SARFAESI Act

When Does the Door Close? Understanding The Right of Redemption of Borrowers Under SARFAESI Act

Summary: The SC has laid down the law on the right of redemption under the SARFAESI Act and clarified that (a) once a bank publishes an auction notice under the SARFAESI Act, the borrower permanently loses the right to redeem the mortgage; (b) the amendment to Section 13(8) of the SARFAESI Act in 2016 applies to all the loans declared as non-performing assets after September 1, 2016, regardless of when the loan was availed; and (c) the term “publication” in Section 13(8) refers to a single composite notice that encompasses all modes including service of notice, newspaper publication, affixation, and uploading on the website, rather than merely newspaper advertisements.Continue Reading When Does the Door Close? Understanding The Right of Redemption of Borrowers Under SARFAESI Act

Introduction:

A division bench of the Hon’ble Supreme Court, comprising Hon’ble Chief Justice D.Y. Chandrachud and Justice J. B. Pardiwala in Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd. and Ors[1] on September 21, 2023, held that a borrower only has right of mortgage redemption till the publication of auction notice under Section 13(8) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (“SARFAESI Act”). The Hon’ble Supreme Court analysed orders passed by various Hon’ble High Courts in interpreting the provisions of Section 13(8) of the SARFEASI Act, post the amendment in 2016 (“Amendment”) and the intent of the Amendment.Continue Reading Section 13(8) of SARFAESI Act: SC settles conundrum on right of redemption of borrower

Priority Of Dues Under SARFAESI - Bombay High Court Reiterates

In a significant order passed on June 28, 2023, in the case of Ronak Industries vs. Assistant Commissioner Central Excise & Customs & Ors.[1] (“Ronak Industries Case”), the Bombay High Court has upheld the priority of dues of secured creditors as laid down under Section 26-E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”). To pass the order, the Bombay High Court has relied on its previous decision in Jalgaon Janta Sahakari Bank Ltd. and Anr. Vs Joint Commissioner of Sales Tax Nodal 9, Mumbai and Anr.[2] and the decision of the Supreme Court in  ICICI Bank Ltd. vs. SIDCO Leathers Ltd.[3]and held that the dues of a secured creditor, upon registration of the charge with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (“CERSAI”), would rank in priority to the dues of the department of the Government.Continue Reading Priority Of Dues Under SARFAESI: Bombay High Court Reiterates