State Governments should direct district administrations not to prevaricate or look the other side but, instead, act with dispatch when faced with request for police assistance from secured creditors in taking over mortgage properties of the defaulters, the Bombay High Court said.
The court ruled thus in a matter that came up before it on a petition filed by the Housing Development Finance Corporation Ltd . The financial institution used the power given to it by the Securitisation Act, 2002 to takeover the mortgage assets in order to be able to recover the dues from the recalcitrant borrowers without any court intervention.
Police assistance
The Act, realising the possible resistance to such a move, has followed it up with the right to the affected financial institutions to petition the Collector/District Magistrate for police help to overcome such resistance.
Frustrated in its efforts when Collectors of the districts concerned more often than not stonewalled its request for assistance, HDFC filed a writ petition before the Bombay High Court which, while pointing out the object of the Act — expeditious recovery of dues to banks and financial institutions — ordered the Maharashtra Government to issue circulars to all the Collectors to put in place a dispensation whereunder Collectors keep records of request for help and act expeditiously but in no case later than two months from the date of the request.
The court passed this order after it was apprised of the widespread practice of defaulting borrowers mounting pressure, directly or through those wielding influence locally, on the Collectors who tended to succumb to such pressures and chose not to act, especially in the absence of a strict guidelines from the Securitisation Act as to the timeframe for acting on such requests.
(The author is a New Delhi-based Chartered Accountant.)
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