FLAT 20% OFF and 3-Months ADDED Validity on All Courses Absolutely FREE! Enroll Now Use Code: INDIA20
LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

veenzar (Advocate)     05 March 2008

Securitisation Act

What is the latest legal position on SARFAESI Act? (Securitisation Act)


 18 Replies

Guest (n/a)     08 March 2008

The Supreme Court in its judgment in Mardia Chemicals Ltd. etc. vs. Union of India & Ors reported in (2004)4SCC311 has upheld the constitutional validity of almost all provisions of the Act. It has, however, quashed section 17(2) of the Act by declaring it unconstitutional. The Supreme Court held as under- a) that after service of notice under sub-section (2) of section 13 it is incumbent upon 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. b) if the borrower raises any objection or places facts for consideration of the secured creditor, such reply to the notice must be considered with due application of mind and the reasons for not accepting the objections, howsoever brief they may be, must be communicated to the borrower. c) if any measures are taken under sub-section (4) of section 13 and before the date of sale/auction of the property it would be open for the borrower to file an appeal (petition) under section 17of the Act before the Debt Recovery Tribunal. d) the tribunal in exercise of its ancillary powers shall have jurisdiction to pass any stay/ interim order subject to condition as it may deem fit and proper to impose. e) requirement of deposit of 75% of amount claimed before entertaining an appeal (petition) under section 17 of the Act is an oppressive, onerous and arbitrary condition against all the canons of reasonableness. Condition is invalid and struck down. Section 13(3-A) inserted by amending Act 30 of 2004 after the judgment of this Court in Mardia Chemicals (supra), whereby the borrower is permitted to make representation/objection to the secured creditor against classification of his account as NPA. He can also object to the amount due if so advised. Under Section 13(3-A), if the bank/FI comes to the conclusion that such objection is not acceptable, it shall communicate within one week the reasons for non-acceptance of the representation/ objection. A proviso is added to Section 13(3-A) which states that the reasons so communicated shall not confer any right upon the borrower to file an application to the DRT under Section 17. In Transcore Versus Union of India & Another, reported in 2008 (1) SCC 125, the Honourable Supreme Court held that withdrawal of the O.A. pending before the DRT under the DRT Act is not a pre-condition for taking recourse to NPA Act. It is for the bank/FI to exercise its discretion as to cases in which it may apply for leave and in cases where they may not apply for leave to withdraw. We do not wish to spell out those circumstances because the said first proviso to Section 19(1) is an enabling provision, which provision may deal with myriad circumstances which we do not wish to spell out herein.

Prakash Yedhula (Lawyer)     24 March 2008

Nice update

SANJAY DIXIT (Advocate)     31 March 2008

Thanks dear Rajesh.

Shree. ( Advocate.)     29 April 2008

thanks for info sir.

J. P. Shah (RTI & CONSUMER ACTIVIST)     29 April 2008

Very useful to me. Thanks to Shri Rajesh

VIJAYA KUMAR (Lawyer)     02 May 2008

thanks for your information

m (maneger)     02 May 2008

Hi All https:/www.topeducation.in This website provides a complete range of education of all courses, colleges, Universities in India to match your Career. Thanks……………………

Guest (n/a)     12 May 2008

It was a good write up. I would also like to know whehter a Debenture Trustee of various Debenture Holders can enforce right under SRFAESIA ?

Jagadeesha (Advocate and Legal Consultant)     16 June 2008

thanks for update.

ESTHERPRIYA (Practising Advocate)     17 June 2008

Excellent work Mr./ Miss./Mrs. Guest

Srinivas.B.S.S.T ( Advocate)     18 June 2008

its a valuable information

J. P. Shah (RTI & CONSUMER ACTIVIST)     04 July 2008

In one of my clients case, a nationalised bank had taken physical possession under securitisation act, of his flat and prepared panchanama and inventory. However, when the flat was given back on adjusting loan acccount, certain items like freeze, tv, were missing. Client has having panchanama and inventory of giving possession. Thus there is difference of few costly items  which are missing during the time flat was in actual custody of the bank. Despite requests by my client, the authorised officer is not filing FIR. Locks were intact but seals were broken. There are no signs of forceful opening on the only door to the flat which is on 5th floor. What should my friend do. Officers of bank are trying to save their colleagues, who my client apprehends that he would have removed. Neighbours have said orally that the bank manager was opening the flat and removing big things. Pl advicse.

Jinendra Lal Jain (Advocate)     12 February 2009


Mr. J. P. shah,

Advise your client to lodge a FIR under Section 406 og the IPC for griminal breach of trust. I am sure he will get the relief.

Another course is to file a complaint about deficiency in service as the Bank  has failed to maintain the security of the articles of which it had taken possession under section 13(4) of Securitisation Act and therefore the bank is liable to compensate and pay compensation for not providing proper services.

You may further contact me as and when desire over the subject.


J. L. JainARFa

J. P. Shah (RTI & CONSUMER ACTIVIST)     15 February 2009

Thanks Shri Jain. He has last week filed complaint in State Consumer Commission at Ahmedabad for Rs.41.00 lacs. His wife will be filing a civil case in local court, against the bank shortly for dispossessing her stridhan etc for 12 months when she was no way connected to Bank. Some items are missing also.

Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Start a New Discussion Unreplied Threads

Popular Discussion

view more »

Post a Suggestion for LCI Team
Post a Legal Query