source : http://mrunal.org To read the full article click here
What is NPA?
- Bank gives loan to a person.
- Person fails to make regular payments.
- Bank gives him notice to correct his behavior. But he doesn’t.
- Bank declares that loan as Non-Performing Asset (NPA) (=Bad Loan)
- Currently Indian banks have NPAs worth more than Rs. 1 lakh crores.
- Prior to 1990s, banks had very hard time recovering bad loans.
- Because often, borrowers (loan takers) would file frivolous cases in civil courts, then ….. proceeding would go on for years.
- So 1993, Government established Debt Recovery Tribunals to deal with NPA matters.
- Now borrower cannot approach civil court, they’ve to go to special Debt Recovery Tribunal (DRT).
- This led to some relief, but then DRTs clogged down by truckload of cases. (Even now, more than 60,000 cases pending with DRTs)
- In 2002, Government came up with new Act, named “SARFAESI Act”.
- and Reconstruction
- of Financial Assets
- and Enforcement of Security Interest Act, 2002,
Suppose, Mr.Paraajay has opened factory with Rs.100 crores. He financed this, via mixture of Debt + equity in following way.
|Holder||Rupees in Cr.|
|Equity (IPO->Shares)||Paraajay and his family||20|
|Debt (loans, Bonds)||Business loan from SBI||40|
- Initially the company runs well and good.
- But then Mr.Paraajay doesn’t revise his MBA books often, so he forgets the business concepts. His company starts making losses.
- He fails to pay loan EMIs for many months.
- SBI gives him notice to correct his behavior.
- Still, he doesn’t start paying money.
- SBI declares this Rs.40 crores loan NPA (Non-Performing Asset).
- Once a loan is declared as non-performing asset, SBI can take actions under SARFAESI act, to recover the loan money.
Bank have following powers under SARFAESI Act
- Take possession of Mr.Paraajay’s assets without requiring court order. (Commericial or residential, fixed or moving assets.)
- Auction / Sale them
- Change the administration/ Management of those assets.
- If Mr. Paraajay had sold away the mortgaged asset to third party Mr. X, bank can order Mr.X to surrender that Asset.
- If Mr.X owes money to Mr.Paraajay, he can be ordered to pay money.
- *ARCs explained after a few paragraphs.
- SARFAESI applies only to loans above Rs.10 lakhs.
- By the way SARFAESI applies only to those assets “mortgaged/secured” to get the loan.
- E.g. if Mr.Paraajay had taken business-loan, SBI would have asked him to sign away his factory/machinary/vehicles/land etc. specific items as mortgage.
- Hence SBI can attach only ^those assets.
- But SBI cannot take away Paraajay’s personal home-furniture, expensive wrist-watch or his son’s bicycle in the name of SARFAESI.
- Similarly, Agricultural land is exempted from SARFAESI attachment.
The borrower (loan taker) has following options:
- Get a stay order from Debt Recoverty tribunal (DRT) against the auction/sale of his properties. (He cannot file case in Civil courts.)
- Fight the case in DRT.
- If unhappy with DRT verdict, he can appeal to Debt Recovery Appellate Tribunal (DRAT).
- But before filing appeal with DRAT, he’ll have to deposit 50% of his pending loan money.
- First SBI contacts the experts, gets valuation of Mr. Paraajay’s assets.
- Expert says “those assets are worth Rs.50 crores according to present market value of land/ building/ machinary whatever.”
- Then SBI will give advertisement in newspapers “we are auctioning xyz land/machinary/building. Minimum bidding amount is Rs.50 crores. Whoever wishes to bid, send us application along with Rs.50,000 as deposit, and their class 10, 12 mark-sheets and school leaving certificates, duly attested by a Gazetted officer.”
- Problem: sometimes, bidders do not take interest in buying such properties, factories etc.
- To fix this problem, Amendment bill of 2011, makes a new provision: if no one else comes to bid in the auction, Bank itself can buy that property.
