law: Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
  13. Enforcement of
  
  security interest.- 
  1.     
  
    Notwithstanding
  
  anything contained in section 69 or section 69A of the Transfer of Property
  
  Act, 1882 (4 of 1882), any security interest created in favour of any secured
  
  creditor may be enforced, without the intervention of the court or tribunal, by
  
  such creditor in accordance with the provisions of this Act.
  2.     
  
    Where
  
  any borrower, who is under a liability to a secured creditor under a security
  
  agreement, makes any default in repayment of secured debt or any instalment
  
  thereof, and his account in respect of such debt is classified by the secured
  
  creditor as non-performing asset, then, the secured creditor may require the
  
  borrower by notice in writing to discharge in full his liabilities to the
  
  secured creditor within sixty days from the date of notice failing which the
  
  secured creditor shall be entitled to exercise all or any of the rights under
  
  sub-section (4).
  3.     
  
    The
  
  notice referred to in sub-section (2) shall give details of the amount payable
  
  by the borrower and the secured assets intended to be enforced by the secured
  
  creditor in the event of non-payment of secured debts by the borrower.
  4.     
  
    In
  
  case the borrower fails to discharge his liability in full within the period
  
  specified in sub-section (2), the secured creditor may take recourse to one or
  
  more of the following measures to recover his secured debt, namely:-
  a.      take possession of
  
  the secured assets of the borrower including the right to transfer by way of
  
  lease, assignment or sale for realising the secured asset;
  b.     take over the
  
  management of the secured assets of the borrower including the right to
  
  transfer by way of lease, assignment or sale and realise the secured asset;
  c.      appoint any person
  
  (hereafter referred to as the manager), to manage the secured assets the
  
  possession of which has been taken over by the secured creditor;
  d.     require at any time
  
  by notice in writing, any person who has acquired any of the secured assets
  
  from the borrower and from whom any money is due or may become due to the
  
  borrower, to pay the secured creditor, so much of the money as is sufficient to
  
  pay the secured debt.
  1.     
  
  
  2.     
  
  
  3.     
  
  
  4.     
  
  
  5.     
  
    Any
  
  payment made by any person referred to in clause (d) of sub-section (4) to the
  
  secured creditor shall give such person a valid discharge as if he has made
  
  payment to the borrower.
  6.     
  
    Any
  
  transfer of secured asset after taking possession thereof or take over of
  
  management under sub-section (4), by the secured creditor or by the manager on
  
  behalf of the secured creditor shall vest in the transferee all rights in, or
  
  in relation to, the secured asset transferred as if the transfer had been made
  
  by the owner of such secured asset.
  7.     
  
    Where
  
  any action has been taken against a borrower under the provisions of
  
  sub-section (4), all costs, charges and expenses which, in the opinion of the
  
  secured creditor, have been properly incurred by him or any expenses incidental
  
  thereto, shall be recoverable from the borrower and the money which is received
  
  by the secured creditor shall, in the absence of any contract to the contrary,
  
  be held by him in trust, to be applied, firstly, in payment of such costs,
  
  charges and expenses and secondly, in discharge of the dues of the secured
  
  creditor and the residue of the money so received shall be paid to the person
  
  entitled thereto in accordance with his rights and interests.
  8.     
  
    If
  
  the dues of the secured creditor together with all costs, charges and expenses
  
  incurred by him are tendered to the secured creditor at any time before the
  
  date fixed for sale or transfer, the secured asset shall not be sold or
  
  transferred by the secured creditor, and no further step shall be taken by him
  
  for transfer or sale of that secured asset.
  9.     
  
    In
  
  the case of financing of a financial asset by more than one secured creditors
  
  or joint financing of a financial asset by secured creditors, no secured
  
  creditor shall be entitled to exercise any or all of the rights conferred on
  
  him under or pursuant to sub-section (4) unless exercise of such right is
  
  agreed upon by the secured creditors representing not less than three-fourth in
  
  value of the amount outstanding as on a record date and such action shall be
  
  binding on all the secured creditors:
  Provided that in the
  
  case of a company in liquidation, the amount realised from the sale of secured
  
  assets shall be distributed in accordance with the provisions of section 529A
  
  of the Companies Act, 1956 (1 of 1956):
  Provided further that
  
  in the case of a company being wound up on or after the commencement of this
  
  Act, the secured creditor of such company, who opts to realise his security
  
  instead of relinquishing his security and proving his debt under proviso to
  
  sub-section (1) of section 529 of the Companies Act, 1956 (1 of 1956), may
  
  retain the sale proceeds of his secured assets after depositing the workmen$s
  
  dues with the liquidator in accordance with the provisions of section 529A of
  
  that Act:
  Provided also that
  
  the liquidator referred to in the second proviso shall intimate the secured
  
  creditors the workmen$s dues in accordance with the provisions of section 529A
  
  of the Companies Act, 1956 (1 of 1956) and in case such workmen$s dues cannot
  
  be ascertained, the liquidator shall intimate the estimated amount of workmen$s
  
  dues under that section to the secured creditor and in such case the secured
  
  creditor may retain the sale proceeds of the secured assets after depositing
  
  the amount of such estimated dues with the liquidator:
  Provided also that in
  
  case the secured creditor deposits the estimated amount of workmen$s dues, such
  
  creditor shall be liable to pay the balance of the workmen$s dues or entitled
  
  to receive the excess amount, if any, deposited by the secured creditor with
  
  the liquidator:
  Provided also that
  
  the secured creditor shall furnish an undertaking to the liquidator to pay the
  
  balance of the workmen$s dues, if any.
  Explanation.-For the
  
  purposes of this sub-section,-
  a.      record date means the
  
  date agreed upon by the secured creditors representing not less than
  
  three-fourth in value of the amount outstanding on such date;
  b.     amount outstanding
  
  shall include principal, interest and any other dues payable by the borrower to
  
  the secured creditor in respect of secured asset as per the books of account of
  
  the secured creditor.
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  5.  
  
  
  6.  
  
  
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  8.  
  
  
  9.  
  
  
  10.  
  
    Where
  
  dues of the secured creditor are not fully satisfied with the sale proceeds of
  
  the secured assets, the secured creditor may file an application in the form
  
  and manner as may be prescribed to the Debts Recovery Tribunal having
  
  jurisdiction or a competent court, as the case may be, for recovery of the
  
  balance amount from the borrower.
  11.  
  
    Without
  
  prejudice to the rights conferred on the secured creditor under or by this
  
  section the secured creditor shall be entitled to proceed against the
  
  guarantors or sell the pledged assets without first taking any of the measures
  
  specified in clauses (a) to (d) of sub-section (4) in relation to the secured
  
  assets under this Act.
  12.  
  
    The
  
  rights of a secured creditor under this Act may be exercised by one or more of
  
  his officers authorised in this behalf in such manner as may be prescribed.
  13.  
  
    No
  
  borrower shall, after receipt of notice referred to in sub-section (2),
  
  transfer by way of sale, lease or otherwise (other than in the ordinary course
  
  of his business) any of his secured assets referred to in the notice, without
  
  prior written consent of the secured creditor.