The Need of a Surveyor’s Report in Bank Recovery Proceedings

 

The Need of a Surveyor’s Report in Bank Recovery Proceedings

1. Introduction

In the realm of banking and financial recovery, accuracy and verification of secured assets form the foundation of any lawful enforcement action. When a borrower defaults on repayment, banks and financial institutions initiate recovery measures under the SARFAESI Act, 2002, the Recovery of Debts and Bankruptcy Act, 1993, or through civil and criminal proceedings. In such cases, a Surveyor’s Report becomes an indispensable technical and evidentiary document that authenticates the identity, extent, and possession of the mortgaged property. It provides an objective assessment of the asset’s physical status, boundaries, encroachments, and utilization — ensuring that the bank’s enforcement is legally sustainable and factually accurate.

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2. Importance under the SARFAESI Framework

Under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, a secured creditor must follow strict procedural compliance before taking possession of or selling a secured asset.
Key stages where a Surveyor’s Report is vital include:

• (a) Verification before Issuance of Demand Notice (Section 13(2))
  Before classifying an account as Non-Performing Asset (NPA) and issuing a demand notice, the bank must ascertain that the mortgaged property physically exists, matches the title documents, and remains unencumbered. A surveyor’s report confirms these facts, reducing the risk of wrongful or defective action.

• (b) Possession and Valuation (Section 13(4))
  Before or after taking symbolic or physical possession, banks rely on a licensed surveyor or valuer to demarcate the property’s boundaries, identify structures, and measure the exact area. This ensures that possession notices reflect accurate details and prevent third-party encroachment or overlap.

• (c) Sale and Auction Process (Rule 8 & 9 of the Security Interest (Enforcement) Rules, 2002)
  For auction or sale, the bank is required to publish correct particulars of the property, including plot number, area, and location. A surveyor’s report guarantees that the published description aligns with the physical reality, thereby protecting both the borrower’s and the purchaser’s rights.

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3. Evidentiary Value before the DRT and Courts

In proceedings before the Debts Recovery Tribunal (DRT) or the Appellate Tribunal (DRAT), disputes often arise regarding the identification, extent, or possession of the secured asset. The surveyor’s report, supported by field maps and measurement sheets, provides technical evidence admissible under Section 45 of the Indian Evidence Act, 1872, which recognizes expert opinion on matters requiring scientific or specialized knowledge.

Tribunals have repeatedly relied upon surveyor’s reports to determine:

• Whether the possession notice covered the correct property.

• Whether any third-party structure or encroachment existed on the mortgaged land.

• Whether the area sold through auction matched the mortgaged asset.

In contested recovery cases, the survey report helps establish factual clarity and prevents challenges based on boundary disputes or defective description.

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4. Protection of Bank’s Legal Interests

The preparation of a professional surveyor’s report safeguards the bank from potential legal complications, including:

• Wrongful Possession or Overreach: Prevents the bank from seizing property not covered under the mortgage.

• Title and Area Discrepancies: Ensures that the mortgaged property’s physical dimensions correspond to the title deed.

• Third-party Claims: Identifies encroachments, tenants, or unauthorized occupants prior to possession or sale.

• Defensible Documentation: Serves as technical evidence if the borrower challenges the bank’s possession before DRT or civil courts.

Thus, the survey report strengthens the bank’s position by demonstrating procedural diligence and factual accuracy.

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5. Role in Asset Valuation and Realization

A surveyor’s report also assists the approved valuer in ascertaining the correct market value of the property by providing precise area, boundary, and locational data. This ensures that the bank’s reserve price reflects fair value and that no future dispute arises due to misrepresentation or under-valuation. Accurate survey data is also crucial for reconstruction companies and asset reconstruction trusts (ARCs) when taking over or reselling non-performing assets.

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6. Judicial Observations

Courts have emphasized the necessity of proper verification of secured assets before possession or sale. In Transcore v. Union of India (2008) 1 SCC 125 and subsequent DRT/DRAT rulings, it has been reiterated that procedural fairness and factual accuracy are essential for lawful recovery. A surveyor’s report forms a part of that factual foundation, ensuring that actions under SARFAESI or recovery proceedings are free from arbitrariness or error.

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7. Conclusion

In conclusion, the Surveyor’s Report serves as the cornerstone of credibility and compliance in bank recovery proceedings. It authenticates the secured asset, supports valuation, and provides defensible technical evidence before tribunals and courts. By aligning documentary title with ground reality, it prevents legal disputes, safeguards the bank’s recovery rights, and ensures that the enforcement process under SARFAESI remains transparent, lawful, and just.

The incorporation of a mandatory surveyor’s report at every stage of the recovery process not only promotes procedural integrity but also upholds the constitutional principles of fairness and due process in financial enforcement.