Here comes the new problem:
- Suppose SBI attached a warehouse of Mr.Paraajay.
- If the land was in good urban area, SBI could open a new branch office there (or housing for its employees).
- But if plot/factory/house is in some remote area= useless for SBI’s personal business.
- Under the Banking regulation Act, a bank cannot keep such immovable property beyond 7 years, (max 12 years with RBI’s permission).
- So ultimately SBI will have to auction it to someone. What if they don’t get better price? Critiques of the bill say, this is not clarified in the bill.
- Asset reconstruction company (ARC).
- They buy NPA (Bad loans) from Banks and try to extract maximum money out of it=profit.
- They’ve to register with Reserve Bank of India.
- ARCIL (India’s first and largest asset reconstruction company (ARC))
- Reliance Asset Reconstruction Company Limited by Anil Ambani
- In our example, SBI has NPA worth Rs.40 crores.
- ARC will buy the NPA file from SBI at a lower rate say 35 crores. (well, SBI is making loss, yes, but something is better than nothing.)
- Besides, banks have hundreads of bad loan cases, they donot have time or manpower to pursue individual case, sometimes no bidders are interested in auction. All the filework and donkey labour, In such cases, it’s better for bank to transfer NPA to ARC.
- But that doesn’t mean ARC will give 35 crores to the SBI from its own pocket!
- Then how will the Asset reconstruction company (ARC) arrange for the money?= via Security Reciepts.
- In above example, ARC needs Rs.35 crores to buy a Non performing asset from SBI.
- So ARC will issue “security reciepts (SR)” worth Rs.35 crores.
- Only Qualified Institutional buyers (QIB) can buy these security reciepts (SR).
- SR are not “bonds”, they donot carry fixed interest rate.
- ARC will promise to pay money on SR, when it gets money the bad loan.
- Although, ARC usually promise 9% profit on “security reciepts (SR)”.
- So, three possible situations:
- Qualified institutional buyers (QIB) buy those security reciepts (SR). So Rs.35 cr cash goes from QIB -> ARC -> SBI.
- SBI itself recieves SR worth Rs.35 crores for free. (that means ARC will gradually pay the money to SBI).
- combination of both: QIBs buy SR worth 30 crores + SBI recieves free SR worth 5 crores.
These people have the expertise and the financial muscle to evaluate and invest in the capital markets.
- Scheduled Commericial Banks
- Foreign Institutional Investor
- Mutual Funds
- Venture Capital Investors
- Insurance Companies
- Pension/ Providend Funds
- ARC =buy bad loans from banks.
- ARC =arrange money from QIBs to buy bad loans from banks.
- Problem= Indian QIBs do not invest much in ARCs.
- Therefore ARC’s capacity to buy NPA= very low.
- And bank themselves don’t have enough expertize or manpower to dispose those NPAs quickly.
- Previously Foreign investors could invest only upto 49% in ARC=minority shareholder=cannot influence company decisions.
- Now, Government also increased foreign investment limit in ARCs. This would attract more investment in ARCs and help in quicker purchase and disposal of NPAs.
|Foreign investment in ARC||%|
Anyways, back to the topic, let’s recap:
- SBI had NPA. First solution: auction the property. Did not work out.
- Second solution: sell it to ARC.
So, ARC purchased the NPA worth Rs.40 crores (at Rs. 35 crores).
ARC’s aim= extract maximum money out of this investment. But how?
- Auction the assets fully or partially. (sell the machinery now, rent the building and wait for land prices to go up for two years and then sell it.)
- Sell the property in combination with other NPA properties of other defaulters. (similar to “buy one large pizza and get 20% discount on any medium sized pizzas”).
- Restructure the EMIs of Mr.Paraajay. E.g. instead of 1 lakh per month, give us 75,000 per month.
- Change the Management of that asset, appoint its own directors/officers.
- Order Mr.Paraajay to outsource or lease his business to a another company.
^SARFAESI act empowers ARC to do such things. The amendment Bill adds a new power to the ARC.
