Module: General Practice
Q130: Scenario: 'Apex Textiles Ltd' has defaulted on a loan of Rupees 50 Lakhs. The bank issued a Section 13(2) notice on January 1st. Apex Textiles did not reply. On March 5th, the bank took symbolic possession of the factory. Apex Textiles claims the action is illegal because the bank did not approach the DRT before taking possession. Based on the SARFAESI Act, is the borrower's claim valid?
✅ Correct Answer: B
Analysis of Scenario: The borrower's claim is invalid.
Core Principle: The fundamental power of the SARFAESI Act is exactly what creates the exception to the general rule—it allows secured creditors to enforce security interest without the intervention of the court or tribunal.
Timeline Check: The notice was issued on Jan 1st.
The 60-day period expired around March 2nd.
The bank took possession on March 5th, which is legally valid under Section 13(4). Clarification on DM: The District Magistrate's assistance under Section 14 is sought only if there is resistance to taking physical possession; it is not a prerequisite for issuing the initial notice.
Core Principle: The fundamental power of the SARFAESI Act is exactly what creates the exception to the general rule—it allows secured creditors to enforce security interest without the intervention of the court or tribunal.
Timeline Check: The notice was issued on Jan 1st.
The 60-day period expired around March 2nd.
The bank took possession on March 5th, which is legally valid under Section 13(4). Clarification on DM: The District Magistrate's assistance under Section 14 is sought only if there is resistance to taking physical possession; it is not a prerequisite for issuing the initial notice.