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

Meridian Traders Ltd, a borrower, receives a bank's reasons for rejecting its objection to a section 13(2) notice, and the bank states it will soon take possession of the secured asset. Meridian wants to approach the DRT immediately under section 17 of the SARFAESI Act. What is the position?

Meridian cannot apply yet. The Explanation to section 17(1) says that communicating reasons for rejecting the objection, or the likely action of the creditor, does not entitle the borrower to apply to the DRT. An application arises only after an actual section 13(4) measure is taken.

  1. AMeridian may apply at once because the bank's likely action is a measure under section 13(4)
  2. BMeridian may apply only after the bank actually sells the asset
  3. CMeridian may apply, but only to the Appellate Tribunal
  4. DCommunication of reasons or likely action does not entitle Meridian to apply to the DRT under that sub-sectionCorrect

Explanation

The Explanation to section 17(1) states that communicating reasons for not accepting the borrower's objection, or the likely action at that stage, does not entitle a person to apply to the DRT. The right arises only when a measure under section 13(4) has actually been taken. Waiting for sale is not required, since possession taking itself is a measure.

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