A Notice in Time Saves Nine

The right to receive notice and an opportunity to be heard are considered as twin ingredients of natural justice, unless specifically excluded by legislation. There are certain laws in India that warrant strict compliance with this requirement. The courts in India have also examined this requirement and its consequences, while keeping in mind the extent to which this requirement is needed to be met with.

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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