Sense of Law

How SARFAESI initiated in partly agriculture land?

noreply@blogger.com (Vijayalekshmi Omana) — Sat, 02 Jun 2012 19:14:00 +0000

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (hereinafter referred as SARFAESI Act) can be taken use of by the Banks and other financial institutions for speedy recovery of non-performing assets/defaulted loans. Both movable and immovable properties can be proceeded against. In case of immovable property, agriculture land is exempted from proceeding with under Sarfaesi Act. This is as per Section 31(i). As per this section the provisions of Sarfaesi Act does not apply to any security interest created on agricultural land. But what if the property is only partly used for agriculture. The question is, whether the Bank can move against the non-agriculture portion of the property under Sarfaesi Act.

The question has been discussed in M/S. CEMAX PLANTS PVT. LTD vs THE AUTHORISED OFFICER by the Honourable High Court of Kerala.

In the above case, the petitioner(borrower) had availed various agricultural loans from the bank of the respondent-Authorised Officer by mortgaging agricultural properties.Later the accounts became Non-Performing Assets and the Bank initiated steps under Sarfaesi Act to recover the loans. Demand notice under Section 13(2) was issued. Thereafter the borrower raised the contention that his land is exempted under the Sarfaesi Act. The bank stated that they found part of the property non-agricultural on physical verification. After considering the arguments the Court decided that the Bank can initiate fresh steps against those properties which can be segregated as non-agricultural ones.

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Legal Advise

noreply@blogger.com (Vijayalekshmi Omana) — Mon, 27 Feb 2012 19:30:00 +0000

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Sense of Law is coming into the mainstream of law blogging. One of the most blessed aspect of the profession is the advice being given to the society about various crucial things of law. We are also starting a new division fully concentrating on legal advise.

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The facility will be free to all users of Sense of Law. Besides giving advise to the needy, the site owner intends to develop an eagerness for knowledge and research among the members of the society.

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Law versus Law

noreply@blogger.com (Vijayalekshmi Omana) — Tue, 14 Feb 2012 18:05:00 +0000

This is a new section introduced in Sense of Law. We could find much number of laws governing our daily activities. There are certain circumstances when we adopt more than one law to find out our course of action. Most often we find similar wordings or rights or procedures being stated in different laws governing a particular matter. But there are instances where there is conflict between different statutes governing the same field of procedure. There may be conflict between laws enacted by Union and those enacted by States. There may be issues of Union List, State List and Concurrent List laws. There is conflict of laws. This section brings to light such conflicting provisions present in different laws and also within same statute. Click on the respective links of topics below to view the post. Thank You.

How to do Property Title Deed Scrutiny

noreply@blogger.com (Vijayalekshmi Omana) — Tue, 14 Feb 2012 17:47:00 +0000

This post generally explains the basic things which are to be attended to while scrutinising a title deed of property. There may be different forms adopted by different professionals in presenting the report and different methods will be involved in scrutinising the deeds and documents. Hence without specifying those aspects, the core contents which are needed is dealt with in this post.

Contents of a Title deed

The property deed has to be read carefully from word to word. You may be required to read between the lines also. If we know what is a title deed and what are the things which are to be included in it, then scrutiny will become easier. A title deed, as the name suggests, evidences the title to a particular property to a particular person named in the deed. So there will be a description of the property in it which includes the measurement, boundaries, items of survey records, nature of property, presence of building etc. The seller's and purchaser's name will be present. Details of prior documents will be there. Note down everything. You can create a separate format either as soft copy or hard copy for jotting the details. This will help in writing/typing the Scrutiny Report and for future reference.

Connected Documents

You have to find out the connected document of the deed. The connected documents include the prior deeds, tax receipts of land and building, encumbrance certificates, power of attorneys, etc. These documents will have great relevance with regard to the present transaction. You will need the prior deeds to find out the flow of title. This will help to find out whether there are any legal impediments to the present title deed by any restrictive covenants contained in the previous deed. If the prior deed is a partition deed, we will get to know the real extent of share standing to the name of present seller which he can alienate through the present deed. Thus various documents will have their own relevance. Other documents like tax receipts will enable us to find out whether the property is properly taxed and tax is being paid regularly. You have to obtain latest tax paid receipts from the concerned authorities for the same. Possession certificate will enable you to find out the person who is in legal possession of the same.

Legal Impediments

For this you may have to know various laws relating to property and revenue. In India, there is Transfer of Property Act which contains rights and duties of seller and buyer, their liabilities and powers, rules regarding alienation of property etc. It details various restrictions on alienation of property. So knowledge of this basic law will help you easily finish up scrutinising the deed in hand. Apart from this there is easement law also. Several states have their own laws regarding property rights and limitations. Knowledge of various things including conveyance, conservancy, reforms, utilisation etc pertaining to the property in force is essential. Verification in revenue records or the sub-registry with regard to any express restriction for alienation is essential. Sometimes there will be any order of Court or Tribunal restricting alienation. An encumbrance

certificate for a period of 14 years or more is essential as per Indian laws. By this document you can know what all transactions have taken place in relation to the subject property.

You may have to look other important basic law of Contract. In India the Indian Contract Act, 1872 deals with the law relating to contracts. The rights of minor and life interest of parties to the prior deeds are to be looked into.

Legal Scrutiny Report

Now it is the time you finalise the Legal Scrutiny Report. The matter should be presented in such a way in which it is easily understood. The name and address of the owner of property is to be given. The Survey or plot number, extent, nature, village, taluk, district etc of the properties to be given. The boundaries are to be stated. Now give a brief description of documents showing the flow of title. This should go to the root of the document which means that the history should be traced. A period covering 13 or 42 should be studied and you should state the whole transactions up to date mentioning each document number and year with survey numbers and extents. Give a clean title certificate only if all the things are clear. For evidence you can specify what all documents you have verified in separate heads after the brief description of flow of title. Thus details of Encumbrance Certificate verified, details of property tax receipts verified etc can be made to separate heads.

Certificate and Advice

You can certify in the end regarding the clarity of title. If there are any legal restrictions you can mention that thing. If the title is clear or not you can give suitable advice. If there are any other documents to be obtained which are either primary or supportive, these can also be stated. If the title is not clear, give the reasons along with your judgement.

