Thursday, September 15, 2011

GUIDELINES ON SPEEDING UP SARFAESI PROCEDURE

A division bench of the Bombay High Court has issued 11-point guidelines to speed up proceedings under the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act (SARFAESI Act). Under this law, a creditor can take possession of secured assets without intervention of a civil court. In a batch of petitions by banks and FIIs led by International Asset Reconstruction Company (IARC), it was pleaded that a number of their applications were pending before the courts across Maharashtra, especially in Mumbai, Pune and Thane and appropriate directions need to be issued to magistrates asking them to dispose off the applications without delay. The Judgment agreed with this and stated that it is in the interest of general public to state that they
take possession of the secured assets and recover money advanced by them where the borrower is
under liability and his account has become non- performing. According to the guidelines, the borrower has no right to be heard at any stage of proceedings including the execution of the magistrate's order. The applications shall be decided within two months. The magistrate's order shall (i) authorize the taking of physical possession of the secured asset with reasonable force which includes the breaking open of locks, wherever necessary; (ii) direct the police station concerned to provide assistance in taking possession.

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