Under the Securitisation Act, it is the Chief Manager of a public sector bank and his counterparts in private sector banks who are authorised to take a decision on the need for seizing the mortgage asset and issue notice accordingly.
The Andhra Pradesh High Court, in Sampoorna Battu v. ICICI Bank, found that the advocate of the respondent bank had issued the impugned notice to the petitioner on her default in servicing a home-loan she had taken from the bank.
Later amends, no use
The Court, taking a strict view of the drill prescribed in the relevant law, pointed out that the subsequent countersigning of the notice on the borrower by the appropriate official of the bank did not exorcise the notice of its deficiency, and it stood vitiated despite the subsequent amends.
The Court, however, made it clear that it was for the bank to decide whether it would like to issue a fresh notice in accordance with the law.
By allowing the writ petition, what the Court did was to quash the seizure proceedings vitiated by lack of authority and thereby only gave a temporary and technical relief.
But the larger message for the banks and financial institutions is not to delegate such profound decisions to their advocates.
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