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Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
There are instances where courts have found that the schedule or procedural timelines prescribed in the SARFAESI Act are not necessarily inconsistent with other laws, but adherence to procedural requirements is critical to avoid conflicts or invalidations ["RAM KISHAN & SONS vs UNION OF INDIA - Delhi"] ["Gnanasoundari VS G. Vijayakala - Madras"].
Analysis and Conclusion:
References:- ["Prabakar A K vs The District Registrar - Madras"]- ["Amara Venkata Siva Kumar, S/o. late Amara Sathyanarayana Murthy VS Amara Venkateswarlu, S/o. late Amara Sathyanarayana Murthy - Andhra Pradesh"]- ["K. Jayamma VS Syndicate Bank - Andhra Pradesh"]- ["Diamond Entertainment Technologies Pvt. Ltd. vs Religare Finvest Limited - Delhi"]- ["RAM KISHAN & SONS vs UNION OF INDIA - Delhi"]- ["Gnanasoundari VS G. Vijayakala - Madras"]- ["Ramesh Pal vs IDFC First Bank Limited - Madhya Pradesh"]
In the complex world of banking and recovery laws in India, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) plays a pivotal role. Borrowers and secured creditors often grapple with questions like: Are Sections 13(2) and 13(4) of the SARFAESI Act inconsistent with the Schedule? This query arises amid concerns over procedural harmony, redemption rights, and conflicts with general laws like the Transfer of Property Act, 1882 (TPA).
This blog post delves into the legal framework, judicial interpretations, and key amendments to clarify this issue. While the provisions are designed to work in tandem, Section 35 of the SARFAESI Act provides an overriding effect over inconsistent laws. Note: This is general information and not specific legal advice. Consult a qualified lawyer for your situation.
The SARFAESI Act empowers secured creditors—such as banks—to recover dues without court intervention in cases of default. It streamlines asset reconstruction and enforcement of security interests.
Under Section 13(2), if a borrower's account is classified as a non-performing asset (NPA), the secured creditor must issue a notice demanding payment of the outstanding amount within 60 days. This gives borrowers a chance to respond and settle. Where any borrower... makes any default in repayment of secured debt... the secured creditor shall give to the borrower a notice... Trishul Developers VS L & T Housing Finance Limited - 2019 Supreme(Kar) 914.
If the borrower fails to comply, Section 13(4) allows the creditor to take possession, sell, or transfer the secured asset. In case the borrower fails to discharge his liability in full within the period specified in the 13(2) notice, the secured creditor may take recourse to one or more measures... Kishan Lal Bishnoi VS Authorised Officer. These steps must follow the Act's procedures, including notices under sub-sections (2) and (4) Y. B. Shamanna, S/o. Late Byanna VS Authorized Officer, The UCO Bank Ltd. - 2023 Supreme(Kar) 575.
The 'Schedule' often refers to schedules in the SARFAESI Act itself or conflicting provisions in other laws, notably Section 60 of the TPA, which governs the mortgagor's right of redemption until a registered conveyance. Critics argue that Sections 13(2) and 13(4) clash with these, especially post-amendment redemption limits.
Post-2016 amendment, Section 13(8) restricts redemption to before the publication of the auction notice. This departs from TPA Section 60, where redemption persists until conveyance by registered deed. The right to redeem mortgaged property under Section 13(8) of the SARFAESI Act is extinguished upon the publication of a sale notice, as amended in 2016. Y. B. Shamanna, S/o. Late Byanna VS Authorized Officer, The UCO Bank Ltd. - 2023 Supreme(Kar) 575.
Such restrictions create perceived inconsistencies, but the Act's framework resolves them through supremacy clauses.
Section 35 is the linchpin: The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law... Bajarang Shyamsunder Agarwal VS Central Bank of India - 2019 0 Supreme(SC) 998. This ensures SARFAESI prevails over general laws like TPA where conflicts arise. Courts affirm that SARFAESI, as a special law, overrides schedules or provisions like TPA Section 60 on redemption Bajarang Shyamsunder Agarwal VS Central Bank of India - 2019 0 Supreme(SC) 998.
Section 35 of the SARFAESI Act explicitly states that the Act shall have effect notwithstanding any inconsistent law Bajarang Shyamsunder Agarwal VS Central Bank of India - 2019 0 Supreme(SC) 998. This legislative intent prioritizes expeditious recovery.