Before reading further, Make sure you know the pros and cons of Debt Vs. Equity
The new Amendment in SARFAESI, empowers ARC to convert debt into equity.(fully or partially).
Share holding Before:
|Paraajay and his family||20||40%|
|Total shares worth||50||100%|
Share holding After
|Shares||Rupees Cr.||Approx. %|
|Paraajay and his family||20||22%|
|Total shares worth||90||100%|
*that is the paper value of original debt (NPA loan of SBI to Mr.Parajaay), Otherwise ARC purchased it @Rs.35 crores.
Anyways, This leads to two situations:
- If company starts making more profit in future, ARC will receive more share from that profit. (because more profit=more dividend to shareholders.)
- If price of company’s shares go up in the sharemarket, ARC can sell those shares to third party and make decent profit.
Critiques says this “debt to equity”provision will be abused. This provision is made to help bad corporates. How so? Well consider following:
- SBI gave Rs.40 crores loan to Mr.Parajaay
- He refuses to pay loan=bad loan/NPA.
- Then SBI sells this bad loan file to an ARC company @Rs.35 crores.
- Hence, SBI’s loss is 40-35=5 crores. (actually more than 5 crores, if we count the possible interest rate that he would have paid, if he had not defaulted. And loss figure will be different if he had paid a few installments earlier. Anyways, let’s keep the loss at 5 crore for the moment.)
- Now ARC owns the NPA assets. (their investment Rs 35 crores)
- Paraajay offers Rs.37 crores and ask ARC to sell the assets to his relative, friend or proxy.
- Hence, ARC’s profit is 37-35=Rs.2 crores.
- And yet Mr.Parajaay successfully saved Rs.3 crores (because originally he had to pay Rs.40 crores to SBI, but he walked away by paying just Rs.37 crores!)
- Few years back, CVC had held a meeting with Bank chairmans and CBI officers. They alleged ^this type of mischief going on, in many loan default cases.
Now under the new provision: if ARC converts its debt into equity (shares), then what will happen?
- It is very unlikely that Parajaay’s company will start making huge profits (otherwise it wouldn’t be in bad loan problem in the first place!)
- It is very unlikely that share-price of Parajaay’s company will go up in sharemarket. (because it has negative publicity due to NPA).
Hence it is very unlikely that ARC will make huge profit out of this “Equity”.
Then Mr.Parajaay can simply offer them a way out : “sell those shares to me, in my friend,relative,driver or peon’s name @Rs.37 crores.”
And ARC would agree, because 37-35=Rs.2 crores profit!
How would Mr.Parajaay arrange those Rs.37 crores?
Ans. If Mr.Parajaay is “totally awesome” then he wouldn’t give 37 crores from his own pocket. He’d just open another company, get new loan from second bank, issue IPOs to get money from juntaa. Then Iski topi uske sar pe.
^This is (one of the many) reasons why Mr.Ratan Tata said following thing:
- Overseas people go bankrupt or companies go bankrupt. Here they never do–they continue to be sick and still operate. Then they are operating to kill you with destructive competition (using predatory pricing etc.)
- (Airline business) is proliferated by many operators, some of them in financial trouble.
- I would hesitate to go into the (airline) sector today in the sense that the chances are that you would have a great deal of competition which would be unhealthy competition.
Bank Employee unions are also against the “Debt to Equity” clause of SARFAESI amendment. (When they had gone on strike to oppose Banking Amendment bill, they also cited this Debt-equity reason as well.)
- Previously, borrowers used to forged property documents and get loans from multiple banks by giving them duplicate property documents as security.
- So when borrower refuses to pay up loan, many banks would make claim for the same property!
- To fix this problem, Reserve Bank of India (RBI) setup Central Registry in 2011, under SARFAESI.
- This central registry has details of all properties against which loans have been taken.
- Any person or bank can inspect records of this registry to make sure the mortgaged property is genuine.
