Selling mortgaged land: Bank questions court's intervention

TNN | Aug 15, 2012, 05.12AM IST

KOCHI: Housing Development Finance Corporation Ltd (HDFC) on Tuesday approached the high court challenging interference of courts in the rights granted to banks under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 (SARFAESI Act).

SARFAESI Act enables banks to take over mortgage land pledged by debtors without having to approach the court. According to HDFC, they are entitled to take possession and sell mortgaged properties to realize debts from borrowers.

In the petition filed through advocate C P Saji, HDFC is challenging an order by the chief judicial magistrate court of Kottayam asking loan defaulters to appear for hearing. The notices under challenge were issued by the magistrate court when HDFC approached the court for assistance in taking over possession of the assets as stipulated in SARFAESI Act.

According to HDFC, the magistrate is only invoking his ministerial power when they approached for assistance and issuing notice is against the Act and various judgments of the Supreme Courtand the high court as there is no trial or adjudication specified in SARFAESI Act.

Serving of notice by the magistrate court serves no purpose as there is no adjudicatory process involved. Further, such an act would cause delay in taking over possession of land of the defaulters, HDFC contends.