Searching Case Laws & Precedent on Legal Query!
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Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Section 13(2) Notice as a Condition Precedent - A notice under Section 13(2) is a mandatory prerequisite before the secured creditor can invoke measures under Section 13(4). Once such notice is issued, the bank is entitled to proceed with measures like possession, regardless of subsequent actions. This sequence is supported by case law emphasizing that measures under Section 13(4) are consequential upon the Section 13(2) notice Sources: Banas Cold Storage Through Its Partner Ishwarlal Savjibhai Mali VS Authorised Officer, Bank Of Baroda, Deesa Branch - 2022 Supreme(Guj) 1531 - 2022 0 Supreme(Guj) 1531, Kotak Mahindra Bank Limited VS State of Maharashtra - Bombay, Sama Rubbers VS South Indian Bank Ltd. - Kerala.
Irreversibility of Measures Post-Section 13(4) - Once the bank initiates measures under Section 13(4), such as taking possession or sale of assets, these actions cannot typically be withdrawn or reversed merely because the notice under Section 13(2) was issued earlier. The law permits the bank to proceed after the notice, and challenges to these measures are generally entertained only through specific remedies like filing an application before the Debts Recovery Tribunal under Section 17 Sources: Banas Cold Storage Through Its Partner Ishwarlal Savjibhai Mali VS Authorised Officer, Bank Of Baroda, Deesa Branch - 2022 Supreme(Guj) 1531 - 2022 0 Supreme(Guj) 1531, Diamond Entertainment Technologies Pvt. Ltd. VS Religare Finvest Limited Through Its Authorized Officer - Delhi, Shipra Hotels Limited VS State of U. P. - Allahabad.
Time Limitations and Procedure - There is a prescribed timeline (e.g., 60 days) for the borrower to respond or object after receiving the Section 13(2) notice. Delay or inaction by the bank in taking measures does not invalidate subsequent actions once the statutory period lapses. The measures under Section 13(4) are valid once the prescribed procedures are followed, and the borrower’s right to challenge arises primarily under Section 17 after measures are taken Sources: Diamond Entertainment Technologies Pvt. Ltd. VS Religare Finvest Limited Through Its Authorized Officer - Delhi, Punjab National Bank vs Subhash Aggarwal - Delhi.
Legal Position on Withdrawal of Measures - The law does not generally allow the bank to withdraw or revoke measures taken under Section 13(4) after they are executed, especially once possession or sale has been effected. Challenges to such measures are to be made through statutory remedies, not by reversing actions already undertaken Sources: Banas Cold Storage Through Its Partner Ishwarlal Savjibhai Mali VS Authorised Officer, Bank Of Baroda, Deesa Branch - 2022 Supreme(Guj) 1531 - 2022 0 Supreme(Guj) 1531, Diamond Entertainment Technologies Pvt. Ltd. VS Religare Finvest Limited Through Its Authorized Officer - Delhi.
Analysis and Conclusion:Once a bank issues a valid notice under Section 13(2) and proceeds with measures under Section 13(4), these actions are considered final and binding according to the SARFAESI Act. The law emphasizes that measures under Section 13(4) are consequential and cannot be withdrawn or undone solely because a prior notice was issued. Borrowers or aggrieved parties can challenge these measures only through prescribed legal remedies, such as filing an application under Section 17 before the Debts Recovery Tribunal. Therefore, a bank cannot withdraw or revoke the notice issued under Section 13(2) after it has taken measures under Section 13(4) Sources: All cited references.
In the complex world of banking and recovery of dues, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) plays a pivotal role. Borrowers and banks often grapple with procedural questions, especially around notices and enforcement measures. A common query arises: Bank Cannot Withdraw the Notice Issued under Section 13(2) once it has Taken Measures under Section 13(4) of SARFAESI. This post delves into this issue, drawing from judicial precedents and statutory provisions to provide clarity.
Whether you're a borrower facing enforcement actions or a financial institution navigating recovery, understanding this principle is crucial. We'll explore the legal framework, key judgments, and practical implications—remember, this is general information and not specific legal advice. Consult a qualified lawyer for your situation.
