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CS Professional · Corporate Restructuring, Valuation and Insolvency · Debt Recovery and SARFAESI

After receiving a Section 13(2) notice, Meera Plastics Pvt Ltd sends a written objection disputing the amount claimed. Lakshmi Finance, the secured creditor, finds the objection untenable. What must the creditor do under the Act?

The secured creditor must consider the objection and, if it rejects it, communicate its reasons to the borrower within fifteen days of receiving the objection. Section 13(3A) imposes this duty. It does not require a prior reference to the Tribunal.

  1. ACommunicate the reasons for non-acceptance to the borrower within fifteen days of receiving the objectionCorrect
  2. BCommunicate the reasons within sixty days of the original notice
  3. CRefer the objection to the Debts Recovery Tribunal for a decision before taking any step
  4. DIgnore the objection since the Act does not require a reply

Explanation

Section 13(3A) requires the creditor to consider the representation and, if it is not acceptable, to communicate the reasons within fifteen days of receiving it. The Act does not send the objection to the DRT first. Ignoring it would breach the sub-section.

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