AI Overview...
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SARFAESI Auction Notice & Second Guarantor - The SARFAESI Act, 2002, empowers secured creditors to initiate proceedings under Sections 13(2) and 13(4) for default, including issuing possession notices and conducting auction sales of secured assets. When a borrower defaults, the bank can proceed to auction the mortgaged property, often involving guarantors who may be held liable if they have provided guarantees. Several sources highlight that notices under Section 13(2) must be properly served, typically to both borrower and guarantor, to ensure validity Tamilnad Mercantile Bank Ltd. , Through its Manager, Kalakkad Branch VS T. David Kamaraj - Madras, Nalluri Satyanarayana, S/o. Butchaiah VS Union Bank of India, Guntur Main Branch, Rep. by its Chief Manager & Authorized Officer - Andhra Pradesh, Indian Bank, Asset Recovery Management Branch-I & Others VS Debt Recovery Appellate Tribunal, Mumbai & Others - Madras.
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Legal Validity of Auction Notices & Proceedings - Courts have upheld the legality of auction notices issued under SARFAESI, provided procedural requirements are met, such as proper notice period and compliance with statutory provisions. For instance, a 30-day notice period was deemed sufficient, and procedural lapses like inadequate notice or improper service have led to orders setting aside auction sales M. S. Sanjay VS Indian Bank - Supreme Court, Niranjan Kumar Sinha VS Central Bank of India - Jharkhand.
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Role of Guarantors & Second Guarantor - Guarantors can be summoned and held liable under SARFAESI if they have provided a guarantee. The law allows recovery of dues from guarantors, and auction notices can be issued against properties of guarantors if they have guaranteed the debt. However, courts have emphasized that notices must be properly served to guarantors; failure to do so can invalidate proceedings Bank of India, represented by Chief Manager, Bank of India VS Debt Recovery Appellate Tribunal represented by Registrar, Chennai - Andhra Pradesh, B. Pattabhiraman VS Authorised Officer, State Bank of India, Coimbatore - Madras.
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Second Guarantor & Insolvency Proceedings - In cases involving second or personal guarantors, proper notice is crucial before initiating insolvency or recovery proceedings. Improper or lack of notice can invalidate such proceedings, as seen in cases where insolvency was challenged due to insufficient notification Ravi kumar jain VS Union Bank of India - National Company Law Tribunal.
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Interference & Appeals - Parties aggrieved by auction notices or proceedings under SARFAESI can challenge these before Debt Recovery Tribunals or appellate authorities. Courts have generally held that interference with auction notices is unwarranted if procedural compliance is demonstrated, and appeals are disposed of accordingly Niranjan Kumar Sinha VS Central Bank of India - Jharkhand, Indian Bank, Asset Recovery Management Branch-I & Others VS Debt Recovery Appellate Tribunal, Mumbai & Others - Madras.
Analysis & Conclusion:
The SARFAESI Act facilitates secured creditors, including banks, to auction mortgaged properties, with guarantors potentially liable if guarantees are provided. Proper service of notices, especially under Sections 13(2) and 13(4), is critical for the validity of proceedings. Second guarantors can be involved, but their rights and liabilities depend on adherence to procedural requirements. Any procedural lapses, such as improper notice, can lead to legal challenges and the setting aside of auction sales. Therefore, for a second guarantor or guarantor involved in SARFAESI proceedings, ensuring proper notice and compliance with legal procedures is essential to uphold their rights and the validity of auction processes.
Search Results for "Sarfaesi Act Auction Notice Second Guarantor"
2021 0 Supreme(Mad) 2785 • India - Madras
J.NISHA BANU
demand notice, followed by a possession notice to respondents - Respondents mortgaged property had been auctioned for a sum of Rs ... Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section ... /- from petitioner/Bank and due to default, by invoking Sections 13 (2) and 13(4) of SARFAESI Act, petitioner/Bank issued statutory ... as a guarantor. ... Thereafter, on 11.05.2017, action was initiated u....
2016 0 Supreme(Jhk) 569 • India - Jharkhand
APARESH KUMAR SINGH
Petitioners herein challenge the E – auction notice of landed properties of petitioners taken as collateral security by the Bank ... Bank Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Sections 17 and 13 – ... (4) – Interference with the impugned notices is not warranted – Directions issued. ... The SARFAESI Appeal was disposed of on 04.02.2016 (Annexure-5) during pendency of which, an earlier e-auction #HL_START....
