SARFAESI Act

Dual Frameworks, Dual Obligations: MSME Restructuring under RBI Framework versus Enforcement under SARFAESI Act

Summary: The RBI’s MSME restructuring framework encourages early intervention and collaborative revival, while the SARFAESI Act enables swift creditor enforcement. Courts have clarified that MSMEs must proactively invoke restructuring protections before SARFAESI proceedings begin. The dual frameworks highlight the need for timely borrower action and balanced lender discretion to ensure rehabilitation is not sidelined by enforcement.Continue Reading Dual Frameworks, Dual Obligations: MSME Restructuring under RBI Framework versus Enforcement under SARFAESI Act

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

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.Continue Reading “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

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]Continue Reading Overhaul of the ARC Framework – Need of the hour

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.
Continue Reading Limitation Act is to be made applicable ‘as far as may be possible’ to Insolvency Code

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.
Continue Reading Lenders as Promoters under RERA regime: Analysing Haryana Real Estate Regulation Authority’s recent Order in Supertech Hues case

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)?
Continue Reading Is the Period of 15 Days Stipulated under Section 13 (3A) of SARFAESI Act to Respond to a Representation by a Borrower Mandatory?