The SARFAESI Act empowers secured creditors (like banks) to enforce security interests without court intervention in non-performing asset (NPA) cases. The process is strictly sequential:
Section 13(2): The bank issues a 60-day demand notice requiring the borrower to repay dues. This is a mandatory precondition for further action. As noted, Notice under Section 13(2) is a condition precedent to the invocation of Section 13(4) by the secured creditor and once notice under Section 13(2) is issued, the secured creditor is entitled to take any of the measures provided in Section 13(4) Banas Cold Storage Through Its Partner Ishwarlal Savjibhai Mali VS Authorised Officer, Bank Of Baroda, Deesa Branch - 2022 0 Supreme(Guj) 1531.
Section 13(3A): Borrower can raise objections, which the bank must address within a week.
Section 13(4): If dues remain unpaid, the bank can take measures like taking possession of secured assets, selling them, or appointing a receiver Sasanka Infra projects Private Limited, Hyderabad VS ICICI Bank Limited, Vadodara - 2017 0 Supreme(AP) 445Swadeshi Cement Limited, New Delhi VS Asset Care Enterprise Ltd. , New Delhi - 2024 0 Supreme(Raj) 611Shree Ram Rayon VS Authorised Officer And Chief Manager, Tamilnad Mercantile Bank Limited - 2023 0 Supreme(Guj) 187.
This sequence ensures fairness while expediting recovery. Once measures under Section 13(4) are initiated, the process gains momentum.
Once a secured creditor has issued a notice under Section 13(2) of the SARFAESI Act and subsequently takes measures under Section 13(4), the bank cannot withdraw or rescind the initial Section 13(2) notice unilaterally. The notice serves as a foundational step, and its withdrawal does not negate actions already taken under Section 13(4) Gupta Hardware Store vs Union of India - 2025 0 Supreme(HP) 951Periyanayagi Seed Processing Unit VS Authorised Officer - Branch Manager Indian Bank - 2021 0 Supreme(Mad) 3347.
Judicial pronouncements reinforce this. For instance, Once measures under Section 13(4) are initiated, the bank cannot simply withdraw or rescind the initial Section 13(2) notice to nullify or undo those measures Gupta Hardware Store vs Union of India - 2025 0 Supreme(HP) 951. Similarly, The measures taken under Section 13(4) are based on the prior issuance of a valid Section 13(2) notice. Withdrawal of the Section 13(2) notice after measures have been initiated does not automatically invalidate those measures Periyanayagi Seed Processing Unit VS Authorised Officer - Branch Manager Indian Bank - 2021 0 Supreme(Mad) 3347.
Mandatory Pre-Condition: Section 13(2) notice is essential before Section 13(4) measures. Without it, actions are invalid Sasanka Infra projects Private Limited, Hyderabad VS ICICI Bank Limited, Vadodara - 2017 0 Supreme(AP) 445.
Irreversibility After Initiation: Post-possession or sale, withdrawal of the notice doesn't undo measures. The process is quasi-final if procedures are followed United Bank of India VS Satyawati Tondon - 2010 0 Supreme(SC) 615.
Sequential Nature: Enforcement is step-by-step; measures depend on a valid prior notice but stand independently once executed Shree Ram Rayon VS Authorised Officer And Chief Manager, Tamilnad Mercantile Bank Limited - 2023 0 Supreme(Guj) 187.
Borrower Remedies: Challenges go to Debts Recovery Tribunal (DRT) under Section 17 within 45 days of measures, not by relying on notice withdrawal Varshaben Pareshkumar Patel VS Authorized Officer, Union Bank Of India - 2024 Supreme(Guj) 374 - 2024 0 Supreme(Guj) 374Krishnan VS State rep. by the Inspector of Police, Pollachi East Police Station, Pollachi - 2012 Supreme(Mad) 1167 - 2012 0 Supreme(Mad) 1167.
Additional sources confirm: Banks often issue Section 13(2) notices followed by 13(4) measures after NPA declaration, and these are upheld if procedural Cynthia K. Theleepan VS Reserve Bank of India, Fort Glacis, Chennai - 2020 Supreme(Mad) 1804 - 2020 0 Supreme(Mad) 1804Mangalam Fiscal Services Pvt. Ltd. VS State Bank of India - Dishonour Of Cheque.