- Official name: Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI)
- In public interest, Union Government can issue notification that xyz provision of SARFAESI act may not apply or may apply with modifications to a class or classes of banks or financial institutions. Suppose many textile exporters have taken loans from banks but due to global recession they are not receiving payments and hence unable to repay loans. In that case, Government can order notification that“SARFAESI will apply to all loans except those given for textile-export business.”
- Earlier a borrower could approach Debt Recovery tribunal (DRT) to get stay order against bank/ARC. New amendment says DRT cannot grant any stay order unless both parties (Borrower vs. lender bank) are heard. This will ensure the process of law is not misused by unscrupulous borrowers to get stay orders just to delay money-recovery.
- Bill proposes to enable banks and financial institutions to enter into settlement or compromise with the borrower. It also seeks to empower the Debts Recovery Tribunal to pass an order acknowledging any such settlement or compromise.
- SARFAESI empowers banks and other financial institutions to attach secured assets of a loan defaulter and sale, auction or manage them without requiring court intervention.
- Parliament passed the amendment to SARFAESI Act and the debt recovery tribunal, in Winter session 2012.
Salient features of new amendment
|can convert their debt into equity (fully or partially)|
|can prohibit or modify SARFAESI’s applicability in public interest.|
Apart from this amendment, Government has also increased foreign investment limit in ARCs from 49 to 74%.
|Established Debt Recoverty tribunal (DRT) and|
|Helps banks recover money from bad loans.|
|Passed in Lok Sabha in Dec 2012, to amend above two laws (RDBF + SARFAESI)|
SARFAESI was based on recommendation of these two Committees
1. Committee on Banking Sector Reforms (Narasimham Committee II), 1998
2. Restructuring of weak Public Sector Banks -Verma Committee
The latest amendment (Debt to Equity), is based on recommendations of Alok Nigam Panel on ARCs, made by Finance Ministry.
VARIOUS ISSUES IN SARFAESI
1. Section 37 of SARFAESI ACT states under “Application of other laws not barred” (Quote) “The provisions of this act or rules made there under shall be in addition to, and not in derogation of, the Companies Act 1956, the Securities Contracts (Regulation Act, 1956, the Securities and Exchange Board of India Act, 1992, the Recovery of Debt Due to Banks and Financial Institutions Act, 1993 or any other law for the time being in force.”
This section clearly and without any ambiguity states that the provisions of SARFAESI ACT is applicable in addition and not in derogation of the existing laws for the time being in force which means that other laws for the time being in force particularly those Acts mentioned in the said section 37 of SARFAESI ACT, are also equally applicable while adjudicating cases under SARFAESI ACT. The authorised Officer and the Presiding Officer of Debts Recovery Tribunal shall not overlook or set aside other laws that are in force while adjudicating the cases under SARFAESI ACT.
2. Many instances have been reported that the Authorised Officer and the Presiding Officer of DRT rejecting the claim for loss and damages or counter claims by the borrowers under SARFAESI ACT. Such rejections are based on the mistaken notion that there is no rule under SARFAESI ACT to put up such claims to the Authorised Officer or to DRT. Due to this false notion, the advocates also do not encourage the borrowers to claim loss and damages or preferring a counter claim in DRT. But a dispassionate, pragmatic and unbiased look at the act shows that the SARFAESI ACT does not prevent the borrower to claim loss and damages.
The psychological disposition of the people is that the banks hold public money under trust and that their prime right is to recover the money they advance. But they also forget the dictum that every right is derived out of a duty first to be performed, the duty of the banks being the duty of concern and care for their customers.
In view of what has been stated in the SARFAESI ACT, 2002 it is apparent and necessary that the borrowers should make it mandatory to file their claim for loss and damages in their application to DRT against the notice of possession served by the Authorised Officer of the bank and the advocates also must invariably incorporate this claim in their pleadings before DRT.
3. Section 28 and Section 29 of the SARFAESI Act, 2002 stipulates the penalties to be imposed in for non compliance of Reserve Bank of India directions and contravention or abetting the provisions of SARFAESI ACT respectively.