Courts consistently uphold SARFAESI's dominance. In one ruling, once a sale notice is issued under Section 13(4), the borrower's redemption right is lost, making the bank's enforcement absolute Y. B. Shamanna, S/o. Late Byanna VS Authorized Officer, The UCO Bank Ltd. - 2023 Supreme(Kar) 575. The court ruled that once a sale notice is issued, the borrower loses the right to redeem the mortgaged property... Y. B. Shamanna, S/o. Late Byanna VS Authorized Officer, The UCO Bank Ltd. - 2023 Supreme(Kar) 575.
Another case emphasized that SARFAESI proceedings under Sections 13(2) and 13(4) proceed despite prior attachments, with sale confirmation extinguishing them SIYAD vs MATTANCHERY MAHAJANIK CO-OPERATIVE URBAN BANK LTD. - 2026 Supreme(Online)(Ker) 6637. The confirmation of sale under SARFAESI Act extinguishes prior attachments on the property, rendering them ineffective. SIYAD vs MATTANCHERY MAHAJANIK CO-OPERATIVE URBAN BANK LTD. - 2026 Supreme(Online)(Ker) 6637.
On priorities, tax arrears under laws like TNGST Act may claim precedence via first charge, but SARFAESI sales protect bona fide purchasers A. Senthil Kumar VS Assistant Commissioner, Chennai - 2010 Supreme(Mad) 5517. The judgment establishes the principle that tax arrears under the TNGST Act create a first charge over the property, giving them priority over the claims of secured creditors under the SARFAESI Act. A. Senthil Kumar VS Assistant Commissioner, Chennai - 2010 Supreme(Mad) 5517.
SARFAESI's overriding effect also extends over arbitration proceedings; remedies are additional, not exclusive Umesh Kumar Gupta S/o Late Shri Ram Sajivan Gupta VS Collector Rewa - 2024 Supreme(MP) 33. The provisions of the SARFAESI Act have overriding effect over other laws, and the provisions of the Arbitration and Conciliation Act, 1996 are available... in addition... Umesh Kumar Gupta S/o Late Shri Ram Sajivan Gupta VS Collector Rewa - 2024 Supreme(MP) 33.
Pre-deposit mandates under Section 18 for appeals reinforce procedural discipline CHUNNU FASHIONS VS EDELWEISS ASSET RECONSTRUCTION CO. LTD. - 2017 Supreme(Del) 105.
The 2016 Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act curtailed redemption rights. Previously aligned closer to TPA, now borrowers must redeem before auction notice publicationM. Rajendran VS KPK Oils And Protiens India Pvt. Ltd. - 2025 0 Supreme(SC) 1723. Post-amendment, the right of redemption is limited to before the publication of the auction notice, and that the SARFAESI Act overrides the Schedule law. M. Rajendran VS KPK Oils And Protiens India Pvt. Ltd. - 2025 0 Supreme(SC) 1723.
This shift supports the Act's object: swift recovery without prolonged litigation. Courts dismiss petitions abusing process, like repeated delays without payment Y. B. Shamanna, S/o. Late Byanna VS Authorized Officer, The UCO Bank Ltd. - 2023 Supreme(Kar) 575.
Future disputes may test amendment limits, but current jurisprudence favors SARFAESI.
In conclusion, while surface-level tensions exist, the SARFAESI Act's architecture ensures Sections 13(2) and 13(4) prevail over conflicting provisions. Stay informed on amendments and rulings to navigate NPA recoveries effectively. For tailored guidance, seek professional legal counsel.
#SARFAESIAct, #BankingLaw, #RedemptionRights
As he defaulted, the proceedings under SARFASSI Act has been initiated, which culminated into issuance of the Sale Certificate in favor of the petitioner on 22.04.2021. ... 2. ... This Writ Petition has been filed seeking direction to the 2nd respondent to remove the entry made in the encumbrance of House Property (Door No.4/ ... 4.So far as the removal of entry from the encumbrance certificate is concerned, this Court is of the view that the entry itself is only to inform about the public about the....
Referring to the definition of “security interest” as defined under Section 2(zf), “secured asset” as defined under Section 2(zc) and the provisions contained in Sections 13, 17 and 34 of the SARFAESI Act, the Hon’ble Supreme Court held that the expression ‘any person’ used in Section 17 is of wide import ... and takes within its fold not only the borrower but also the guarantor or any other person who may be affected by action taken under Section 13(4) of the SARFAESI Act#HL....
Since, the borrowers committed default, the bank issued notice under Section 13(2) of SARFAESI Act and took steps under section 13(4). The land was auctioned on 08.11.2005 and confirmed in favour of the highest bidder i.e., the appellant. ... and mortgaged the same to defendant Nos.1 & 2 bank which includes suit schedule property. ... Further, Section 35 says, the Securitisation Act overrides other laws, if they are inconsistent wit....
