THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC. 3(ii)]

MINISTRY OF FINANCE AND COMPANY AFFAIRS

(Department of Economic Affairs)

(BANKING DIVISION)

NOTIFICATION

New Delhi, the 20th September, 2002

S.O. 1020 (E). —In exercise of the powers conferred by Sub-section (1) and clause (b) of Sub-section (2) of

Section 38 read with Sub-Sections (4), (10) and (12) of Section 13 of the Securitisation and Reconstruction of Financial

Assets and Enforcement of Security Interest Ordinance, 2002 (Ord. 3 of 2002), the Central Government hereby makes the

following rules, namely:—

1. Short title and commencement.— (1) These rules may be called the Security Interest (Enforcement) Rules, 2002.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. Definations.—In these rules, unless the context otherwise requires,—

(a) "authorised officer" means an officer not less than a chief manager of a public sector bank or equivalent, as

specified by the Board of Directors or Board of Trustees of the secured creditor or any other person or

authority exercising powers of superintendence, direction and control of the business or affairs of the

secured creditor, as the case may be, to exercise the rights of a secured creditor under the Ordinance;

(b) demand notice means the notice in writring issued by a secured creditor or authorised officer, as the case

may be, to any borrower pursuant to sub-Section- (2) of Section 13 of the Ordinance;

Interest (Second) Ordinance, 2002 (Ord. 3 of 2002);

(d) "approved valuer" means a valuer as approved by the Board of Directors or Board of Trustees of the

secured creditor, as the case may be ;

(e) Words and expressions used and not defined in these Rules but defined in the Ordinance shall have the

meanings respectively assigned to them in the Ordinance,

i. Demand Notice:—(1) The service of demand notice as referred to in Sub-section (2) of Section 13 of the

Ordinance shall be made by delivering or transmitting at the place where the borrower or his agent, empowered lo accept the

notice or documents on behalf of the borrower, actually and voluntarily resides or carries on business or personally works

for gain, by registered post wiih acknowledgement due, addressed to the borrower or his agent empowered to accept the

service or by Speed Post or by courier or by any other means of transmission of documents like fax message or eleetronic

mail service:

Provided Unit where authorised officer has reason lo believe that the borrower or his agent is avoiding the service

of the notice or that lor any other reason, the service can not be made as aforesaid, the service shall be effected by affixing

a copy of the demand notice on the outer door or some other conspicuous part of the house or building in which the

y mower or his agem ordinarily resides or carries on business or personally works for gain and also by publishing the

contents of the demand notice in iwo leading newspapers, one in vernacular langauage, having sufficient circulation in that

local ny

(2) where the borrower is a body corporate, the demand notice shall be served on the registered office or any of the

branches of such body corporate as specified under suh-rulc(l).

(3) Any other notice in writing to be served on the borrower or his agent by authorised officer, shall be served in

the same manner as provided in this rule.

(4) Where there are more than one borrower, the demand notice shall be served on each borrower.

4. Procedure after issue of notice.—If the amount mentioned in the demand notice is not paid within the time

specified therein, the authorised officer shall proceed to realise the amount by adopting any one or more of the measures

specified in Sub-section (4) of Section 13 of the Ordinance for taking possession of movable property, namely:—

(1) Where the possession of the secured assets lo be taken by the secured creditor are movable property in

possession of the borrower, the authorised officer shall take possession of such movable property in the

presence of two witnesses after a Panchanama drawn and signi. il by the witnesses as nearly as possible in

Appendix-I to these rules.

(2) After taking possession under sub-rule (1) ab^vc, the authorised officer shall make or cause to be made an

inventory of the property as nearly as possible in the form given in Appcndix-11 to these rules and deliver or

cause to be delivered, a copy of such inventory to the borrower or to any person entitled to receive on behalf

of borrower.

(3) The authorised officer shall keep the property taken possession under sub-rule (I) either in his own custody

or in the custody of any person authorised or appointed by him, who shall take as much care of the property

in his custody as an owner of ordinary prudence would, under the similar circumstances, take of such

properly:

Provided that if such property is subject to speedy or natural decay, or the expense of keeping such property

in custody is likely to exceed its value, the authorised officer may sell it at once.

