Under this act secured creditors (banks or financial institutions) have many rights for enforcement of security interest under S. 13 of SARFAESI Act, 2002. The procedure of Physical Possession of the secured asset: If the borrower defaults in repayment, under S. 13(2) a demand notice is to be sent by Secured Creditor to the borrower to discharge his liabilities. Such notice persists for 60 days. The demand notice shall contain details and amounts of the amount payable by the borrower. This demand notice can also be objected to by the borrower, which should be replied to by the secured creditor within 15 days, and the reply should enumerate the reasons for the non-acceptance of such objection. This position was clarified by the Hon’ble Supreme Court of India and later amended into the SARFAESI Act, as S. 13 (3A). When the 60 day period concludes, without any discharge by the Borrower, actions can be taken by the Secured Creditor as enumerated under S. 13 (4) - wherein they can take possession of the secured assets, take over the management of the asset, appoint any person to manage the secured asset, require any person who has acquired any of the assets from the borrower to pay the secured creditor. The actions under S. 13 (4) are appealable as enumerated in S. 17- 18. Therefore, the borrower can appeal the actions of the secured creditor in Debt Recovery Tribunal, DRAT, writ in High Court, and SLP in Supreme Court. The procedure of Sale and Auction under the SARFAESI Act, 2002: A Sale Notice is required in the case of auctioning off of the secured asset if inviting tenders from the public, or by way of public auction. This sale notice shall be published in 2 leading newspapers, on the website of the secured creditor, and as per the Directions of the Ministry of Finance directions, upload the tender notice on tender.gov.in. The sale notice or possession notice should be effectively served, i.e. in 2 newspapers in circulation in the area as provided for in the SECURITY INTEREST (ENFORCEMENT) RULES, 2002. More particularly, the procedure for an auction of immovable assets is given in Rule 8, Security Interest (Enforcement) Rules, 2002. the methods of sale of the immovable secured assets include: (a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying such assets; or (b) by inviting tenders from the public; (c) by holding public auction; or (d) by private treaty(after the possession of the asset by a Bank or Financial Institution, they might be willing to sell it to an appropriate buyer through a private deal with a third party)
