Duly Noted” Notice period for subsequent sale notice under Rule 8 and 9 of the Security Interest (Enforcement) Rules, 2002 relaxed by the Supreme Court.

Introduction

A three-judge bench of the Supreme Court, in S. Karthik & Ors. v. N. Subhash Chand Jain & Ors.[1](“S. Karthik”), recently relaxed the mandatory pre-requisites prescribed for sale of mortgaged assets under the Security Interest (Enforcement) Rules, 2002 (“The SI Rules”), under certain circumstances. It was held that when a sale notice under the SI Rules does not result in a sale due to reasons entirely attributable to the borrower, then the lender need not wait another 30 days before selling the mortgaged assets through a subsequent sale notice. This decision assumes significance as it is indicative of a lender friendly approach in monetising their security interests by adopting a flexible standard in interpreting the procedural prerequisites, rather than reading them pedantically. This blog examines the judgement in detail.

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Overhaul of the ARC Framework – Need of the hour

In continuance of various measures to resolve the pile of non-performing assets (NPAs) in the financial sector, the Reserve Bank of India (RBI) has now turned its focus on the role and framework of Asset Reconstruction Companies (ARCs) in being an important part of the solution. Even though the ARCs were in the game since enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI”), their performance has been sub-optimal and the recovery percentage abysmally low.[1]

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Limitation Act is to be Made Applicable ‘As Far as May Be Possible’ to Insolvency Code

The Supreme Court’s pro-insolvency stance continues. With three recent rulings in a period of one month, the Supreme Court has clearly indicated that, so far as possible within the contours of the Limitation Act, a debt will continue to be alive and an action basis such debt will be maintainable under the Insolvency and Bankruptcy Code, 2016 (“Insolvency Code”) against a defaulting borrower.
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Lenders as Promoters under RERA regime - Analysing Haryana Real Estate Regulation Authority’s recent Order in Supertech Hues case

Introduction

The Haryana Real Estate Regulation Authority (“HRERA”) has recently delivered an unprecedented order in the matter of Deepak Chowdhary Vs PNB Housing Finance Ltd. & Ors. (“Supertech Hues case/ Order”)[1]. This Order will have implications on banks and other financial institutions, which provide credit to real estate companies, while also bringing into focus, the conflict between the rights of such banks and financial institutions vis-à-vis the rights of allottees of such projects. Despite the Real Estate (Regulation and Development) Act, 2016 (“RERA/Act”), contemplating mortgage loans to be the “first funders” of a real estate project[2], the HRERA has passed an order, which may have implications on secured lenders when it comes to exercising their rights to enforce their security.
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Summary of Delhi HC Judgement of 13 3A SARFARESI

Can a secured creditor respond to a representation by a borrower, in response to a notice issued to him under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), beyond the mandatory period of 15 days (as stipulated under Section 13 (3A) of SARFAESI Act)?
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