Yes, you can attach the
Guarantor’s property as long as Bank has the first charge on that property and
such properties can be attached irrespective of belonging to the Borrower or
Guarantor. What is required is property must be charged to the Bank and while
issuing notice of 60 days, you must ensure that Borrower as well as Guarantors
are served with Sec.13 Notice, without exception.
If after receipt of the
Securitisation Notice, during the period of 60 days or thereafter, if the
Borrower or Guarantor sells or assigns, such dealer assignment is an illegality
and therefore the Purchaser or the Act, if any person contravenes or abets the
contravention, the provision of the Act or any rule made thereunder, he shall
be punishable with imprisonment, which may extend for a period of one year or
with fine, or with both.
Therefore, if anybody
transfers or sells the charged properties after receipt of the Securitisation
notice, the person who is the Purchaser, the Borrower and the Guarantor (in
which the Bank has a secured interest), and if disposed, they may be prosecuted
under Sec.29 before Judicial Magistrate 1st Class Court. Sec 29
provides that not only the contravention of the provisions of the Act but also
rules made therein. Therefore, it is difficult for the Offender to escape from
the Clutches of Law, if any (monkey business)
is done by him by disposing of the secured assets charged to most of his
mischief, the Bank after getting the Notice u/s 13 (2) of the Act.
Moreover, in case of
immovable properties, those are charged to the Bank are normally charged by
creation of a Equitable or Registered Mortgage and almost all the Original
Title Deeds are with Bank, as such, no. Original title deeds are left with
Mortgagor. Hence, he cannot sell or dispose of the immovable properties, if
done the Purchasers right to the property will be subject to Banks first claim
being satisfied. However, assignment as invalid cannot be denied to the Bank
and even criminal case can be filed by the Bank against all concerned in such
cases.
If at the time of creation of Equitable Mortgage, whetherdrawing of MEMORANDUM OF ENTRY is required?
Yes, if the State in which
such Equitable Mortgage is made, there is a State Stamp Act, which prescribes
Stamp Duty to be paid on such Equitable Mortgage created in the State, you must
draw Memorandum of Entry which is required under State Law, the Stamp Officer
of the State can enter the Bank and take physical possession of all those
mortgaged documents, thereby the Bank will bereft of the security.
Not only the Bank should
draw the Memorandum of Entry and affix stamp as required by State Law, but also
the Memorandum of Entry must be entered in a Register maintained by the Bank
for that purpose. Avoiding paying Stamp Duty on Memorandum of Entry is akin to
sitting on a volcanic point.
Yes. This can be done but
it will be a moral wrong on the part of the Bank as the intention is very clear
to evade the legally payable State revenue, as if avoided to help the Borrower.
However, when the Equitable Mortgage is created in a State, where there is no
prescription of Stamp Duty payable on Memorandum Of Entry (MOE), it will be a
perfect mortgage even it will be a perfect mortgage even if the property is
situated outside that State. But, besides the aforesaid moral wrong, the Bank
if it wants to invoke Securitisation Act or any other legal proceedings and
rely upon the mortgage created outside the State, it is necessary that, within
30 days of these original documents being brought in the State in which here is
the prescription of Stamp Duty payable on such mortgage, the Stamp Duty must be
paid, and then only the mortgage can be recognised in a Court of Law or
Tribunal, or for the purpose of taking action under Securitisation Act, in the
State, where there is a requirement of paying Stamp Duty on MOE.
Therefore the Evidentiary
value of the mortgage will be Nil, unless prescribed Stamp Duty is paid.
Getting the MOE stamped at the time of going to Court is not a good practice as
it may expose that the Bank is not stamping the MOE when executed, which is
against Law and attract serious reactions from the Government.
Even when such mortgage documents are presented in the Court, the Court can impound the documents and
send it to the State Authorities for non-stamping of those documents, which
require such stamping under that State Law.
Under any circumstances,
if there is no MOE made by the Bank, a fresh MOE must be made and given for
stamping and stamps as well as penalties must be paid and the documents can be
presented in judicial proceedings as Evidence. In certain cases, Banks do take
a Power of Attorney to create such Equitable Mortgage in favour by the Bank
Officer himself.
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