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Whether Bank need DRT permission to initiate SARFAESI Action?

noreply@blogger.com (Vijayalekshmi Omana) — Sun, 29 Jan 2012 03:03:00 +0000

First Proviso to sub-section 1 of Section 19 says that the bank or financial institution may, with the permission of the Debts Recovery Tribunal withdraw the application made to the DRT for realisation of debts for initiating proceedings under SARFAESI Act.
For the purpose of analysing the said section the exact wordings of the provision is provided below:
Provided that the bank or financial institution may, with the permission of the Debts Recovery Tribunal, on an application made by it, withdraw the application, whether made before or after the Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Act, 2004 for the purpose of taking action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security InterestAct, 2002, if no such action had been taken earlier under that Act.
What we can infer from this provision is that the Bank has to obtain permission of the DRT for initiating action under SARFAESI in case an application is pending with DRT. But the said permission is not required if the SARFAESI action had been taken earlier.
google_ad_section_start(weight=ignore) -->In M/s Transcore versus Union of India and another it was contended by M/s Transcore the appellant in Supreme Court of India that the bank has not obtained the sanction of DRT and hence the action of the bank under SARFAESI is liable to be set aside. The brief facts of the case are as follows:
The bank issued notice under Section 13(2) of the Sarfaesi before the Amendment Act of 2004. Then after the amendment, possession notice was issued. Transcore challenged it by saying that the earlier notice was just a show cause notice and it did not constitute an action in terms of first proviso to Section 19(1). There is another question in this whether two simultaneous proceeding are possible. The bank contended that the provision was an enabling one and hence it is not mandatory.
It may be noted that SARFAESI Act is a powerful tool in the hands of Banks and financial institutions. The constitutional validity of the said Act was challenged in Mardia Chemicals Ltd and others versus Union of India and others in 2004 and the same was upheld. Notice under Section 13(2) is not a mere show-cause notice. It specifically asks the defaulter to repay the entire dues within sixty days of the issue of notice. This notice can be said to be the initiating step for the entire Sarfaesi proceeding. Furthermore as per Section 13(13) of the Sarfaesi Act the transfer of secured assets is prevented by way of issue of notice under Section 13(2). So it cannot be said that the notice is not an empty formality. It is not a mere show-cause notice. It does constitute "action taken" in Proviso to Section 19(1) of DRT Act.
Here in the above case also it was argued by the bank's counsel that Section 13(2) is a pre-condition to invoke the provision of Section 13(4). If the DRT did not grant permission to withdraw the application, then what could be the status of the banks is a question to be considered. The whole process has to be done within the period of limitation also. The counsels also contended that unless there is any express bar, a curative relief must not be restrained with the doctrine of election. The bank can choose one or more remedies open to them. In the case of no inconsistency between two remedies, the doctrine of election has no application.
Now the position is that the Bank need not obtain the permission of DRT mandatorily to proceed under SARFAESI Act.
Critical Analysis:-The Parliament has enacted a law. The Court cannot go beyond the provisions. Since the Bank has the right to come back to DRT after Sarfaesi, the provision has to be interpreted literally as it is. There is likely chance that the DRT will disallow the application to withdraw the case before it. Even if it does so and there is nothing provided in the statute in such a situation, there is no need for any fear as there will be a High Court to raise your pleadings. The Courts just don’t want the number of cases to built up. This ruling may have such an intention. Since there is a big power to the Banks without the interference of Court in Sarfaesi why should the Courts bother? I feel that this decision may be questioned sometimes later.

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Sarfaesi vs.Transfer of Property-Mortgaged Property Rights

noreply@blogger.com (Renjith Sadanandan) — Tue, 13 Dec 2011 08:28:00 +0000

In a sense, Sarfaesi and Transfer of Property deals with one common thing viz property. Here we are looking with the matter of dealing the mortgaged property as per both the legislations. Both the Acts viz. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (hereinafter referred as Sarfaesi Act) and the Transfer of Property Act(hereinafter referred as TP Act) are Central statutes. Both the statutes are having separate provisions for dealing with the transfer of mortgaged property.

In specific, the overriding or conflicting provisions for the present post are Section 13(1) and 35 of the Sarfaesi Act and Sections 69 and 69A of TP Act. In Sarfaesi Section 13 deals with enforcement of security interest created in favour of the bank without the intervention of the court. Anyhow the same has to be done in accordance with the provisions of Sarfaesi Act. The wordings of this section opens with a 'non-obstante clause'. The extract is as follows:

"Notwithstanding anything contained in Section 69 or 69A of the Transfer of Property Act, 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".

In Section 35, there is another non-obstante clause which says that notwithstanding anything inconsistent therewith contained in any other law, the provisions of Sarfaesi Act shall have effect.

Hence it is clear that Sarfaesi Act is having an upper hand in enforcing the security interest for eg.realising asset secured by mortgage of property, without the intervention of court.

Section 69 and 69A of the TP Act says that the mortgagee or any other person acting on his behalf shall have power to sell the mortgaged property in default of payment of mortgage-money without the intervention of Court. Section 69A deals with appointment of receiver for the purpose of Section 69.

So what is the difference between these provisions. As a matter of fact, TP Act is a much earlier legislation compared to Sarfaesi Act where Sarfaesi is a special enactment. But the power under the TP Act can only be exercised in certain cases. In other words, the power is subject to the provisions of this section. With the enactment of Sarfaesi, any secured creditor can enforce his rights without following the conditions laid down in the respective provisions of TP Act. While TP Act restricts the security interest into some types of mortgages and some places where the right can be exercised, provisions of Sarfaesi Act applies to any security interest created in favour of any secured creditor. We must stress on the word 'any' appearing in this provision. Here it is relevant to note the definition given to 'security interest' in Section 2(1)(zf) of the Sarfaesi Act. The extract of the section is given below:

"security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in Section 31.

So here Sarfaesi Act earns more points. Section 13 of the said Act overrides respective provisions of TP Act. It retains the powers of TP Act and not the conditions. The only condition is that, the power has to be carried out in accordance with the provisions of Act. There are no limitations in applying the power. Section 35 of Sarfaesi more firmly enforces the powers granted by this special enactment by overriding all other laws inconsistent with Sarfaesi. The result is that in case of Banks and other financial institutions, Sarfaesi Act is the best, speedy and effective tool to enforce security interest and thereby realising the dues.

