The SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act of 2002 in India provides a framework for the enforcement of security interests by lenders. The act gives lenders the right to take physical possession of the property that is secured by a security interest if the borrower is in default of the loan.
The act requires the lender to serve a demand notice on the borrower in writing, specifying the amount of debt owed and the steps that will be taken if the debt is not paid. If the borrower disputes the demand notice, they must file a representation with the bank within the specified time frame.
If the representation is not accepted by the bank, the bank may apply to the Debts Recovery Tribunal (DRT) for an order for possession of the property. The DRT must conduct a hearing on the application, giving the borrower an opportunity to be heard. If the DRT finds that the borrower is in default and the demand notice was properly served, it may grant an order for possession of the property.
Once the DRT grants an order for possession, the bank may appoint an authorized officer to take possession of the property. The authorized officer is responsible for taking physical possession of the property, securing it, and selling it to recover the debt owed by the borrower.
It’s important to note that the SARFAESI Act provides a framework for the enforcement of security interests by lenders and the rights and obligations of borrowers. The act is subject to legal and procedural requirements, and borrowers should seek legal advice if they have any questions or concerns.