Section 28 states, “Penalties for non-compliance of direction of Reserve Bank. –if any Securitization company or reconstruction company fails to comply with any direction issued by Reserve Bank [under section 12 or section 12(A)], such company and every officer of the company who is in default, shall be punishable with fine which may extend to 5 lakh rupees and in case of continuing offence, with an additional fine which may extend to 10 thousand rupees for every day during which the default continues.”
Section 29 stipulates, “If any person contravenes or attempts or abets the contravention of the provisions of this Act or of any rules made thereunder, he shall be punishable with imprisonment for a term which may extend to one year, or with fine, or with both.”
But in practice, the aforesaid provisions of the act are neither taken in to consideration by the Authorized Officer of the Bank nor taken cognizance by the Presiding Officer at DRT even when sufficient evidences are produced by the borrower for non compliance of RBI directions and contravening or abetting the rules of SARFAESI Act.
4. Bombay and Madras High Court ruled that, Sec.5 of Limitation Act is applicable to the proceedings under Sec.17 of SARFAESI Act. Following are the basic points for the above ruling:
1) Provisions of Limitation Act apply to any statute if such statute does not expressly or impliedly exclude applicability;
2) SARFAESI Act does not expressly exclude application of the provisions of Limitation Act 1963 and there is no controversy about the same. Whether there is exclusion by implication, can be seen from a reading of the relevant provisions.;
3) Right of borrower or guarantor under Sec.17 is right of redemption embodied in Section 13(8) of the Act. It is constitutional right and also human right.;
4) Any contrary interpretation would defeat right to property ;
5) Sec.17 can not to be treated strictly like suit.
6) Sec.5 of Limitation Act applies to some type of applications even though it does not apply to suits.
7) Sec.17 of SARFAESI Act is right of redemption which extinguishes after sale of asset. To say that, Sec.5 does not apply it would mean that the right of redemption (right to property =Constitutional right=human right) is denied.
8) Interpretation leaning towards right to property should be chosen by the courts.
9) It is fallacy to think that every original proceeding pending before tribunal is like a suit.
Madras High Court and Bombay High Court are of the common view that, Section 5 of Limitation Act applies to the proceedings under sec. 17 of SARFAESI Act. But Calcutta High Court and Kerala High Court together are of different view on the point that, Section 5 of Limitation Act does not apply to the proceedings under Sec.17 of SARFAESI Act.
Summary : Hence there should not be any doubt on applicability of the provisions of Limitation Act 1963 to the proceedings u/s 17 and 18 of SARFAESI Act. Supreme Court knows the public policy of the Limitation Act that no one should sleep over his right and should enforce it within time prescribed does not mean that it is enacted to hamper the right of redemption borrower to redeem his mortgage. Let us hope that Supreme Court may take a similar view as taken by Bombay, Madras & Allahabad High Courts on this crucial issue at the earliest as some DRTs are declining to accept the condonation of delay as it is not specifically provided except the right of enforcing their claim under Sec.13(2) of SARFAESI Act and shut the doors leaving some aggrieved parties to peril.
5. Who is an ‘Authorised Officer’ ?
Rule 2(a) defines ‘Authorised Officer’ as under:-
a) Authorised Officer must be of rank not less than Chief Manager in a public sector bank or equivalent.
b) (i)Board of Directors
(ii) or Board of trustees of the secured creditor
(iii)or any other person
(iv) or authority exercising powers of superintendence, direction and control of business or
affairs of the secured creditor under the Act is competent to initiate action.
There are two categories of persons i.e. a) and b) as stated above. One is Chief Manager or equivalent. Another is Board of directors or Controller of the business of the secured creditor.
Authorised Officer who is clothed with statutory power has to perform his action as per prescription of law. He represents secured creditor. His services are not mandatory but may be engaged to exercise the rights of the secured creditor (See Sec.13(12). Chief Manager level officer is chosen because with rich experience and maturity of mind he will be able to take action with due care and caution in view of stringent nature of the provisions of the Act.