How To-Sarfaesi Action after Possession Re-delivered?

noreply@blogger.com (Renjith Sadanandan) — Mon, 12 Dec 2011 08:13:00 +0000

How To Take Sarfaesi Action after Possession Re-Delivery?

Under Sarfaesi Act, the Banks, Financial institutions etc can take possession of the properties offered as security when the party commits default in repaying the dues even after issue of demand notice. The strongest tool in the hands after the time period of sixty days provided in the notice is the taking over of property either symbolically or physically. After this the property can be transferred to others for realising the dues of the borrower.
There is also a situation when the defaulted borrower repays the entire dues with costs and other expenses to the borrower and regularises the loan account. In such cases the secured creditor can re-deliver the property which has been already possessed as per Sarfaesi proceedings.
After this exercise, the subject account may again become irregular at some point of time. Here the secured creditor can definitely take action against the defaulted borrower. The question is whether the secured creditor can again initiate any Sarfaesi proceedings. If so, how to take the action and what are the proceedings? This is a case where the secured creditor once initiated the Sarfaesi action by issuing demand notice to the borrower and took possession of the property. Now in the midway the borrower again possesses the property thus resulting all the Sarfaesi proceedings to a fullstop. Hence, inorder to move against the defaulted borrower the second time, re-possession of the property by the secured creditore is necessary. For this the secured creditor can once again issue demand notice under Sarfaesi. It is very important to note that the second notice to be issued at this stage should only be based on the second cause of action. Here it is important to put the details of the fresh cause of action specifically so that every one knows that the second notice is not the continuation of the first action taken by the bank. The notice should not be vague. It should appear from the notice that the account once became non-performing asset and possession was taken by the secured creditor and the property was repossessed by the borrower after regularising the account. After this on classifying the same account as NPA again, the fresh cause of action has arised and the second notice is being issued based on the fresh cause of action.
It is clear that after repossession or redelivery of the property and stopping of Sarfaesi action, the rights available to the secured creditor comes to an end. AIl or any action taken as the continuation of the first notice is considered illegal. So whenever a case comes of initiation of Sarfaesi action after re-delivery of property, think only of the second cause of action.

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What is effect-non-publication-vernacular possession-Sarfaesi

noreply@blogger.com (Renjith Sadanandan) — Thu, 08 Dec 2011 08:16:00 +0000

What is the effect of non-publication of notice in vernacular paper under SARFAESI Act?

In SARFAESI action, the banks or the financial institutions being the secured creditors can take possession of the mortgaged assets belonging either to the borrower or to the guarantor. Section 13(4) authorises this act of the secured creditor. The stipulations to be followed by the secured creditor is the publication of possession notice in two leading news papers. Of this one should be in vernacular language. I have mentioned in another post in this blog that the non-publication of the possession notice after taking possession of property in news papers will vitiate all actions taken by the secured creditor. Sub-rule 2 of Rule 8 of The Security Interest(Enforcement) Rules, 2002 says that the possession notice has to be published also in one vernacular newspaper having sufficient circulation in the locality. This is a mandatory provision. Various courts have upheld this provision stating that the non-compliance of this will make the measures taken by the Bank irregular and those will be vitiated.

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What is effect-Non-Publication-Sarfaesi Possession Notice

noreply@blogger.com (Renjith Sadanandan) — Thu, 08 Dec 2011 08:12:00 +0000

What is the effect of non-publication of Possession Notice under SARFAESI?

When any borrower's account is classified as 'non-performing asset' and the secured creditor(banks, other financial institutions etc) issues a demand notice under Section 13(2)to him and the guarantors to pay off the entire debt. As stated in the statute viz. the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 a time period of sixty days is given to the defaulters to repay the entire debts. If the persons are not repaying the entire debt due to the Bank on or before completion of the time period specified in the demand notice, the Bank has the right to take possession of the properties.

There is a stipulation in the statute about the publication of possession notice. At the time of taking possession of the properties which are the secured assets mortgaged by any parties for the purpose of the advance granted by the bank, a notice in writing will be given to the concerned parties by hand, post etc. Thereafter the possession notice is pasted or affixed in some conspicuos part of the mortgaged property/secured asset and photographs will be taken. The statute stipulates that the possession notice has to be published in two leading news papers. Therefore, after taking possession the Bank is required to publish the possession notice in two newspapers. If this provision is not followed in its essence, the result is that all the proceedings by which the SARFAESI action was initiated, will be vitiated. Please note that the time limit for publication of this notice in news papers in seven days from the day of taking possesion of the property.

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Length of right of redemption to a mortgagor under Sarfaesi Act?

noreply@blogger.com (Renjith Sadanandan) — Tue, 06 Dec 2011 08:17:00 +0000

What is the length of right of redemption to a mortgagor under Sarfaesi Act?

Right of Redemption is a specific right guaranteed to a person who mortgages his property to another. In this right the mortgagor(one who mortgages property to another), may redeem his mortgaged property by paying off the entire mortgage money to the mortgagee(person to whom the property is mortgaged). The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'Sarfaesi Act' or 'the Act') is a special statute created mainly to protect the interests of financial institutions. The borrower/guarantor/third party may deposit the entire dues of the borrower and can avail the right of redemption. But the right of redemption arises only before the mortgaged property is transferred by the secured creditor. The process of Sarfaesi Act by which the secured creditor realises the liability is detailed in Section 13(4). If the borrower fails to discharge his liability in full within the time limit granted to him by way of a specific notice, the secured creditor may take possession of the secured assets including the right to transfer the same. It is implied in this provision that the secured creditor can transfer the assets to another. In Rule 8 of the Security Interest Enforcement Rules, 2002 it is stated that the secured creditor shall give a notice of thirty days in case of sale of properties. So the date of sale will be notified as per the notice.

As per Section 13(8) of the Sarfaesi Act the secured creditor shall not sell or transfer the secured asset if the entire dues have been paid to him at any time before the date fixed for sale or transfer. This means that the right of redemption of mortgage is clearly available to the secured debtor upto the date fixed for sale or transfer.

