09 May 2008
TIME LIMIT FOR TAKING ACTION AFTER NOTICE IS SERVED Under section 13(4) of the Act the secured creditor can take action any time after the expiry of 60 days notice under section 13(2). There is no time limit. However action must be taken within reasonable time. The notice cannot be said to be perpetually valid. If the creditor does any act which is contrary to the intention of notice (e.g. reschedules loans or gives further time for repayment), it can be said that the notice has abated and no action can be taken against such notice.
Is there any case law to support above proposition ?
Actually No limitation is mentioned for a secured creditor to initiate action against the borrower us 13(4). The Borrower also has remedy only after an action is there as per s 17 (1). The case of Mardia Chemicals has no discussion on this point and declares only 17(2) as unconstitutional
11 May 2008
Thanks Mr. Agrawal I know there is no limit provided for taking action post notice under section 13(2). I am to know whether the creditor is estopped from proceeding under section 13(4) if he after sending the notice has accepted the liability crystalised before sending the notice during the intervening period of 15 months and the existing liability has arisen subsequent to notice. As a matter of fact I am of the opion that there should be an equity estoppel against the creditor. I need some case law to support this opinion. Kindly also enlighten me whether the right of the borrower starts after taking physical possession of the property or after an order for assistance from CMM court is taken and a receiver is appointed.
29 May 2008
Dear Thukral Sahib In SARFAESI Act section 36 provides the limitation period sought by you. This section says that the secured creditor should take measures under section 13(4)within the limitation provided by law of limitation to avail such type of relief. It clears your problem but creates a new problem for me. What I understand by this section is that the secured creditor should give notice to the debtor well in time that is to say before 2 or more months prior he should give notice under s 13(2). Suppose in a particular case it remains only 7 days of limitation period. if he gives notice under section 13(2), he is bound to wait for 60 days and then only he can proceed under s 13(4). The limitation expires only after 7 days of notice so is it correct that he can not take recourse of s 13(4)? What I want to say is that time taken in the proceedings under section 13(2) does not stop running of limitation period.