The Debts Recovery Appellate Tribunal, Allahabad (“DRAT”), in the case of Bank of Baroda v. Umang Gyanchandani, [Appeal Dy. No. 247/2019, decided on March 4, 2021], adjudicated upon the following issues:

1. Whether a bank is under an obligation to get a mortgage registered with CERSAI to proceed under the SARFAESI Act?
2. Whether there is a requirement of giving prior notice before taking symbolic possession? 

Decision:  

1. The DRAT with respect to issue (a), held that, there is no impediment under the SARFAESI Act that a bank cannot proceed under the SARFAESI Act without registration with CERSAI. Further, the DRAT also stated that registration is made in order to protect the rights of a bank as a proof of mortgage and thus, in no way, it causes any prejudice to the borrower-mortgagor, even if the mortgage is not registered in time.
2. The DRAT with respect to issue (b), while placing reliance on the decision of Allahabad High Court in the case of Messrs. Mahesh Industries Private Limited v. The Karur Vysya Bank, [Writ Petition No. 9731 of 2019, decided on August 8, 2019], held that, there is no specific provision in the SARFAESI Act that a prior notice is required to be served before taking symbolic possession and also enumerated that, a possession notice may be delivered to the party at the time of symbolic possession and if it could not be delivered, then the option with the bank is to send it by post. 

Please find attached a copy of the order.

This update has been contributed by Arka Majumdar (Partner) and Kunal Dey (Associate).