Various courts have taken the view that the right of the mortgagor to redeem his property is available until the purchaser obtains documents of title. Merely depositing the sale proceeds will not defeat the mortgagor's right of redemption. As per Sarfaesi rules, the secured creditor has to issue a sale certificate in favour of the purchaser in case of sale confirmation. Until the time this sale certificate is issued the borrower/mortgagor definitely gets the right to redeem his property.

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Sarfaesi Demand Notice Particulars

noreply@blogger.com (Renjith Sadanandan) — Tue, 06 Dec 2011 08:10:00 +0000

This post details what all particulars are to be entered into in the demand notice of Sarfaesi.

Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act(hereinafter referred to as 'Sarfaesi Act'/'Act') refers to issue of notice to the borrower who makes default in payment of the dues. This notice will be in writing. This is the first stage of initiation of steps under Sarfaesi Act.

There are several particulars to be entered in this notice. It is stated in Sub-Section 3 of Section 13 in the Act. They are the details of amount payable and the secured assets. But apart from that there are so many things to be noted to be entered in the notice. They are described below. Without these essential ingredients a demand notice under Section 13(2) will not be perfect.

1.Details of Secured Creditor:-

The Secured Creditor means either Banks or Financial Institutions as per the Act. In the notice it should be evident from the very look that it is issued from a particular secured creditor. The name of the institution can be entered as header and the address of the institution including all contact numbers and communication addresses may be entered as footer.

2.Intimate borrower on the very first line of the purpose:-

It is not mandatory but desirable to enter below the header that the notice is issued under the Act as per the particular section.

3.Address of parties:-

The next line is the address portion. Here the address of the borrower has to be entered. If the permanent and present address of the borrower is different then notice has to be issued to both the addresses. Even though notice is sending separately, all address should be contained in every individual notices. Another important thing is that the notice has to be sent to the guarantors and mortgagors as well in their permanent and present addresses. This will show that the secured creditor has taken all possible steps to inform the parties about the severe methods to be adopted in future.

All the names and addresses should be entered in every individual notices. This will inform each person that against whichever persons action has been initiated by the secured creditor.

4.Office details:-

After properly addressing the parties(Dear Sir/Madam)State both Head Office/Registered Office and Branch of the secured creditor in the first paragraph. In the second paragraph state clearly that the particular branch of the secured creditor advanced amount to the particular borrower.

5.Details of Advance:-

The loan details has to be entered specifically. The nature of advance, the specific amount, date of advance, revival dates, total balance as on the present or particular date etc to be entered.

6.Amount details:-

The amount is the total amount on a particular date which involves interest suspense, costs, expenses etc as per the books of account of the secured creditor. Any previous remittance has to be properly debited.

7.Details of property secured:-

The secured asset means the property, either movable or immovable, on which the security interest is created. Security interest is created over a property by way of hypothecation, charge, mortgage etc. The particulars of these properties has to be entered suitably in the notice. Property details are to be entered in the body of the notice and also in the schedule annexed to the notice at the end. Immovable properties must be properly identifiable by the description. While entering movable property description, the place in which it is stored, lying etc may also be entered.

8. Important Dates:-

There are some important dates which should be entered in the notice at suitable places. The date on which the account was classified as non-performing asset has to be stated. Apart from that the date as on which the total amount due has been calculated is to be entered. Also, the date from which the total amount along with other cost, expense and interest has to be remitted till full repayment should be noted. The notice must always state the date of recall notice/preliminary notice sent before issuing Sarfaesi notice.

9. Time Limit for Repayment and consequence on failure:-

The notice must inform the parties the time limit by which the dues are to be cleared. As per the Act, a period upto sixty days will be given for repaying the full dues. Apart from informing this time limit, the financial institution should also state the consequences on not repaying the entire dues within the prescribed period. The several actions which can be taken by the secured creditor on non-payment of the amount within the time limit is stated in Section 13(4) of the Act.

10. Restrictions on borrower:-

The notice should also state the restrictions imposed on the borrower as per Section13(13). By way of this section the borrower is restricted to transfer the secured asset by way of sale, lease etc after receipt of the notice.

11. The sign and seal of the Authorised Officer has to be affixed in the notice without which the same has no validity in the eyes of law.

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Evicting Tenant-Sarfesi-Rent Control

noreply@blogger.com (Renjith Sadanandan) — Tue, 01 Nov 2011 14:13:00 +0000

Whether a tenancy created prior to creation of secured interest of premises can be ended with the help of Sarfaesi Act?

This is a moot question which covers in it the legal formulas from two common legisalations viz 1] the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and 2] the Building Lease and Rent Control Act. Of course we know that a Bank or other financial institution which

comes within the definition of securitisation company can exercise its rights strongly by the help of the Sarfaesi Act which is a landmark legislation. This legislation will help those companies to secure the financial assistance granted to others and enforce the security interest.

Now the question is what is to be done when a landlord creates a tenancy in a building which was mortgaged to the Bank. Here the Bank has full-fledged rights to evict the tenant as the tenancy was created after securing the building to the Bank for advance granted by it. But what if the building was already occupied by tenants

before creation of mortgage rights. This moot question was answered by the Full Bench of Honourable High Court of Kerala in Pushpangadan N P and others versus Federal Bank Limited and others in 2011. In this case the the tenants contended that since they were already occupying the premises at the time of creation of

mortgage their tenancy right would not be affected by any of the measures taken under Section 13[4] of the Securitisation Act. They also contended that their leasehold rights could only be terminated by invoking the provisions of Rent Control Act.

There are certain provisions in the Sarfesi which helps the secured creditors to exercise their rights to enforce security interest created over properties. They are sections 13,14, 34 and 35. Section 14 gives power to the secured creditors to take possession of the properties if the borrower fails to discharge his liabilities in full. This power can be exercised without the intervention of the Court. Section 14 gives power to move application before concerned authorities to get assistance in taking possession of properties. Section 34 excludes the jurisdiction of Civil Courts and Section 35 says that the provisions of Sarfesi Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force. When we analyse the provisions of Sarfesi along with the objects and reasons of the statute we may feel that it is the prime legislation and it will not have any threat from any other law in the world. But it may be noted that

the object of the Sarfesi Act is only the speedy recovery of the debt due to the secured creditor. It is pertinent to analyse the provision of Section 37 of Sarfesi Act. It states that the provisions of Sarfesi Act and the rules made thereunder shall be in addition to, and not in derogation of any other law for the time being in force. When we take the provisions of Rent Control Act and Sarfesi, there is nothing inconsistent therewith contained in both. So Section 35 is not having much relevance there.

