What Should Borrowers Do First After Receiving a SARFAESI Notice?

Ans. Begin by verifying the notice against your loan statement, repayment history, sanction letter and security documents. Identify the date of notice, amount demanded and property described in the notice. Advocate BK Singh can help you determine if there are any factual/legal inconsistencies to put down in objection.

Ans. As per Section 13(2) of SARFAESI Act, a borrower typically receives 60 days from the date of demand notice to fulfil the liability demanded by the secured creditor before further action may be taken.

Ans. Yes. Section 13(3A) allows for the borrower to send in representations / objection to the secured creditor. The response should include supporting loan statements, payment evidence, communication records and documents that establish error/misclaimed amounts.

Ans. If the secured creditor rejects the borrower’s representations / objection, then Section 13(3A) mandates that it communicates the reasons for not accepting it in writing within the prescribed format. Such a communication must be saved safely for future reference of the borrower.

Ans. Yes, a borrower can enquire about an One Time Settlement even after receiving a SARFAESI notice. Acceptance of an OTS is not guaranteed and is subject to the lender’s policies, account history, amount due, value of security, and commercial decision.

Ans. No. Sending a representation / objection under Section 13(3A) will not automatically stay any further SARFAESI action. Borrowers need to gauge the stage of recovery closely and not fall prey to notions that a reply by itself stops future possession.

Ans. A Section 17 application before the Debt Recovery Tribunal (“DRT”) typically arises when a person aggrieved by an action under Section 13(4) seeks remedy. A Section 13(2) notice by itself does not usually give rise to a DRT remedy under Section 17.

Ans. Section 17 is triggered typically 45 days from the date on which the action complained of under Section 13(4) is taken. Determining the correct action and date is important because limitation can become an issue in claiming the borrower’s remedy.

Ans. After the issuance of the 60-day notice, if the secured liability remains outstanding and all other statutory prerequisites are met, then the secured creditor may initiate action under Section 13(4) of SARFAESI Act, 2002 and proceed towards taking possession of the security. The procedure would depend on the facts and stage of recovery.

Ans. No, it is not legally required to hire a lawyer just to send in a reply to a SARFAESI notice. It may still be beneficial to have your response reviewed legally where the amounts claimed, papers, repayment credits, settlement negotiations or recovery process is being disputed.