Bank auctions encumbered property

| Updated on November 14, 2017 Published on March 10, 2011


A lady won the public auction conducted by a bank under the SARFAESI Act for sale of a plot of land mortgaged to the bank. The bank issued her a “Sale Certificate” on March 20, 2009.

When she approached the Sub-Registrar to register the property in her name, she found that the property was already sold by the earlier owner (bank's borrower) to some other person in September 2006 itself and was, as such, encumbered.

The bank neither helped her to register the property in her name nor refunded the amount deposited.

As the bank had failed to handover the property without encumbrance, it was directed to refund Rs 12 lakh paid by the complainant along with the applicable fixed deposit rate of interest.

Application of wrong interest rate: The complainant had taken various agricultural loans from AB bank which became overdue. These were covered under the Central Government Debt Relief Scheme 2008.

The borrowers had paid 75 per cent of amount against OTS (one-time settlement) amount to get the benefit of 25 per cent relief. The complainant's grievance was that interest applied on the above loans was incorrect as the bank had not adhered to RBI instructions on Agricultural Debt Waiver and Debt Relief Scheme.

The bank replied that the interest has been applied correctly as per the instructions issued by its Central Office. Since the reply was not found satisfactory, the ombudsman issued instructions to the bank to certify that the RBI guidelines on Agricultural Debt Waiver Scheme have been adhered to.

At this stage, the bank found a discrepancy in the interest applied and refunded Rs 72,440 to the complainant.

(Source: Annual report of the Banking Ombudsman Scheme.)

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Published on March 10, 2011
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