Now we can take the case of tenancy created before creation of security interest. An unscrupulous landlord may take a loan and makes default purposefully to get the property taken over by the Bank and then get the tenants evicted by the Bank. Then he may choose his own person to participate in auction sale of the property and buy the same. So it should not be the case that the genuine tenants and their rights are not protected only because the landlord created security interest of the premises with the Bank.

Thus the Court held that the Sarfesi Act has no overriding effect over the provisions of Rent Control Act. A tenant inducted in the premises before the creation of security interest cannot be summarily evicted using the provisions of Sarfesi. There is nothing repugnant in both the laws. Both are operating in different fields. It cannot be held that Rent Control law is void because of repugnancy to Sarfesi Act.

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Right to Information Act Preview

noreply@blogger.com (Renjith Sadanandan) — Thu, 06 Oct 2011 09:02:00 +0000

Right to Information Act is a landmark legislation. It has a short title "Right to Information Act, 2005". The long title is as follows:

An Act to provide for setting up the practical regime of right to information for citizens to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority, the Constitution of a Central Information Commission and State Information Commission and for matters connected therewith or incidental thereto.

It has six chapters, thirty one sections and two schedules. The preview of the main sections are as follows:

Section 2- It contains all the definitions used in the Act. "Information", "Right to Information", "Public Authority", "Competent Authority", "Appropriate Government" etc are some of the important definitions among others.

Section 3-All citizens are having right to information.

Section 4-This section lays down certain obligations of Public Authorities. It contains maintenance of records and publishing of certain matters about the organisation including its duties, functions, powers, rules and regulations, other statements etc.

Section 5- This section mandates the designation of information officers for the provisions of Right to Information Act in every administrative offices of the Public Authority.

Section 6- This important section is the heart of the Act. It deals with the process of requesting for information. A person desiring to obtain information shall make his application to the respective information officers of the Public Authority in writing, typewritten or electronic means. The application can be given in English, Hindi or in the official language of the area in which the application is made.

Section 7- This section deals with disposing of applications under Section 6. The time limit for providing information is thirty days. The PIO[Public Information Officer] may either provide the information on payment of prescribed fees or reject the application for reasons. But failure to communicate information within the prescribed period will be deemed to be denial of the request. The cost, fee etc if any for providing information should be intimated to the applicant by the PIO. But the information has to be given free of charge if the time

limit for providing the same is over.

Section 8- This provision deals with exempted informations. The informations which will affect the security and interest of state are exempted. Any information which is barred by law or court is exempted. Like this, ten exemptions are provided in this Section.

Section 9- It speaks about rejecting application for information which if given, will involve infringement of copyright subsisting in a person other than the state.

Section 10- If any part of the information is of such a type that it cannot be disclosed, the other part can be disclosed if both can be severed. In this case the matter is to be communicated to the applicant including reasons and findings.

Section 11- This section deals with procedure to be adopted by PIO in case of receipt of applications seeking informations furnished by third parties. The time limit for giving notice to third party is within five days from the date of receipt of information.

Section 12, 13 and 14 deals with the constitution of Central Information Commissions, their terms of office and allied matters.

Section 15,16 and 17 deals with State Information Commissions.

Sections 18 deals with the powers of Information Commissions. The power to receive complaints, summon witness and inquire into the matter is detailed.

Section 19- This section deals with the provision for appeal. The time period for the first appeal is thirty days whereas it is ninety days in case of second appeal. It details other aspects of appeal.

Section 20- Penalties- This section deals with imposition of penalty on PIO's by Information Commissioners for various reasons. The maximum penalty is twenty five thousand rupees.

Section 22- The Act is having overriding effect on anything inconsistent contained in Official Secrets Act, 1923.

Section 23- It bars the jurisdiction of courts regarding any orders under the Act.

Section 24- Certain organisations are exempted from the operations of the Act. Those exempted organisations are enlisted in Second schedule of the Act. But there are exceptions also which is provided

in this section.

Section 27- This section gives powers to the appropriate government to make rules for carrying out the provisions of the Act.

Section 28 gives powers to competent authority to carry out the provisions of the Act.

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How To Successfully File Right to Information Application

noreply@blogger.com (Renjith Sadanandan) — Wed, 05 Oct 2011 08:24:00 +0000

It is very simple. Follow the steps given below and you will be a successful query master in Right To Information Act.

1. Find out what information to be sought

This is the most important aspect when you have planned to give an application under Right to Information Act. You have to bear in mind the specific topic on which the query is to be asked. Unless you are clear of the topic and the question to be asked, you may get the unsatisfactory answers and you may not have a better scope for appeal. So be sure of what information to be sought and what to be asked. This will help the Public Information Officer also to provide you the necessary details up to your satisfaction. If any information or answers given is not what you asked specifically, you will have a better scope of appeal. So clear questions is always good.

2. Find out to whom should you ask.

This is also another vital aspect which you should bear in mind. You should be quite sure as to whom the question is to be asked. If you are not quite sure about this, your application may be straight away rejected for want of jurisdiction. Any how the precious time will be lost.