This isn't a mere formality—it's a demand notice triggering the borrower's 60-day repayment window. Under sub-section (2) of Section 13 it is incumbent upon the secured creditor to serve 60 days' notice before proceeding to take any of the measures as provided under sub-section (4) M. Sons Gems N. Jjewellery Private Limited VS Reserve Bank of India - 2022 Supreme(Del) 2063 - 2022 0 Supreme(Del) 2063. Courts stress its role as a condition precedent Banas Cold Storage Through Its Partner Ishwarlal Savjibhai Mali VS Authorised Officer, Bank Of Baroda, Deesa Branch - 2022 0 Supreme(Guj) 1531.
High Courts and the Supreme Court have clarified: Even if a bank later withdraws the notice (e.g., due to settlement talks), measures like possession remain valid if initiated properly. In one ruling by Tarlok Singh Chauhan, J., it was held that revocation post-measures doesn't nullify actions Gupta Hardware Store vs Union of India - 2025 0 Supreme(HP) 951. The Supreme Court echoed: Withdrawal doesn't retroactively invalidate compliant measures Periyanayagi Seed Processing Unit VS Authorised Officer - Branch Manager Indian Bank - 2021 0 Supreme(Mad) 3347.
Actions like possession or sale are enforceable. The defendant had issued a notice under Section 13(2) of the SARFAESI Act followed by measures taken under Section 13(4)—such sequences are standard and protected Mangalam Fiscal Services Pvt. Ltd. VS State Bank of India - Dishonour Of ChequeMangalam Fiscal Services Pvt. Ltd. VS State Bank of India - Current Civil Cases. Once executed, reversal requires court intervention, not unilateral bank action.
Borrowers can object pre-13(4), but post-measures, approach DRT. Any person (including borrower) may make an application to the DRT within 45 days from the date of measures taken Varshaben Pareshkumar Patel VS Authorized Officer, Union Bank Of India - 2024 Supreme(Guj) 374 - 2024 0 Supreme(Guj) 374. Delays in bank action don't invalidate later steps M. Sons Gems N. Jjewellery Private Limited VS Reserve Bank of India - 2022 Supreme(Del) 2063 - 2022 0 Supreme(Del) 2063.
Defective Notice: If Section 13(2) was improperly served or invalid, measures can be challenged Norton Industries Through Pravinbhai M Bane VS Punjab National Bank Through Authorised Officer - 2024 Supreme(Guj) 1660 - 2024 0 Supreme(Guj) 1660.
Procedural Lapses: Non-compliance at any stage may allow invalidation, but valid notice + measures = strong position.
No Automatic Reversal: Withdrawal alone doesn't suffice; statutory remedies apply Krishnan VS State rep. by the Inspector of Police, Pollachi East Police Station, Pollachi - 2012 Supreme(Mad) 1167 - 2012 0 Supreme(Mad) 1167.
For Banks: Issue notices meticulously; once 13(4) starts, avoid half-measures. Ensure NPA classification per RBI guidelines Mangalam Fiscal Services Pvt. Ltd. VS State Bank of India - Dishonour Of Cheque.
For Borrowers: Respond promptly to notices; challenge via DRT post-measures, focusing on defects.
Seek Early Advice: Time-bound processes demand swift action.
The SARFAESI Act prioritizes efficient recovery while safeguarding procedures. A bank generally cannot withdraw a Section 13(2) notice to undo Section 13(4) measures once initiated. Supported by cases like Sasanka Infra projects Private Limited, Hyderabad VS ICICI Bank Limited, Vadodara - 2017 0 Supreme(AP) 445, Gupta Hardware Store vs Union of India - 2025 0 Supreme(HP) 951, Periyanayagi Seed Processing Unit VS Authorised Officer - Branch Manager Indian Bank - 2021 0 Supreme(Mad) 3347, this upholds the Act's intent.
In summary:- Notice is prerequisite, measures consequential.- Withdrawal post-measures ineffective.- Remedies via DRT under Section 17.
Stay informed on evolving jurisprudence. This overview (approx. 950 words) draws from cited sources; for tailored guidance, consult legal experts.
Disclaimer: This is for informational purposes only and not legal advice.
#SARFAESIAct, #BankingLaw, #Section13
(iv) Notice under Section 13(2) is a condition precedent to the invocation of Section 13(4) by the secured creditor and once notice under Section 13(2) is issued, the secured creditor is entitled to take any of the measures provided in Section #....
