Under Sarfaesi Act, the Banks, Financial institutions etc can take possession of the properties offered as security when the party commits default in repaying the dues even after issue of demand notice. The strongest tool in the hands after the time period of sixty days provided in the notice is the taking over of property either symbolically or physically. After this the property can be transferred to others for realising the dues of the borrower.
There is also a situation when the defaulted borrower repays the entire dues with costs and other expenses to the borrower and regularises the loan account. In such cases the secured creditor can re-deliver the property which has been already possessed as per Sarfaesi proceedings.
After this exercise, the subject account may again become irregular at some point of time. Here the secured creditor can definitely take action against the defaulted borrower. The question is whether the secured creditor can again initiate any Sarfaesi proceedings. If so, how to take the action and what are the proceedings? This is a case where the secured creditor once initiated the Sarfaesi action by issuing demand notice to the borrower and took possession of the property. Now in the midway the borrower again possesses the property thus resulting all the Sarfaesi proceedings to a fullstop. Hence, inorder to move against the defaulted borrower the second time, re-possession of the property by the secured creditore is necessary. For this the secured creditor can once again issue demand notice under Sarfaesi. It is very important to note that the second notice to be issued at this stage should only be based on the second cause of action. Here it is important to put the details of the fresh cause of action specifically so that every one knows that the second notice is not the continuation of the first action taken by the bank. The notice should not be vague. It should appear from the notice that the account once became non-performing asset and possession was taken by the secured creditor and the property was repossessed by the borrower after regularising the account. After this on classifying the same account as NPA again, the fresh cause of action has arised and the second notice is being issued based on the fresh cause of action.
It is clear that after repossession or redelivery of the property and stopping of Sarfaesi action, the rights available to the secured creditor comes to an end. AIl or any action taken as the continuation of the first notice is considered illegal. So whenever a case comes of initiation of Sarfaesi action after re-delivery of property, think only of the second cause of action.