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CS Professional · Insolvency and Bankruptcy - Law and Practice · Debt Recovery and Securitization

Nirmal Traders received a section 13(2) notice listing its warehouse as secured asset. Before any public auction notice or tender was published, Nirmal tendered to the bank the full dues plus all costs, charges and expenses. What is the legal effect under section 13(8)?

The bank must not transfer the warehouse by lease, assignment or sale and must take no further step towards transfer. Section 13(8) bars transfer when full dues plus costs are tendered before publication of the auction notice or invitation of quotations or tenders.

  1. AThe bank may still proceed with sale since the sixty days have expired
  2. BThe bank must not transfer the secured asset by lease, assignment or sale, and must take no further step for such transferCorrect
  3. CThe bank may sell only after getting DRT permission
  4. DThe tender has no effect unless the bank consents to accept it

Explanation

Section 13(8) provides that if full dues with costs are tendered before the date of publication of notice for auction or inviting quotations or tender, the asset shall not be transferred, and any steps already taken must not be continued. The tender was timely, so the bank is barred from transferring the asset.

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