As can be seen from the language in the sub Section action under the Act by Authorised Officer is not mandatory. Every branch is extended hand of secured creditor.
When suits can be filed by officer of the bank irrespective of his cadre for recovery of debt the question often arises as to why a branch manager cannot take action under the Act without seeking assistance of Authorised Officer. The word “may” in the sub Sec.13(12) leaves scope to contend that an officer below the rank of Chief Manager with his experience and ability, can also initiate action under the Act without assistance of the Authorised Officer as his service is not mandatory. The purpose of engaging services of Authorised Officer is to see that action under the Act is initiated by an officer of Chief Manager cadre as he is supposed to have acquired more experience in bank than an officer of lower cadre and knows his limits and responsibility and he will be able to perform the action under the Act with all precautions as the provisions are stringent in nature.
Therefore it is clear from the above discussion that, there is no absolute bar for an officer of lower cadre than Chief Manager to take action under the Act for secured creditor. However it is better that the Rule 1 (a) is amended substituting ‘Senior Manager’ in place of ‘Chief Manager’ so that a Senior or Dy. Chief Manager (in scale III cadre) can take action in NPA accounts of his branch for expeditious recovery of the debt instead of waiting for services of Authorised Officer / Chief Manager in each case.
6.Can the Authorised Officer of the bank delegate his powers to send demand notice u/s. 13(2) of the act and submit replies u/s. 13(3)(a) through a lawyer?
Yes, The bank and Authorized Officer of the bank has right to send the notice or reply through an advocate.
A notice given by a solicitor or an advocate on behalf of the secured creditor or the Authorised officer, as the case may be, in terms of section 13 (2) of SARFAESI ACT is quite conformity with the provision contained in the act and the rules framed thereunder.
7. Procedure followed for obtaining physical possession from chief metropolitan magistrate under section 14 of SARFAESI Act
Where an immoveable property secured to the Bank is occupied by the Borrower or is let out by him, the Bank approaches the Jurisdictional Chief Metrop. Magistrate or DM under section 14 of SARFAESI Act.The Authorized Officer prefers an application / request to the Jurisdictional CMM. The jurisdiction of the CMM is determined on the basis of the Jurisdictional Police Station where the immoveable property is situated.
The registry of the court (CMM) numbers the request / application as C.Misc No……of……..
One date is fixed for the Authorised Officer to appear Before the CMM with originals of:
a) Title deed establishing the Borrower’s title to the immoveable Property
b) Upto date Encumbrance Certificate of the immoveable property
c) Possession Notice, Paper Publication and service by Registered Post & evidence of affixing the notice on the conspicuous portion of the property.
After being satisfied that the Bank has followed the prescribed procedure, the CMM will issue a direction to the Jurisdictional Police Station to assist the Bank-secured Creditor to obtain Physical/actual possession. The CMM order also authorizes breaking open of the Lock if necessary.
With this order (certified copy) in hand, a letter is addressed to the Jurisdictional Police station informing the SHO about the date on which the Authorised Officer will proceed to take Physical Possession. [Copy of the CMM order is enclosed for reference of the Police and after meeting the police officer - indicating the date of process in consultation with the head of jurisdictional police thana , a date is fixed ]and finally the physical Possession is obtained .
The above procedure does not provide for issuance of notice to Respondents or occupants of the property. Hence, no notice of the proceedings before CMM is served either on the mortgagor or any person in occupation of the immoveable property. Section 14 is only a step-in-aid for Authorised Officer to take physical possession.
1.Whether section 14 is a due process of Law or merely a procedure established by Law?