2019 0 Supreme(Mad) 1237 • India - Madras
R.SUBBIAH, B.PUGALENDHI
sale notice itself, it is stated that the charged properties in the name of the borrower do not form part of the auction sale - ... Act. ... , contention of the petitioners that the secured creditor of the corporate debtor has to wait to initiate proceedings under the SARFAESI ... Thereafter, the respondent-Bank proceeded under Section 13(4) of the SARFAESI Act and issued first E-Auction Sale Notice, dated 28.11.2017, against which, the Company filed....
• India - Dishonour Of Cheque
APARESH KUMAR SINGH
Bank in terms of provisions of Act of 2002 to allow borrower / guarantor to repudiate debts before property is auction sold or to ... 13(4) and 17—Recovery of debt—Sale of mortgaged property—Action taken by Bank under provisions of SARFA ... statutory remedy available under Section 17 of SARFAESI Act, 2002—It always open for ... The SARFAESI Appeal was disposed of on 04.02.2016 (Annexure-5) during pendency of which, an earlier e-auction#HL_....
2010 0 Supreme(Mad) 2363 • India - Madras
ELIPE DHARMA RAO
and allowing credit of the amount deposited by the auction purchaser was illegal and not in line with the provisions of the SARFAESI ... amount to be made by the borrower/guarantor while preferring an appeal before the Debts Recovery Appellate Tribunal under the SARFAESI ... The bank had filed an application for recovery of a loan, and the guarantors contested the possession notice and sale of the mortgaged ... to the guarantor and no difference or distinction could b....
2022 0 Supreme(AP) 289 • India - Andhra Pradesh
C.PRAVEEN KUMAR, V.SUJATHA
taking possession of properties belonging to borrower and guarantors - Possession notice issued under Section 13(4) of SARFAESI ... Notice under Section 13(2) was sent only to borrower and not to the guarantor - This has been found fault with said case, no material ... SARFAESI Act - Section 13(4) and 13(2) - General Clauses Act - Section 27 - Enforcement Of Security Interest ... SARFAESI Act. ... As no representat....
2011 0 Supreme(AP) 106 • India - Andhra Pradesh
GHULAM MOHAMMED, K.G.SHANKAR
Tribunal granting stay of the notice under Section 13 by the Bank without laying the condition of 50 % amount to be deposited is ... A) SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSESSTS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002, Section 18:- Debt Recovery ... Tribunal committed gross legal error in ordering to give credit of amount deposited by auction purchaser to guarantor, as auction purchaser cannot be brought within the fold of ‘borrower’ under SARFEASI Act#H....
2025 0 Supreme(SC) 302 • India - Supreme Court
J. B. PARDIWALA, R. MAHADEVAN
The auction purchaser contended that the bank followed due process under the SARFAESI Act, while the guarantor challenged the legality ... a 30-day gap between sale notices did not invalidate the auction, as the initial notice complied with legal requirements. ... (A) SARFAESI Act - The appeal arises from the High Court's order setting aside the Debt Recovery Appellate Tribunal's decision regarding ... (iv) The Bank proceeded to pu....
2007 0 Supreme(Mad) 2150 • India - Madras
SUDHANSU JYOTI MUKHOPADHAYA, FAKKIR MOHAMED IBRAHIM KALIFULLA
as a routine cannot claim for notice under Section 13(2). ... debt or any instalment thereof - In case of default, secured creditor can take possession of the secured assets of the borrower - Guarantor ... and 13(4) - Possession of secured asset---Question of notice under Section 13(2) arises only in case of default in payment of any ... In the impugned order dated 13th June, 2005, the DRAT, Chennai, has not shown the reason to entertain the petition filed by M/s.K.K.Steel Enterprises, who had neither applied pursuant to the first #HL_ST....
2025 Supreme(Online)(NCLT) 2871 • India - National Company Law Tribunal
notice, the insolvency application cannot proceed. ... ) Insolvency and Bankruptcy Code, 2016 - Sections 95 and 96 - Personal Insolvency Resolution Process initiated against personal guarantor ... for default of Rs.8,94,58,478/- - The court found that the personal guarantor was not properly notified before initiating insolvency ... A Section 13(2) SARFAESI notice dated 28.08.2020 was issued by UBI, invoking the second charge on the property before the first charge. Symbolic possession ....
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