Sale under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Sale with symbolic possession:

In this case, the creditor did not have actual possession of the secured asset but only a constructive or symbolic possession. The transfer of the secured asset by the creditor therefore cannot be construed to be a complete transfer as contemplated by Section 8 of the Transfer of Property Act. The creditor nevertheless had a right to take actual possession of the secured assets and must therefore be held to be a secured creditor even after the limited transfer to the auction purchaser under the agreement

Thus, the entire interest in the property not having been passed on to the creditor in the first place, the creditor in turn could not pass on the entire interest to the auction purchaser and thus remained a secured creditor in the Act.

Fraud and collusion with SARFAESI purchaser:

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Redemption of mortgage subject to SARFAESI Act

Section 13(8) of SARFAESI Act.

Failure to deposit full amount dues:

In the present case, the appellant failed to comply with the provisions of Section 13(8). The statute mandates that it is only where the dues of the secured creditor are tendered together with costs, charges and expenses before the date fixed for sale or transfer that the secured asset is not to be sold or transferred. Continue reading “Redemption of mortgage subject to SARFAESI Act” →

Does Arbitration bars remedy under SARAFESI Act

Effect of Arbitration Clause.

Loan agreements contained arbitration clauses which were invoked by the appellant with the filing of cases under Section 9 of the Arbitration and Conciliation Act, 1996. In view thereof, initiation of any other proceedings under the SARFAESI Act if impermissible in law?

Because arbitration is an alternative to the proceedings under the RDB Act, it would not be obligatory on the Bank/Financial Institution to withdraw the proceedings pending before the arbitrator, prior to resorting to secure its interest under the SARFAESI Act. The Bank/financial institution can simultaneously proceed before the Arbitral Tribunal for adjudication of disputes and also take recourse to Section 13 of the SARFAESI Act for enforcement of its security interest. Both the proceedings can continue parallel to each other. Continue reading “Does Arbitration bars remedy under SARAFESI Act” →