Bank of Baroda recently published an e-auction notice for the sale of actor Sunny Deol's 'Sunny Villa' bungalow in Mumbai due to outstanding loan dues amounting to around Rs 56 crores. Scheduled for September 25, the auction notice was withdrawn on August 20, reportedly due to technical reasons. The Sarfaesi Act empowers banks to recover non-performing asset (NPA) dues without court intervention. Deol has the option to settle the dues and stop the auction. The Act mandates a legal notice, followed by a 60-day period to repay the loan, failing which the property can be sold. Sunny Deol, an actor and MP, won the Gurdaspur constituency seat in the 2019 elections. Bank of Baroda's swift action raises questions about the handling of NPAs within legal bounds.
Last week Bank of Baroda published an e-auction notice for ‘Sunny Villa’ a bungalow located Juhu, Mumbai that is owned by none other than famous Bollywood actor Sunny Doel. The auction date for the 600 square meter property was announced for 25th September 2023, with a reserve price of Rs 51 crores and an earnest money deposit of Rs 5 crores. However, on 20 August, the bank withdrew the notice citing technical reasons.
Mr Doel, a known actor and member of parliament, is said to owe the bank approximately Rs 56 crores since December 2022. Sunny Sounds, owned by the Deols is the corporate guarantor and Dharmendra Deol, Sunny Doel’s father, is the personal guarantor of the debt. Despite the looming auction, the Deol family has the option to settle the dues and potentially halt the auction process, as outlined by the provisions of the Sarfaesi Act.
The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesri Act) 2002 empowers banks and financial institutions to recover their non-performing asset (NPA) loan dues without the intervention of the Court. The Act is applicable to all NPAs with outstanding dues above Rs 1 lac. NPAs wherein the amount due is less than 20% of the principal and interest do not come under the purview of this Act.
Under the Act, the creditor can send a legal notice to the borrower if the borrower has not been able to repay his or her loan for a period exceeding six months. Once a legal notice is sent, the borrower has 60 days to clear the dues. Should the borrower fail to do so, the financial institution has the right to sell the property to recover dues. According to the now deleted auction notice, Mr Deol is said to have not cleared his dues since December 2022. Based on this, the auction notice appears to be line with the rules of the Act.
The Sarfaesi Act auction rules require the bank to publish a sale notice in at least two leading newspapers, on the website of the secured creditor (in this case Bank of Baroda) and on the corresponding government website. Bank of Baroda is said to have published the notice in India’s leading newspaper Times of India, Mumbai edition. The proceeds gained through the sale are first used to clear the outstanding dues of the bank and the remaining money is given to the defaulting borrower.
Sunny Deol, whose full name is Ajay Singh Dharmendra Deol, holds the position of an MP within the BJP party, representing the Gurdaspur constituency. He secured this position through the 2019 elections, winning by a significant margin.
The swift action taken by Bank of Baroda reflects the bank’s strong stance on NPAs. While its actions appear to be well within the purview of the Sarfaesri Act 2002, the urgency to issue the notice can appear harsh and perhaps even hasty. It remains to be seen what transpires between the bank and the borrower.
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