Bengaluru: The national stock exchange of India’s member and investment consultant, Kumar V. Jagirdar said on Monday that the financial institutions have been using the SARFESI Act to the best of their advantage while putting the borrowers at high risk.
Addressing a press conference here, Mr Jahgirdar said that every citizen in the country wants a decent living where they can have three meals a day, a house, a vehicle, medical care and a good education. “To further this desire for comforts can lead to desires for luxuries and that's when we start stretching our budget by taking loans from government and the financial institutions which grab the major chunk of our hard earned money,” he explained.
He added that the judiciary tries to execute the laws for the financial institutions forgetting that sometimes giving prominence to economics leads to injustice on socio psycho status of the society where the rich grows richer and the poor degrades to become poorest.
According to the recent Supreme court stand on non-interference of the High Court in matters related to SARFESI Act has led to abuse of power in the hands of Tribunals which remains a mere puppet in the hands of financial institutions which in turn arm twist the public in the name of “public funds” and usage of word "wilful defaulter".
Mr Jagirdar further explained that the financial institutions have been using the SARFESI Act to the best of all advantage. The Nexus operates in these ways:
When there is a default by a borrower/consumer/ part of the public by non-payment of their Three EMI 's and they are considered as NPA. Thus, the borrower is put into psychological fear that he is no more fit financially and he is forced to pay the entire loan dues along with Interest which includes penal interest, overdue interest, SARFASI Charges, Private agency recovery charges, paper publication charges, legal charges, court fees and other charges which do not reflect in the statement of accounts.
Debt recovery tribunals do not question the bonafide integrity of the financial institutions however they deeply look into the bonafide integrity of the Borrower by asking them' deposit 25 % of the total dues given as per the whims and fancy of the Banks. Now who checks these is there an authority to help the common man?
The Government has established the Debt Recovery Tribunals to safegaurd the vicious interest of the bank forgetting that the borrower is also part of the public.
The SAEFESI Act provides the issuance of the Demand notice under section 13 (2) and 13(4) to the borrowers as well as the occupants of the mortgaged property but the bank issues notices only to the borrowers and not to the tenants. And based on these notices the bank approaches the magistrate courts to take physical possession of the property by suppressing the true facts that there are tenants or any other third party claim. The courts without any adjudicative procedures without issuing notices to the borrowers or tenants straight away passes orders blindly and mostly one sided. These orders are in general passed in support of the banks claim without questioning basic material facts such as whether the bank has come with clean hands?
He said that the bank enforces this order by engaging private goondas agencies, court shristadars, and police who literally dump the occupants and the borrower into streets without even giving even the basic requirements of human life.
It looks so derogatory and inhuman when you see the borrowers running from pillar to post to get back their own basic necessities. Further Some of the Bank advocates purposely evade taking notices and appearance before the court instead even if they appear they will state that account is NPA, and it is a public money and the borrower is a wilful defaulter.
After taking physical possession from the borrowers the borrowers are left at the mercy of the Debt tribunals which is established for exclusive recovery dues for the banks without including the principal of natural justice while passing orders the illegality of infringement of justice to a borrower goes unseen even by the civil courts or high courts by observing to approach DRT courts hence the borrower has no other remedy other than approaching the DRT by paying huge court fees and depositing the 25% of the conditioned order. (Example: If the borrower has availed a loan of Rs 1 crore during 2015 and bank taken action during 2022 during this period the borrower has paid 75 lakhs but the bank claims Rs 2 crores as due and out of Rs 2 crores 25% is Rs 75 lakhs)
Some of the bank advocates runs recovery agencies by investing money, the banks wilfully keep the base price which will not even be 50% of the market price and the bank official or the advocates will purchase the property through illegal means or will sell to their known sources or proxy at a cheaper price thus depriving the very right of the borrower which is a ghastly act committed towards the society.
Whether the SARFESI ACT over rides the constitution is a big question mark and who will bell the cat is need of the hour
Animal Welfare and old age people, tenants and women, children have to be given priority while passing orders and rehabilitation of a common man / borrower has to be given priority.
All loans which include residence such as home loans and mortgage loans on residence below Rs. 2 Crores shall be looked from the eyes of law from a different perspective further recommendations shall be discussed in detail in the coming press meet.
Along with Mr Jagirdar, Dr Priya Dharshini, Arun Prasad Adv Rajendra were also present during the press meet.
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