3. Prepare your queries under different heads

Now you have to prepare your RTI[Right to Information] application. You can use either handwritten, typewritten, electronic mode to prepare your application. It can be sent through electronic modes also. While preparing your application you will have to state the following things:

a] Name/Designation and Official address of the Public Information Officer- The application has to be properly addressed. The name and address of the PIO[Public Information Officer] has to be stated first. If you don't know the designation, you only need to say "Public Information Officer" followed by the department/office.

b]Full Name of the Applicant-The applicant has to state his full name and address. He can receive the reply in the address provided in the application.

c] Specify the subject-Your application can catch the immediate attention of the PIO if you write a subject in the application. If you categorise your application, it will look formal and will get good attention.

d] Informations or queries-Now you can state your questions on issues for which you require information. If there are more questions, number it in numerals 1,2,3....and so on. You may get specific answers pointing to these questions specifically asked.

e] Year pertaining to the information-If you other details which you consider necessary to get the relevant information, then add it. If you are asking information pertaining to a particular year, then state the year. This way it will be easier and quicker for the PIO to deliver you the most relevant information.

f] Always add the details- It is always helpful to add necessary details or reference which you consider necessary to get more apt information. Anyhow it is not mandatory.

g] Authenticate- Sign the application against your name. Put date and place in the application. Now it is almost done and it can be called an application.

h] Fee- Prescribed fee has to be paid for making a valid application. Rupees ten has to be paid for filing your application as per the rules. This you can pay easily by affixing a Court fee stamp of denomination ten.

5. Conclusion

Send the application in a cover[if not by electronic mode] affixing proper Postal stamp and properly addressed. It is always better if you send the letters by Registered Post. However it is not mandatory. Always keep a record of what you have done.Take a photostat copy of your application for your future reference. You can also place a copy along with the application sent for acknowledgement by the authority and sending you back.

So go ahead and prepare your application. All the best.

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How To List In Law

noreply@blogger.com (Vijayalekshmi Omana) — Wed, 28 Sep 2011 19:51:00 +0000

Law knows no limits. Yes, you will find law in any extent of life.'Sense of Law' is also on a venture to reach that every extents along with you. For the fulfillment of this objective, Sense of Law is on the look for new features and adding new contents for it which may be of great help to its genuine visitors.

'How To' is a most successful term used in search engines. Inspired with this success, Sense of Law is also adding a 'How To' section which may really help the netizens find out us quite easily. Sense of Law is the first blog on Law adding such a feature for its visitors. Being the administrator, I promise to ensure that new posts will be added regularly in this section.

So click on the links to find out the 'How Tos'. Best wishes.

How To Successfully Interview a Client

noreply@blogger.com (Renjith Sadanandan) — Wed, 28 Sep 2011 19:34:00 +0000

There are world universities of law which conducts competitions on Client Interview. The most important part among others is the initial conversation by the advocate and client. A client's trust upon an advocate, on his nature, knowledge, attitude etc will depend upon the initial impression expressed in the Client interview. This post however, is not looking deeply into the presentation skills which an advocate should possess while having conversation with his client. A general method to be adopted for successfully doing a client interview is detailed here under which may help you get a good hold of the case.

Be a patient listener

What is the difference between a normal interview between two persons and an interview between advocate and a client. A normal person who doesn't have the backing of law may ask necessary and unnecessary questions. But an advocate may ask only necessary questions. He may get those unnecessary answers and

explanations from the client. So whether you should note down all the things which a client says is a primary question. The answer is in the negative. In such a condition you may note the important things only by listening effectively.

Thinking in Client's Point of View

One may have to think in Client's point of view. This may help in a better way of understanding the facts. But be sure to avoid the fancy stories of the client. Take the real fact only.

Note down important points

You can take your time to note down important factual/legal points during your conversation with the party. This points will really help you proceed with the case in future preparation.

Ask Questions

Always ask questions to the client. But be sure to do this only to make your client come to the real point. But do not do this frequently as he may miss out some important points if you hinder him frequently. This depends on each situation and varies from client to client. If a client is a 'talking machine' and he simply going around the real fact without touching it most of the time, you can ask questions on the specific points which you came across during your conversation. Asking questions will clarify the doubts in your mind and gives a much more clearer picture.

Basic knowledge

At least basic knowledge of the subject matter is required for an easy and effective conversation with the client. This can be acquired through different means. Experience also counts. If you have the requisite knowledge, you can easily cut short the valuable time and ask specific questions in such a way to make it easier for the client also to discuss the most relevant matters. For example if you know the basic things of a law relating to the fact which your client is telling, you can ask that law point particularly to him and he will be in a position to state those facts which relate to your law point.

Clarify the errors and Educate

This is an important thing. Sometimes the client himself finds questions and answers to some problems and reaches a conclusion. He may tell the facts and figures based on these conclusions. You may point out those specific errors and clarify it for getting the real fact. Educating the client will ultimately benefit the client and most importantly the Advocate. So make him know his rights and benefits.

Ask for the records

Make a note of the important things which have primary evidence. Ask your client to bring those records while fixing another interview, for reference. These primary records are a great piece of evidence and are handy things for the case.

Call for more evidence

If any documents given to you is insufficient, you may advise the client to obtain the necessary things during next interview. You may also suggest the ways to obtain the same.

Always ask for compromise

If the facts are such that you could smell a possibility of compromise, please ask regarding such a course. This way you will never be the loser. You may escape from wasting your precious time and energy in filing an unnecessary suit.

Make a good finish

A good word, a positive word is most essential to end the interview. The client should feel that the things are on the move."We will do it" or "We can do it" like terms may encourage the client to proceed with the case. Depending on the circumstance and nature of the client you can appropriately use words to strengthen your client to entrust the matter with you.

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Abetment-Abettor-Different Types-Penal Code

noreply@blogger.com (Renjith Sadanandan) — Sat, 17 Sep 2011 16:18:00 +0000

Abetment means the act of approving, encouraging or supporting a person. This term is used for aiding a crime in Indian Penal Code. Abetment is defined in Section 107 of the Indian Penal Code. A person is said to abet another to do a thing if he instigates him, or engages other persons in any conspiracy to do that thing, or if he intentionally aids to do that thing by any act or illegal omission.

An abettor is a person who abets an offence. It is also to be noted that it is not necessary that for committing the offence of abetment, the real offence abetted should be committed.

Types of abetment

Abetment can be committed through various methods. It can be caused by aiding, conspiracy, instigation.

a.Conspiracy-When the person abetting conspires with another two to do an illegal act or omission which would be an offence, it is called abetment by conspiracy. So in this type of abetment, there must be a conspiracy and two or more persons is required.

b.Aiding-Aid means help. If the person is aiding or helping the actual offender to commit the offence or to help the offender in furtherance of commission of the crime, it is called abetment by aiding.

c.Instigation-Instigating or provoking a person to do an offence is also abetment for committing that offence. Instigation can be directly or indirectly done. Words, gestures etc may be used for instigating another person.

