There was a time when Indian Banking system was having the problem of bad debts. To overcome the bad debt problem certain legislative changes were made in the form of the introduction of bank Securitization Act. This gave certain powers to the banks which made recovery of assets easy. This ofcourse has helped the banks in recovering bad debts.

Unfortunately we are now getting innumerable complaints from Bank customers alleging that the Banks are unable to distinguish between genuine defaulters and occassional defaults arising out of business cycle changes. In particualr many employed persons who had availed housing loans and miss a few instalments when they lose a job are facing the brunt of the draconian powers vested with the banks under the Act.

I am enclosing below a note received by me recently which talks about the plight of a housing loan customer. There are many more such persons at the mercy of the Banks.

 “Subject: Inhuman & Barbaric Act of HDFC under Securitisation Act – A Report from C V Giddaqppa, CCHAI

Dear Sir,

Mr. Bhagath Singh has availed loan from the Housing Finance Development Corporation, Bangalore, in the year 2008 for an amount of Rs 31 lakhs.He was regular in payment of the EMI which amounts to Rs 31,431/-. till July 2009. In July 2009 he lost job became unemployed.

The Loan agreement is for a period of 240 months.In spite of the regular repayment of EMI. The Bank has proceeded against him under Securitisation Act, demanding the clearance of entire loan much earlier to the stipulated time period of 240 months. Till July 2009 the petitioner was regular in repayment of the EMI’s ,but for losing his job in the year 2009, he was not able to regularize the accounts. But he had requested the HDFC to give the statement of account for regularization, which the respondents deliberately did not give. The Petitioner filed SA 195/2010 and obtained stay.

On 7.7.2010 the stay stands vacated ,hence Mr Singh filed an application before the DRT, Bangalore, in MA 69/2010 seeking permission of the Hon’ble DRT to give three months time to regularize the account.The matter is still pending before DRT Bangalore.And posted on 8.11.2010.

Meanwhile the Respondent bank fraudulently approached the City Civil Court III ACMM Bangalore in CMisc 2188/2010 and obtained an order on 14.9.2010 for taking physical possession of the schedule property. The HDFC did not disclose the fact of pending case before the DRT. The HDFC with police force and anti social elements have illegally locked the premises throwing elderly people ,women and children from the premises and pasted a court order from City Civil Court III ACMM in CMisc 2188/2010,wherein physical possession has been ordered. Even while taking physical possession on 26.10.2010, they have not followed the procedure stipulated in the Securitisation Act.

The Bank is prohibited under Section 31 of the Act that they cannot touch the prohibited items under Section 60 of CPC such as bed, bedding, utensils, cloths, etc. Without making any Panchanama or Inventory, the inmates being elderly people and even 11 months’ baby was thrown out without allowing them to complete their meal and coffee. Entire process of taking physical possession was completed within 30 minutes, in the presence of the police officers. This is an arrogant & inhuman act of the HDFC with the support of local police and goons.

We are in civilized Society having affirmed to follow “Socialist” Policy as per the Preamble the Constitution of India. As an Association we condemn the barbaric act of HDFC in strong terms and contemplating to go on hunger strike before the HDFC after Diwali. A Writ Petition No.34141-34143/2010 was filed on 28th Oct 2010 before the Hon’ble High Court of Karnataka and the Hon’ble Justice Mr.Mohan Shantanagoudar took up the as emergent and passed the order same day by granting stay order and directions to the Bank to redeliver the possession.

The Bank sent a messenger to handover the key to the borrower and entire scene was captured by SAMAYA 24X7 Kannada Channel and the same was telecast on 31.10..2010. It was noticed in the Kitchen and Dining table that half eaten food and cooked food was rotten and given bad smell. Even when the undersigned went to the HDFC to show the order and get the keys, the behaviour of the Authorised Officer, Mr. G B Bhat and his colleagues was very rude and they challenged to vacate the stay and take steps to sell the property at the cost of the borrower within a month. The staff have insulted the mother of Mr. Singh and his relatives who arranged the money for complying with the High Court Order. Even in an earlier case of Mr. Kamalanadhan, the same officer had taken illegal possession and thereafter it was released by the DRAT, Chennai.

We do not know know how many such cases are un-reported. The Financial Institutions are supposed to be “Development Agencies” but not “Enemies of the Society”. Therefore, we demand for immediate suspension of Mr. Bhat, the Authorized Officer, who has violated the rules and mis-behaved with the borrower and their representatives. A separate Memorandum and complaint will be submitted to the concerned authorities apart from taking further legal course against the HDFC. We request all the concerned to take immediate action and order for an inquiry.

Yours sincerely, (C.V.GIDDAPPA)


The above incident indicates that Banks are not mature enough to handle the powers vested with them unde the Act. It is time that Supreme Court reviews the Act and consider if it is constitutionally acceptable and in public interest.

If necessary Supreme Court should order the Act to be either modified or repealed. I have also come across cases where victims of bank frauds have been brought under the recovery process of DRT just because securities were available. Even if this slows down the credit growth, it is worth repealing the act.

I think Finance Minister Mr Pranab Kumar Mukherjee has to take a personal look at the impact of the Act on the public and take a fair view of its utility. I request public to contribute their views in this regard. Mr Giddappa has been working hard to restore justice to many affected persons and needs to be supported by public spirited persons and organizations.


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