Answer : Banks and Financial Institutions cannot take any Sarfaesi Action without serving a notice of 60 days on the borrower / mortgager under Section 13(2) of Sarfaesi Act, 2002

Answer : In the notice under Section 13(2) of Sarfaesi Act, 2002, the bank or financial institution should give details of the amount payable by the borrower and should also give details of the secured assets which the secured creditor intends to enforce in the event of non payment of secured debts by the borrower. Generally, in the notice under Section 13(2) of Sarfaesi Act, 2002, the banks and financial institutions give details of the loan that was given to the borrower, mention that there has been default in the repayment of the loan and or interest and consequently, the loan account has been classified as NPA , give details of the total amount payable and give notice that if the said amount is not paid within 60 days, the bank or financial institution will take further steps and measures like taking over of possession and sale of the assets

Answer : The borrower can make representation or raise objection against the notice under Section 13(2) of Sarfaesi Act, 2002. Such representation or objection should be made within 60 days of the date of the notice under Section 13(2) of Sarfaesi Act, 2002.

Answer : It may be argued on the behalf of the bank or financial institution that the borrower did not make any representation or objection against the notice under Section 13(2) of Sarfaesi Act, 2002 because the borrower did not have anything to say against the said notice. This may create some problem when the borrower moves Debts Recovery Tribunals challenging the steps and measures taken by the bank and financial institution under Sarfaesi Act, 2002. Hence it is advisable to send a proper and legal reply to the notice under Section 13(2) of Sarfaesi Act, 2002.

Answer : There is a difference between representation or objection. In the objection, the borrower has to state the points because of which, the notice under Section 13(2) of Sarfaesi Act, 2002 is illegal or because of which the said notice should not have been issued. On the other hand, in the representation, the borrower makes an appeal to the Secured Creditor for some relief or concession. Preferably, the borrower should send a combined reply containing both representation and objection. The reply to the said notice should be properly drafted by a banking law expert. The borrower should state the under mentioned facts in the reply to the said notice :- The borrower should state some relevant facts to prove that he is not a wilful defaulter and the default has occurred because of circumstances totally beyond his control In case there has been any deficiency on the part of the bank in the matter of sanction and disbursement of loan, or if the lender has violated or is guilty of violating lenders’ liability, that should be highlighted in the borrowers reply. The borrower should thoroughly check whether the amount claimed in the notice is correct or not, whether the rate of interest claimed by the bank is as per the contract or not and whether there is actually any default in the loan account or not. The borrower should clearly check whether any objection can be raised to the legality and validity of the mortgage, hypothecation, etc. The borrower should thoroughly check, if necessary with the help of charted accountant, whether the loan account is NPA or not. The Borrower should not make any admission of a particular amount of debt, otherwise the bank may pray for certificate on the basis of admission made in the reply to the notice under Section 13(2) of Sarfaesi Act, 2002

Answer: The remedy available to a borrower upon receipt of a notice under section 13(2) of the Sarfaesi Act, 2002 is to make a representation or raise an objection to the Secured Creditor under section 13(3A) of the Sarfaesi Act, 2002.

Answer: A Borrower cannot file an application under Section 17 of the Sarfaesi Act, 2002 against a notice under Section 13(2) of the Sarfaesi Act, 2002. However, subsequently when the borrower moves the DRT under Section 17 of the Sarfaesi Act, 2002 against any subsequent steps or measures, he can take the point that the notice under Section 13(2) of the Sarfaesi Act, 2002 is illegal and void and consequently, all subsequent steps or measures are also illegal and void.

Answer: A Borrower cannot ordinarily file a writ petition under Article 226 and 227 of the Constitution of India against a notice under Section 13(2) of the Sarfaesi Act, 2002. In the case of Punjab National Bank Versus Imperial Gift House reported in (2013)14 Supreme Court Cases Page 622, Supreme held that the High Court was not justified in entertaining the writ petition against the notice issued under Section 13(2) of the Sarfaesi Act, 2002 and quashing the proceedings initiated by the Bank. However, High Court has a discretion in the matter and in an appropriate case, High Court may entertain a writ petition. For example, if it is absolutely clear that the property in question is not a mortgaged property, High Court in its discretion, may entertain a writ petition. In the case of Debabrata Das versus Sate of West Bengal reported in AIR 2011 Calcutta page 57 (Division Bench), Calcutta High Court found that property was never mortgaged. Calcutta High Court ordered to return possession along with cost of Rs. 1 lakh.

Answer: The borrower cannot file a suit in civil court challenging the notice under Section 13(2) of Sarfaesi Act, 2002

Answer: The secured creditor must consider the representation or objection of the borrower against the notice under Section 13(2) of Sarfaesi Act , 2002 and if the Secured Creditor finds that the representation or objection is not acceptable or tenable, he shall communicate within 15 days 

(7 days before 15.01.2013) the reasons for non – acceptance of the representation or objection to the borrower. The Supreme Court in the case of Mardia Chemicals Limited –Versus- Union of India, reported in (2004)4 Supreme Court Cases page 311, has held that there should be some meaningful consideration of the objection raised rather than to ritually reject them and proceed to take drastic measure under Sub Section 4 of Section 13 of the Sarfaesi Act , 2002.

Answer: If the borrower does not make payment within 60 days after receiving notice under Section 13(2) of Sarfaesi Act, 2002, the Secured Creditor can take one or more of the measures mentioned in Section 13(4) of the Sarfaesi Act, 2002, as mentioned below :- 

Take possession of the Secured Asset :

Transfer the Secured Assets by way of lease, assignment or sale :

Take over the management of the Business of the Borrower:

Transfer the business of the borrower by way of lease, assignment or sale 

Appoint any person to manage the Secured Assets, the possession of which has been taken over by the Secured Creditor :

Require any person who has to make some payment to the Borrower , to make such payment to the Secured Creditor :

Answer : After receipt of a notice under Section 13(2) of Sarfaesi Act, 2002, a borrower cannot transfer by way of sale, lease, or otherwise( other than in ordinary course of his business) any of his secured asset mentioned in the notice under Section 13(2) of the Sarfaesi Act, 2002 without prior consent of the secured creditor.