There are still many sub-heads and divisions for the offence of abetment. It may be dealt in another post. But for the time being this short note is published.

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Steps under Sarfaesi if borrower avoids notice

noreply@blogger.com (Vijayalekshmi Omana) — Sun, 14 Aug 2011 05:50:00 +0000

What are the steps to be taken by the secured creditor to proceed further under the SARFAESI Act if the borrower avoids notice or if the demand notice could not be served by the modes available?

SARFAESI Act is brought into force to enable the banks and financial institutions to get a speedy remedy by enforcing security interest created in their favour by borrowers. There are certain procedures to be followed by the banks and financial institutions while initiating the action under the SARFAESI Act. A demand notice under Section 13(2) of the Act is mandatory. However, some willful defaulters may try to avoid this notice in the belief to defeat the purpose of the Act. We have a Civil Procedure Code and Civil Rules of Practise which details the procedure to be followed while sending the notice to persons in different circumstances. The SARFAESI Act and Rules also details similar procedure.

If the borrower avoids notice or where demand notice could not be served by the modes available, a copy of the demand notice may be affixed on the outer door or some other conspicuous part of the house or building where the borrower/owner resides or carries on business and also by publishing the contents of the demand notice in two leading newspapers, out of which one in vernacular language, in vernacular newspaper having sufficient circulation in the locality. If borrower fails to pay the amount demanded by the bank within 60 days from the date of publication of the notice, the bank can proceed to take possession of the property.

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Official Liquidator controls property-SARFAESI Procedure

noreply@blogger.com (Vijayalekshmi Omana) — Fri, 05 Aug 2011 11:57:00 +0000

If the borrower/mortgagor/guarantor is a company under the Control of Official Liquidator in winding up proceedings, what are the procedures to be complied with during the course of SARFAESI proceedings?

SARFAESI Act is a tool for speedy remedy in the hands of Banks and Financial Institutions for securing repayment of amount advanced. The procedure starts by issuing a recall notice to the defaulted party. Then a demand notice will be send to the party under Section 13(2) specifically mentioning the amount due with interest to repay within 60 days of the receipt of the notice. If the party fails to repay the amount within the time specified, the secured creditor can take symbolic/actual possession of the property mortgaged.

In case of borrowers/guarantors/mortgagor being a company under Official Liquidator, demand notice to be served on the Official Liquidator. Since Official Liquidator was the custodian of all assets of the company, Authorised Officer has to take possession under Section 13(4) by giving possession notice to him and sale notice is to be served on him prior to 30 days of sale. After realising the sale proceeds, the same shall be distributed in accordance with Section 529A of Companies Act. Workmen dues as adjudicated by Official Liquidator/Labour Court shall have paripassu charge with that of the secured creditor. All other procedures applicable for taking possession, sale, sale confirmation etc are to be complied with.

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Precautions before SARFAESI demand notice

noreply@blogger.com (Vijayalekshmi Omana) — Sun, 31 Jul 2011 10:52:00 +0000

What are the precautions to be taken at the time of issuing demand notice under Section 13 of SARFAESI Act?

Sarfaesi Act is an effective tool in the hand of financial institution for getting a speedy remedy in case of willful defaulters of loans or advances. The first step is however issuing a recall notice for closing the account. Then the time for issuing demand notice will come. Certain things should be ensured by the banks or financial institutions before issuing demand notice. Some of them are mentioned below.

(1) The account should have been classified as NPA and recalled.

(2) The security sought to be enforced should be hypothecated or mortgaged to the secured creditor.

(3) The security interest or rights created should not come under the excluded categories in Section 31 of the Act.

(4) The total liability in the account should be above one lakh rupees.

(5) The demand notice should be issued within the limitation period.

(6) It should be ensured that the correct address of the borrower/mortgagor is ascertained prior to issue of notice.

(7) Correct particulars must be entered in the notice. If any error occurs, a fresh notice has to be issued recalling the earlier one.

(8) Always keep the acknowledgement card of the issued notice for future use.

(9) Always physically verify the particulars of property.

(10) It is advisable to file a Caveat in Civil Court to avoid unnecessary hurdles caused by crooked borrowers.

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Possession Notice under Sarfaesi

noreply@blogger.com (Vijayalekshmi Omana) — Sun, 17 Jul 2011 09:02:00 +0000

Rule 8 of the Security Interest (Enforcement) Rules, 2002 says where the secured assets is an immovable property, the authorised officer shall take possession by delivering a possession notice to borrower and by affixing the same on the outer door or at such conspicuous place of property. The same has to be published in newspapers also.
The format is as under. As per the rule the notice may be as far as possible in the prescribed format:-

THE FORMAT
Whereas
The undersigned being the Authorised Officer of the ............(name of the institution) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and in exercise of powers conferred under Section 13(12) read with rule 3 of the Security Interest(Enforcement)Rules, 2002 issued demand notice dated...............calling upon the borrower Sri.......M/s.........to repay the amount mentioned in the notice being Rs..........(in words within bracket) within 60 days of receipt of the said notice.
The borrower having failed to repay the amount, notice is hereby given to the borrower and the public in general that the undersigned has taken possession of the property described herein below in exercise of powers conferred on him/her under Section 13(4) of the said Act read with rule 9 of the said rule on this.................day of ..............of the year...................
The borrower in particular and the public in general is hereby cautioned not to deal with the property and any dealings with the property will be subject to the charge of the ............ (Name of the institution) for an amount of Rs..........and interest thereon.

Description of Immovable Property
(Describe the total property)
All that part and parcel of the property consisting of Flat No...../Plot No...........in survey No........./city or town survey no..................within the registration sub-district.........and district..............
Bounded
On the North by......
On the South by........
On the East by.........
On the West by........
Date Authorised officer
Place (Name of the Institution)
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The Security Interest(Enforcement)Rules,2002

noreply@blogger.com (Vijayalekshmi Omana) — Sat, 09 Jul 2011 15:01:00 +0000

Introduction

As per Sec.38(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002, the Central can make rules for carrying out the provisions of the Act.

