Conditional SARFAESI protection for guarantor's residential property pending consideration of one time settlement or rephasement request.

Coercive SARFAESI action against a guarantor's residential mortgaged property was deferred where the secured creditor had indicated that a request for one time settlement or rephasement could be considered under the applicable guidelines. The borrower was granted conditional protection: on deposit of Rs.10,00,000 within four weeks and filing of an OTS or rephasement application, the Bank was required to consider the request and refrain from further coercive steps until a decision was taken.

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Issues: Whether coercive action under the SARFAESI proceedings against the guarantor's residential mortgaged property should be deferred and possession restored upon deposit and consideration of a request for one time settlement or rephasement.

Analysis: The petitioner was the guarantor and the secured asset was his residential house. The Bank had already taken possession and intended to auction the property, but it also accepted that if a substantial amount was deposited within a fixed time and an application for one time settlement or rephasement was made, the request could be considered under the existing guidelines. In these circumstances, protection from immediate coercive steps was warranted pending the Bank's decision on the settlement request.

Conclusion: The petitioner was granted conditional relief. On deposit of Rs.10,00,000 within four weeks and filing of an application for one time settlement or rephasement, the Bank was required to consider the request and no coercive action was to be taken until a decision was made.

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