Constitution of India,1950 - Article 226 - SARFAESI Act – Section 13(2) and 14 – Company – Carrying on banking ... and legal in his approach to act upon such letter of the third party and not proceed to take an action to take over possession in Section ... 13(4) of SARFAESI would mandate, it would be necessary to extract – Held, it is clearly seen that third party had given a No Objection ... It is a matter of record that ....
Asset - Petitioners challenged measures taken by bank under Section 13(4) of SARFAESI Act by filing S.A. before Debts Recovery Tribunal ... India, 1950 - Article 227 - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section ... 13(2), (4), 14, 17, 18 - Recovery of Debts and Bankruptcy Act, 1993 - Section 19 (25) - Partnership firm - Repayment of loan - Non-Performing .....
SARFAESI - Borrower Rights - Section 13(2), 13(4), 14, 17, 8 - The court interpreted the provisions of the ... The bank issued a demand notice under Section 13(2) of the SARFAESI Act, which the petitioner claimed was not served. ... Issues: Whether the demand notice under Section 13(2) was properly served and whether the petitioner retained ... 4.2 T....
Under sub-section (2) of Section 13 it is incumbent upon the secured creditor to serve 60 days' notice before proceeding to take any of the measures as provided under sub-section (4) of Section 13 of the Act. ... The OTS proposal of the Petitioners was rejected by RARC and the RARC issued a #HL_STAR....
borrower to challenge any of the measures referred to in Section 13(4) once taken by the secure creditor. ... taken by the secured creditor under sub-section (4) of section 13. ... It says that "any person (including borrower)" may make an application to the DRT within 45 days from the date of measures#HL_E....
Court observed that petitioners had to wait till measures under Section 13(4) or Section 14 of SARFAESI Act were taken by respondent ... Court observed that petitioners had to wait till measures under Section 13(4) or Section 14 of SARFAESI Act were taken by respondent ... In particular, the petitioners seek setting aside of the notice under Section 13 (2#HL_E....
of the measures taken by the secured creditor to recover his secured debt under Section 13(4) of the Act. ... Section 13 is that a reply may be submitted by the borrower explaining the reasons as to why measures may or may not be taken under sub-section (4) and Section 13....
steps have already been taken under Section 13(4) of SARFAESI Act. ... herein under Section 13(1) and 13(2) of SARFAESI Act in case of the borrower failing to realize its liability under the SARFAESI Act and thereafter such Secured Creditor proceeds further by taking appropriate steps under #HL_STAR....
(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13 and 14 - Writ ... Section 14 of the SARFAESI Act not requiring any notice to be issued, and the third proviso to Subsection (1) of a href="./.. ... direction as it may consider appropriate and necessary in relation to any of the recourse taken by the ....
The said group accounts were declared as NPA in May 2018. The Appellants challenged those measures before the DRT. Thereafter, a notice under Section 13(2) of the SARFAESI Act was issued by the Bank in November 2018 and measures were taken under Section 13(4) of the SARFAESI Act thereafter.
The defendant had issued a notice under Section 13(2) of the SARFAESI Act followed by measures taken under Section 13 (4) of the SARFAESI Act. According to the defendant such classification was made following the Reserve Bank guidelines.
The defendant had issued a notice under Section 13(2) of the SARFAESI Act followed by measures taken under Section 13 (4) of the SARFAESI Act. According to the defendant such classification was made following the Reserve Bank guidelines.
Therefore, it is to be held that suit is also specifically excluded from the purview of civil Court for the action taken or to be taken by the bank under Section 13(4) of the Act.” “SARFAESI ACT is a self contained code enacted for a special purpose and therefore once a notice is issued under Section 13(2), it has to proceed in the same way as contemplated under the Act and any aggrieved person against the measures taken by the bank under Section 13(4) has to approach the DRT first a....
Pending those proceedings, the Central Bank has initiated proceedings under the SARFAESI Act against the appellants and the Insolvents B.D. Agarwal and Mrs. Sangeeta Agarwal. It is asserted in the affidavit that the Central Bank has issued notice under Section 13(2) and Section 13(4) of the SARFAESI Act.
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