Introduction
A possession notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 indicates that the bank has already taken action under Section 13(4). At this stage, the recovery process has moved forward, and auction of the property may follow.
Even then, the borrower is not left without remedies. The law still provides options to stop or delay the auction if timely steps are taken.
Can Auction Be Stopped After Possession Notice
Yes, a borrower can stop the bank auction even after a possession notice is issued.
However, the options become limited and require quick action. The closer the process gets to the auction date, the more urgent the situation becomes.
Right to Repay Before Sale
The borrower has the right to repay the entire outstanding amount before the sale is completed.
If full payment is made before the auction is finalized, the bank must stop the sale and return the property. This is one of the strongest legal protections available.
Filing Application Before Debt Recovery Tribunal
A borrower can challenge the bank’s action by filing an application before the Debt Recovery Tribunal under Section 17 of the Act.
The tribunal has the authority to examine whether the bank followed the correct procedure. If any violation is found, it can stay or cancel the auction process.
Seeking Stay on Auction Proceedings
Along with filing the application, the borrower can request an interim stay on the auction.
If the tribunal is satisfied that there is a valid legal issue, it may temporarily stop the auction until the case is decided.
Challenge Procedural Violations
The bank must follow strict rules while conducting the auction.
If there is improper valuation, lack of proper notice, or any procedural lapse, the borrower can challenge the auction on these grounds. Such violations can lead to cancellation of the auction.
Possibility of Settlement with Bank
Even after the possession notice, negotiation with the bank is still possible.
Borrowers can request a one-time settlement or seek additional time to repay dues. Banks may agree to settlement if it ensures recovery without delay.
Limited Role of Courts
In exceptional situations, a borrower may approach the High Court.
However, courts usually advise borrowers to first approach the tribunal unless there is a clear violation of legal rights or procedure.
Importance of Immediate Action
Time plays a crucial role at this stage.
Delays can result in the auction being completed and the property being transferred to a third party. Once this happens, reversing the transaction becomes difficult.
Conclusion
A borrower can stop a bank auction even after a possession notice under SARFAESI, but only by acting quickly.
Repayment of dues, approaching the tribunal, and challenging procedural errors are key remedies. Timely action is essential to protect your property and legal rights.
