SARFAESI ACT 2002
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, was a remarkable peace of legislation with an objective to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected thereto.
As per Sec 13 of the said Act any security interest created in favour of a secured creditor may be enforced with out the intervention of the court or tribunal. Where any borrower makes any default in repayment of any secured debt or any installment thereof and his account is a non performing asset, then the secured creditor may require the borrower, by notice in writing to discharge in full, his liabilities to the secured creditor within 60 days from the date of the notice.
If on receipt of such a notice, the borrower raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor finds that such objection is not acceptable, he shall communicate within one week of such objection the reasons for non-acceptance of the objections.
In case the borrower fails to discharge his liability within 60 days period, the secured creditor may: –
a) take possession of secured assets of the borrower including the right to transfer by way of lease, assignment or sale, for releasing the secured assets.
b) Take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale, for releasing the secured assets.
The secured creditor may, by notice in writing, require any person who has acquired any of the secured assets from the borrower and from whom any money is due to the borrower to pay the secured creditor so much of the money as is sufficient to pay the secured debt. All costs, charges and expenses incurred by the creditor for the purpose of taking possession of the secured assets shall be recoverable from the borrower.
If the dues are paid by the borrower, at any time before the date of sale, the secured assets shall not be sold or transferred by the secured creditor. If the dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the creditor may file an application to the DRT for recovery of the balance amount from the borrower.
The secured creditor, instead of acting under his Act can first proceed against the guarantors or sell the pledged assets. No borrower shall transfer his assets after the receipt of the notice, without written consent of the secured creditor. The secured creditor can seek the assistance of Chief Metropolitan Magistrate to take possession of the secured assets and documents relating thereto.