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

Sagar Foods Pvt Ltd received a Section 13(2) notice. Which action by the borrower is restricted by Section 13(13) after receipt of the notice?

After receiving the notice, the borrower cannot sell, lease or otherwise transfer any secured asset referred to in it without the creditor's prior written consent. Section 13(13) excepts transfers in the ordinary course of business, so normal sales of goods remain allowed.

  1. ASelling finished goods in the ordinary course of its business
  2. BTransferring a secured asset named in the notice by sale or lease without prior written consent of the secured creditorCorrect
  3. CMaking a representation or objection to the secured creditor
  4. DPaying part of the dues to the secured creditor

Explanation

Section 13(13) prohibits the borrower, after receiving the notice, from transferring by sale, lease or otherwise any secured asset referred to in the notice without the creditor's prior written consent. Transfers in the ordinary course of business are excepted. Objecting to the notice or paying dues is not restricted.

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