SARFAESI ACT 2002

SARFAESI ACT 2002
THE SARFAESI ACT IS A VERY EFFECTIVE AND USEFUL FOR RECOVERY OF DEBT. DRT AND DRAT BOTH ARE IMPORTANT PART FOR RECOVERY OF DEBT.

Posted March 3,2019 in Education.

Sandip Maniya
3 Followers 53 Views

The SECURITISATION AND RCONSTRACTION OF FINANCIAL ASSESTS AND ENFORCEMENT OF SECURITIES INTREST ACT-2002, As known as SARFAESI Act Allows to bank and financial institution to auction Residental And Commercial Properties to Recover loans the bank and financial institutions ( secured creditors ) have right to enforcement of security intrest under the SARFAESI Act 2002.if borrower can not pay installment and makes any default in repayment and his account is classified as NON-PERFORMING ASSETS by bank or financial insttution then they are required before expiry of period of limitation by writing notice.generally, notice time period is 60 days under the SARFAESI Act-2002.

 

CONCEPT 

 

 

  dispute is arrived between bank or financial institution and borrower then they are gong with the company act before enforce sarfaesi act 2002 is enact.

 

  •  prima facie any dispute are creating related to debt recovery the party takes follow the section 137 of company act.
  • civil suit is mandatory for the recovery of debts.
  • the company act process is very wide and take a time upto 4-5 years to settlement between parties.
  • so then after  NARSIMHAM COMMITTEE enforce the RECOVERY OF DEBT ACT 1993.
  • there is an two types of the recovery of debt act 1993:
  1. DRT -DEBT RECOVERY TRIBUNAL
  2. DRAT- DEBT RECOVERY APPELLATE TRIBUNAL       


DRT - DEBT RECOVERY TRIBUNAL

  • DRT is work under the recovery of debt act 1993 
  • total DRT (38) in india.
  • limitation period of notice is 45 days.
  • DRT is take 180 days for resolving the dispute.
  • if borrower can filed suit in DRT then he pays 70% amount of total securities.
  • supreme court interfere for this process and pass the order to zero amount pay to filed suit in DRT.
  • appeal can be filed first in DRT. even  if any parties can't be satisfied with DRT judgement then filed suit in DRAT.

DRAT - DEBT RECOVERY APPELLATE TRIBUNAL

  • DRAT is work under the recovery of debt act 1993.
  • total 5 DRAT are available in india.
  • limitation time period of notice 30 days.
  • for the filed suit in DRAT minimum 50% amount pay of security before suit.
  • DRAT take 180 days for resolving the dispute.
  • suddenly the number of pending cases are increasing so both DRT and DRAT take 3-4 years to resolving the dispute.

 

there is an lots of loopholes in this act and this loopholes were mis-used by borrowers,so government make appoint another committee under Mr.Andhyarujina was appoint examine banking sector reforms and to change in the legal system.

 

the committee recommended to enact the new lagislation for establishment  securitisation law and empower the bank and financial institution to take possession of non performing assets.

thats why SARFAESI actfor the first time empower  recover they dues without interfere of court

 

 

SARFAESI ACT-2002

 

SARFAESI Act is a very effective and useful for the recovery of debt. SARFAESI Act cover any asset,movable or immovable,given as a security whether by the way of mortgage.the SARFAESI Act-2002 gives power of seized or desist to bank. bank or financial institute can given notice in writing to defaulting borrowers required it to discharge it liabilities within 60 days.if borrower fails to comply with notice then bank or financial institute take laid down action.

  • take a possession of securities of loan
  • sell the property
  • given the property on lease
  • hand over the management

 

under the SARFAESI Act bank or financial institution (secured creditors) given notice to the borrower and the time period of notice is 60 days. notice period is divided in to two part 

  1.  15 days _ for settlement
  2. 45 days _  for appeal

 

SARFAESI ACT 2002 _ NOT APPLICABLE 

 

SARFAESI Act are very important to the recovery of debt and specially useful for the bank or financial institution to recover debt without interfere of court .but some other securities for the borrower are under the laid down

 

  • Agriculture land can not be sold
  • debt are secured
  • due amount up to 1 lac
  • due amount 1 lac and above more then 20% of the principal loan amount and interest there on.
 
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