The petitioner had preferred a Writ Petition vide WP(C) No. 13043 of 2021 challenging the Notice under Section 13(2) of the SARFAESI Act. The counsel for the respondent withdrew the Notice under Section 13(4) of the SARFAESI Act and the petition was accordingly disposed of. ... However, the respondent again filed a petition under Section 14 of the SARFAESI Act before the Court of learned CMM, South East District, Saket Court, New Delhi by concealing the factum of with....
It is then the Bank sought to initiate proceedings invoking the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘the Act’ for short) in respect of the schedule property by issuing a notice as is required under sub-sections (2) and (4) of Section 13 ... This leads the Bank to initiate proceedings under the Act. A notice is issued under sub-section (2) of Section 13 of the #HL_STAR....
Syndicate Bank 121 (2005) DLT 241 (DB), the debtor has an opportunity of showing cause and a right of hearing (under Sections 13(2) & 13(3A) of the SARFAESI Act) and right of appeal to the Debt Recovery Tribunal (under Section 17 of the SARFAESI Act), there is no such remedy available to the debtor under ... inconsistent to the provisions of the SARFAESI Act, then SARFAESI Act cannot override the other legislation. ... State of Kerala (2009) #HL_STAR....
Later, on 31.3.2018, the loan account was classified as non-performing asset and notice under Section 13(2) of the SARFAESI Act was issued on 26.6.2018. ... He further contented that the decree schedule property was not a secured asset under the SARFAESI Act . ... Since the amounts were not paid, Section 13(4) of the SARFAESI Act was invoked and symbolic possession of the property was taken on 9.10.2018. Thereafter M.C.No.394/2019 was filed before t....
The rights already got accrued to the Petitioners in view of the sale under the SARFASSI Act. ... The tax under sub-section (2) of Section 13 shall be paid without any notice of demand. ... ... 2. The case of the Petitioners is that the Third Respondent advertised for tender-cum-auction for sale of the property of one M/s. Pioneer Cashew Limited under Section 13(4) of the SARFAESI Act, 2002. ... Non-obstante Clause in Section 13 of....
Under the SARFAESI Act, the proceedings are liable to be set into motion by issuing notice under Section 13(2) followed by measures/recourses under sub-section (4), for which also the Limitation Act has been made applicable. ... Section 17(2) casts obligation upon the DRT to consider and decide whether any of the measures referred to in sub-section (4) of Section 13 are in accordance with the provisions of this Act and rules made t....
It is further not disputed that petitioner defaulted in repayment of loan leading to the loan account becoming NPA and the financial institution after resorting to Section 13(1) & (2) of the SARFAESI Act took recourse to Section 13(4) of the SARFAESI Act by filing an application u/s 14 of the SARFAESI ... 2.2 It is further not disputed by petitioner that a Securitization Application has been filed by petitioner-borrower assailing the notice for poss....
What is relevant to notice is that Section 11 of the Act refers to the First Schedule whereas Section 12 refers to the Second Schedule and Sections 13(1) and 13(2) refer to Part I of the Third Schedule and Sections 13(3) and 13(4) refer to Part II of the Third Schedule. However, sub-sections (4-A) and (4-B) of Section 13 do not refer to any schedule at all because by those sub-sections general provisions are enacted which apply to all the cases where a citizen of India has obtained or is desirous of obtaining medical qualification granted by any medical institution in any c....
(1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as nonperforming asset, then, th....
5. Section 13 (1), (2), (3), (3A), (4) and (5) of the SARFAESI Act provides as follows:- “13. Enforcement of security interest (1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of court or tribunal, by such creditor in accordance with the provisions of this Act. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured d....
Therefore, the system put in place by the Commissioner by the order dated 17th January 2014 cannot be said to be inconsistent with Sections 12 and 13 of the IT Act. While there may not be an express agreement between the originator and the notice, an order validly passed by the Commissioner in exercise of his powers under Rule 62 (1) (vi) of the DVAT Rules is binding on the registered dealers. The Court is unable to find a legal infirmity in the Order dated 17th January 2014. It is not inconsistent with Section 13 (1) read with Section 13 (2) of the IT Act.
Thereafter, section 13(4) inter alia provides that in case the borrower fails to discharge his liability in full within the period specified in the 13(2) notice, the secured creditor may take recourse to one or more measures [as set out in section 13(4)] to recover his secured debt. Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt: Section 13(4) of the SARFAESI Act reads as under:- “(4) In case the borrower fails to discharge his liabili....
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