Can a civil court stop or stay a SARFAESI auction?
Ordinarily, a civil court cannot entertain a suit or grant an injunction in matters that fall within the jurisdiction of the Debts Recovery Tribunal under the SARFAESI Act, 2002. A borrower or affected person in Hyderabad or Telangana may need to approach the DRT under Section 17 of the SARFAESI Act.
The correct remedy depends on the notice received, the stage of the recovery action, the relief requested and the facts of the case. Obtain legal advice immediately if an auction, possession or sale is proposed.
What should I do after receiving a SARFAESI notice from my bank?
Do not ignore the notice. Check:
- The type of notice received.
- The date on which it was issued and served.
- The amount claimed by the bank.
- The secured property mentioned.
- Whether possession or auction proceedings have begun.
- Whether any payment, restructuring or settlement proposal has been made.
Depending on the facts, possible steps may include submitting objections, examining the bank’s calculation, negotiating with the lender, approaching the DRT or seeking appropriate interim relief.
Can a bank auction my property without giving notice?
A secured creditor is generally required to follow the applicable statutory procedure and provide the notices required by law. Whether the bank complied with that procedure depends on the documents, dates and recovery stage.
Obtain and preserve the demand notice, possession notice, auction notice, sale notice, newspaper publications and proof of service. A procedural defect may require timely legal action.
Can I challenge a bank auction in Hyderabad?
A bank auction may be challengeable in an appropriate proceeding if there is a legally sustainable ground, such as procedural non-compliance, an incorrect outstanding amount, lack of proper notice or another defect recognised by law.
The appropriate forum and limitation period must be examined before filing a case. A person who receives an auction notice should not wait until after the sale without obtaining advice.
Can I file insolvency proceedings before the NCLT for an unpaid invoice?
Not merely because an invoice remains unpaid. Proceedings under the Insolvency and Bankruptcy Code, 2016 require compliance with statutory conditions, including the applicable default threshold and procedural requirements.
For an operational creditor, a genuine pre-existing dispute about the debt or liability may prevent commencement of the insolvency process. The IBC should not be used as an ordinary debt-recovery mechanism.
Can an operational creditor file a Section 9 IBC application when the company disputes the invoice?
Generally, a Section 9 application may be rejected if a genuine dispute existed before the statutory demand notice was received. The NCLT may examine contracts, purchase orders, invoices, correspondence, prior notices, payment records and other documents to determine whether the dispute is genuine.
A dispute created only after receipt of the demand notice may be treated differently, but the result depends on the evidence and facts.