It is a due process of law
2. Can a Tenant/occupant be evicted under section 14 without preferring suit/proceedings for eviction in a civil court?
Yes tenant can be vacated without any further proceedings for eviction in a civil court, courts do not have jurisdiction to entertain cases under SARFEASI
3. As the Bank does not step into the shoe of the Landlord / mortgagor, can it maintain a suit for eviction against the tenant? if not, is the Bank driven to sell the propety on "As is where is Basis" so that the Purchaser steps into the shoe of the Landlord to maintain eviction case.
If the tenant wants to file a suit under tenancy then it can be done against the owner. . . . and after auction it is upto the new owner how he want's (with tenant or not)
4. Against the order of CMM [under section 14]: What is the remedy for the Tenant? Can he invoke the Writ jurisdiction or approach DRT or Civil court for stay?
The tenant can try civil suit but i seriously doubt that. Another view is that :
1 DRT only considers whether the Secured Creditor has followed all the prescribed procedure as per the SARFAESI Act and Rules framed thereunder. If it grants a declaration under Section 17(4) of SARFAESI Act, the remedy of the Tenant is foreclosed.
2. Civil Court may not entertain any suit which has the effect of staying the proceedings initiated under SARFAESI Act. Hence only a Writ Petition seeking review of CMM order is maintainable by the Tenant to protect his possession
However if if mortgage was created during the pendency of the lease or, if the lease was created with the permission of the bank, then the DRT can give relief to the tenant till the expiration of period of lease, from the vacating the property. Otherwise if the lease is without knowledge of bank, tenancy is illegal ab initio.
8. If the banks wants to file the Sec.14 application before the CMM, without taking any steps for symbolic or physical possession or serving notice to the party of the security property.Is it legally permissible under SARFAESI Act.
S14 can be resorted to only after mandatory compliance of S13.
9. I have purchased a property from United Bank through public auction. The property is in symbolic possession with the bank. Now upon full consideration being paid to bank, will the bank get the physical possession from the borrower and hand it over to me(buyer)?
Option I - You may approach the district magistrate / CMM (Metropolitan magistrate) U/s 14 of the NPA Act for assistance for taking physical possession of the property, as by buying the property under the Auction you have stepped into the shoes of the Bank. Dont except hte borrower or the security owner to come to your doorstep and handover the keys
Option II - The bank have the symbolic possession means that they don't have the key of the property and the property is still under the borrower however the bank have served the borrower a possession notice and a copy of notice has been pasted in a prominent place of the property. The Advertise in news paper was "possession cum sale notice". Actually there is nothing like a symbolic possession under the SARFAESI Act. Nothing has been defined as "symbolic posession" in SARFAESI Act,2002. Possession is possession and there is no distinction between symbolic and physical possession.
Secondly, you need to confirm whether any appeals are pending against the action taken by the bank. If so the outcome of the litigation will have a bearing on whether you will be given the possession or not.
Thirdly, what documents were executed between your self and the Bank at the time you made the payment will also have to be considered.
Purchasers of the properties from banks under the SARFAESI Act have to bear the risk of various problems, since SARFAESI Act even though enacted about 10 years back, each bank officials and even courts interpret the Act & Rules provisions according to their own understandings. Still the laws under the said Act are not adequately settled.
According to advocate Raju , Normally bank had to issue separate possession notice u/S13(4) and Sale Notice u/R 8(6). Some banks stipulate illegally in the sale notice that 'as is where is, as is what is, without recourse, without entertaining any complaints, without responsibility of tax or other dues of the borrower, etc.'. If the bank is selling a property, which was leased for long period to another party, they have to disclose that fact in the sale notice. Hence the purchaser gets the property subject to lease, after the lease period. ("as is where is" means you get what you see or it means they won't move it or What you see is what you get....The seller told you the house was for sale ‘as is,’ so you are on your own. Hidden problems often translate to costly repairs, and that means you might not be able to make money on the resale " )
The purchaser cannot directly go to CJM u/S14 for taking physical possession of the property, the bank had to do that and give vacant possession to the purchaser.
source : http://www.lawyersclubindia.com/forum/details.asp?mod_id=31636&offset=2#.URC1eh13aKw