Some ten aspects are provided in (a) to (g) clauses on which the rules are made. So in the exercise of those powers the Security Interest Rules are made. Some provisions like S.13(4), (10), (12) also require the procedure to get the full effect of it. Hence these rules.

There are 13 rules. The important ones are as follows:-

Rule 2:Definitions-In this the authorised officer is defined. In this the authorised officer is defined. Demand notice is defined. Approved valuer is defined.

Rule3:Demand Notice:This rule prescribes how to issue/deliver a demand notice. The provisions are very much similar to CPC. Sending of notice in case of individuals, body corporate etc is detailed.

Rule 3A: Reply to representation of borrower-In the Act, S.13(3A) says about the reply to be given to the representation of borrower. Likewise, here also it is stated. Sub rule(b) says that the secured creditor can modify the notice if necessary.

Rule 4:It says about the procedure after issue of notice. The procedure to be followed as per S.13(4) of the Act is detailed.

Rule 5:It deals with valuation.

Rule 6: It deals with sale of movables.

Rule 7: Issuance of sale certificate

Rule 8&9: Sale of immovable secured assets. Time, delivery of possession etc are detailed.

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Securitisation SARFESI Act Preview

noreply@blogger.com (Vijayalekshmi Omana) — Sun, 03 Jul 2011 06:16:00 +0000

Short Title:The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Long Title:An Act to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto.

There are six chapters; 42 sections; 1 schedule in this Act.

This Act came on 17th of December 2002.

Chapter I mainly contains definitions.

S.1-Name of the Act, its extent and date of commencement. It extends to the whole of India.

S.2-Definitions:

Some of the important terms are contained as follows:-

2(a) -Asset reconstructions.

2(l)-Financial asset

2(f)-borrower

2(o)-non-performing asset

2(z)-securitisation

2(zc)-secured asset

2(zf)-security interest

Chapter II deals with the regulation of securitisation and reconstruction of financial assets of banks and financial institutions.

S.3 deals with registration of securitisation company. Reserve Bank of India has some powers in the registration of such companies. The RBI can inspect the business of such companies. This section also lays down certain conditions to be fulfilled. Then RBI grants certificate.

S.4-This section lays down certain criteria which enables the RBI to cancel the registration certificate already granted. An appeal is provided to Central Government against the order of cancellation.

S.5-It deals with acquisition of rights or interests in financial assets.

S.5A-It deals with transfer of applications in any tribunals to DRT.

S.6-It deals with giving notice to obligor and payment made by him.

S.9-It details the different measures for asset reconstruction. In this six measures are stated.

S.10-It deals with other functions of securitisation/reconstruction companies.

S.12-&12A deals with powers of RBI to determine policies, issue directions calling for statements etc.

Chapter III

S.13-deals with different stages of process of enforcing security interest. Sub-section 1 says that the security interest may be enforced without intervention of court or tribunal.

Sub-section 2 says that in case of NPA account the secured creditor may ask the borrower to discharge his full liabilities by notice in writing within 60 days of receipt.

Sub-section 3 refers to the contents of notice.

Sub-section 3A deals with representation by borrower.

S.13(4)-If borrower fails to discharge his full liability within the notice period actions can be taken. Certain measures are given which can be taken to recover the secured debt.

S.14-It deals with power of Chief Metropolitan Magistrate and District Magistrate to assist secured creditor to take possession of secured asset.

S.15-Deals with manner and effect of takeover of management. Publishing notice in newspaper is detailed in this section.

S.17-It deals with Appeals to DRT.

S.18-Appeal to Appellate Tribunal from DRT.

S.18B-Appeal to High court.

Chapter IV

S.20 deals with Central Registry for the purposes of registration of transaction of securitisation and reconstruction of financial assets and creation of security interest.

Chapter V deals with penalties.

S.27&28 deals with penalties where 29 deals with imprisonment. 30 deals with taking cognizance.

Chapter VI are miscellaneous things.

In this S.31 details the circumstances in which the provisions of the Act do not apply. There are 10 things.

In S.34 civil court's jurisdiction is barred.

S.36 deals with limitation period.

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SUPREME COURT TO CONSIDER THE BANNING OF ENDOSULPAN ON 13TH MAY.

noreply@blogger.com (adv latheesh kumar) — Thu, 12 May 2011 07:16:00 +0000

SUPREME COURT TO CONSIDER THE BANNING OF ENDOSULPAN ON 13TH MAY.
On 11th May, 2011 ,while considering a Wri Petition filed by Demoratic Youth Fesderation of India [W.P.(C) No.213/2011 D.Y.F.I Vs. Union of India], a Bench constiting of Chief Justice S.H. Kapadia, Justice K.S. Radhakrishnan and Justice Swatanter Kumar observed that they would consider passing of an interim order on the ban of Endosulfan. The case will be coming before the Bench on 13th of May after impleading the pesticide manufacturers. Mr.Krishnan Venugopal who was appearing for the writ petitioners vehemently argued for the ban of Endosulfan, whereas Mr.Gopal Subraminian, the Solicitor Genereal of India who was appearing for the Union opined that Endosulfan can be banned only after finding a cost effective alternative.

SUPREME COURT STAYED ALLAHABAD HIGH COURT VERDICT ON AYODYA CASE

noreply@blogger.com (adv latheesh kumar) — Wed, 11 May 2011 13:20:00 +0000

SUPREME COURT STAYED ALLAHABAD HIGH COURT VERDICT ON AYODYA CASE
On 9th May, 2011 the Supreme Court stayed Allahabad High Court order of september 2009 on Ramjanmbhoomi-Babrimasjid Title case in which the High Court directed for a division of 2.77 acres of disputed site in to three parts among the Hindus, the Muslims and the Nirmohi Akhara. When C.A.No.10866-67/2010, mailto:M.Siddiq@H.M.Siddiq,%20Jamiat%20Ulama-i-Hind Vs. Mahant Suresh Das & Ors.etc.etc(Ramjanmbhoomi-Babrimasjid Title case) came up for hearing before a Bench consisting of Justice Aftab Alam and Justice R.M.Lodha , the Court opined that no body has prayed for a partition of the area, so the High Court has given a new relief which was sougt by noboday.