, the Authorised Officer shall take or cause to be taken possession, by delivering a possession notice prepared as per Rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property.

The possession notice as referred above shall also be published in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the Authorised Officer.

In the event of possession of immovable property is actually taken by the Authorised Officer, such property shall be kept in his own custody or in the custody of any person authorized or appointed by him, who shall take as much care of the property in his custody as a owner of ordinary prudence would, under the similar circumstances, take of such property.   

The Authorised Officer shall take steps for preservation and protection of secured assets and insure them, if necessary, till they are sold or otherwise disposed of

20. What is the time limit for initiation of sale proceedings of movable properties / immovable properties by the Secured Creditor for realization of outstanding dues payable by the borrower.

As per sub-section (2) of Section 6 of the Act, the Authorised Officer shall serve to the borrower a notice of thirty days for sale of the movable for realization of outstanding dues. Further, no sale of immovable property under the Rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in news papers as referred or notice of sale  has been served to the borrower.  

21. Whether the Secured Creditor should obtain any valuation report from an approved valuer for fixing the price of the property.

Yes. As per Section 5 of the Act, after taking possession of movable assets, however in any case before sale, the Authorised Officer shall obtain the estimated value of the movable secured assets and thereafter, if considered necessary, fix in consultation with the Secured Creditor, the reserve price of the assets to be sold in realization of the dues of the Secured Creditor. 

Similarly, as per Section 8 of the Act, before effecting sale of the immovable property , the Authorised Officer shall obtain Valuation of the property from an approved valuer and in consultation with the Secured Creditor, fix the reserve price of the property and may sell the whole or any part of such immovable property secured asset for realization of the dues of the Secured Creditor 

22. What is the amount to be paid by the PURCHASER onthe day of successful bidding or confirmation of sale.

As per sub-section (3) of Section 9 of the Act, on every sale of immovable property, the purchaser shall immediately pay a deposit of twenty-five per cent, of the amount of the sale price, to the Authorised Officer conducting the sale and in default of such deposit, the property shall forthwith be sold again.

23. Within what period the PURCHASER has to pay the balance amount.

As per sub-section (4) of Section 9 of the Act, the balance amount of purchase price shall be paid by the Purchaser to the Authorised Officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed up on in writing between the parties. 

24. Whether the Secured Creditor / Bank can forfeitthe deposit and proceed with resale of the property, in case the PURCHASERcommits default in payment within the stipulated period.

Yes, as per Section 7 of the Act, where movable secured asset is sold, the sale price of each lot shall be paid as per the terms of the public notice or on the terms as may be settled between the parties, as the case may be and in the event of default of payment, the movable secured assets shall be liable to be ordered for sale again.

In respect of immovable secured assets, as per Sub-section (5) of Section 9 of the Act, in default of payment within the period mentioned, the deposit shall be forfeited and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold.