I ,as a banker sanctioned a housing loan to a customer for a flat which was ready to registry . After issuing Demand Draft towards the registry of the property I came to know that the said property is already offered to our another branch as collateral . Soon after knowing the fact we have hold the DD and informed the borrower and builder. The borrower after discussion with the builder orally agreed to pay the EMI and builder assured that the property would be soon free from collateral .Even after 3 months the property is still not got free because of different reasons. Now the borrower is blaming the bank only. Since even after 3 months the proceeding of registry has not been completed and neither the builder nor the borrower has informed about the fate of the DD we have closed the DD and credited to the loan account .Once again the borrower has started threatening the bank to recover EMIs. Can he start criminal proceeding against the bank ? What are the legal remedy the bank have ?
2 Answers from Attorneys
Dear Sir / Madam,
The builder has concealed actual facts that the property has been offered as collateral security in which case the builder has no right to sell the property till the collateral on the property is cleared. The bank on its part has given sufficient time to the builder to clear the collateral. Since he has failed, the bank is right in cancelling all payments on behalf of the buyer to the builder. The buyer will have to lodge a case on the builder. The bank on its part will have to persuade the builder to clear the collateral and register the property, else refund monies paid to the buyer.
There appears to be a serious lapse on the part of the bank to sanction housing loan in this case. As per RBI guidelines, the banks are expected to do a title search of the property before sanctioning any loan. There are legal consultants/advocates on the panel of the banks to perform this job. Either this was not done or there was negligence in this regard. Moreover, there does not seem to be any coordination between different branches of the same bank. This is totally unacceptable.
However, now in order to protect its interest, bank may negotiate a settlement with the builder/buyer to amicably resolve the matter. In case, the building has submitted false documents or misrepresented the facts to the bank, criminal proceedings can be instituted against the builder. Since this is a secured loan (the property having been already offered as a collateral at another branch), the bank can take over the physical possession of the property and dispose it off to recover its dues.
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MUKESH RALHAN, ADVOCATE
RALHANS - IMMIGRATION & OVERSEAS AFFAIRS LAW GROUP
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