(4) The authorised officer shall take steps for preservation and protection of secured assets and insure them, if

necessary, till they are sold or otherwise disposed of.

(5) In case any secured asset is :—

(a) a debt not secured by negotiable instrument; or

(b) a share in a body corporate;

the custody of any court or any like authority, the authorised officer shall obtain possession or

recover the debt by service of notice as under :—

(i) in the case of a debt, prohibiting the borrower from recovering the debt or any interest thereon

and the debtor from making payment thereof and directing the debtor to make such payment to

the authorised officer; or

(ii) in the case of the shares in a body corporate, directing the borrower to transfer the same to the

secured creditor and also the body corporate from not transferring such shares in favour of any

person other than the secured creditor. A copy of the notice so sent may be endorsed to the

concerned body corporate's Registrar to the issue or share transfer agents, if any;

(iii) in the case of other movable property (except as aforesaid), calling upon the borrowers and the

person in possession to hand over the same to the authorised officer and the authorised officer

shall take custody of such movable property in the same manner as provided in Sub-rule (1) to

(3) above;

(iv) movable secured assets other than those covered in this rule shall be taken possession of by

the authorised"officer by taking possession of the documents evidencing title to such secured

assets.

5. Valuation of movable secured assets.— After taking possession under sub-rule (I) of rule 4 and in any case

before sale, the authorised officer shall obtain the estimated value of the movable secured assets and thereafter, if considered

necessary, fix in consultation with the secured creditor, the reserve price of the assets to be sold in realisation of the dues

of the secured, creditor.

6. Sale of movable secured assets.—(1) the authorised officer may sell the moveable secured assets taken

possession under sub-rule (1) of rule 4 in one or more lots by adopting any of the following methods to secure maximum sale

price for the assets, to be so sold—

(a) obtaining quotations from parties dealing in the secured assets or otherwise interested in buying such

assets; or

.(b) inviting tenders from the public; or

(d) by private treaty.

(2) The authorised officer shall serve to the borrower a notice of thirty days for sale of the movable secured assets,

under sub-rule (1):

Provided that if the sale of such secured assets is being, effected by either inviting tenders from the public or by

holding public auction, the secured creditor shall cause a public notice in two leading newspapers, one in vernacular

language, having sufficent circulation in that locality by setting out the terms of sale, which may include,—

(a) details about the borrower and the secured creditor;

(b) description of movable secured assets to be sold with identification marks or numbers, if any, on them;

(d) time and place of public auction or the time after which sale by any other mode shall be completed;

(e) depositing earnest money as may be stipulated by the secured creditor;

(0 any other thing which the authorised officer considers it material for a purchaser to know in order to judge

the nature and value of movable secured assets.

(3) Sale by any methods other than public auction or puMfe tender, shall be on such terms as rrfffiy be settled

between the parties in writirtg.

7. Issue of certificate of sale.-—(1) Where movable secured assets is sold, sale price of each lot shall be paid as per

the terms of the public notice or on the terms as may be settled I'etwi en ihe parties, as the case may be, and in the event oi

default of payment, the movable secured assets shall be liable t<^h,. us, *ial lor saw again.

(2) On payment of sale price, the authorised officer r.hall is& <eaeerlific . •• of sale in thes<re;>u

i >)rm as give>

p »

tfr,

•

the sale shall become absolute. The certificate of sale so issued sh.>ll h; prima facie cv-dende ol'titfe of the purchaser.

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC. 3(ii)]

(3) Where the movable secured assets are those referred in sub clauses (iii) to (v) of clause (1) of sub-section (1)

of section 2 of the Ordinance, the provisions contained in these rule and rule 7 dealing with the sale of movable secured

ass'-i.s shall, mutatis mutandis, bpply to such assets.

8. Sale of immovable secured assets.—(1) Where the secured asset is an immovable property, the authorised

ofi ' er shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in

Ap .endix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous

pla» e of the property.

(2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newspaper, one in

vei acular language having sufficient circulation in that locality, by the authorised officer.

(3) In the event of possession of immovable property is actually taken by the authorised officer, such property

shall be kept in his own custody or in the custody of any person authorised or appointed by him, who shall take as much

care of the property in his custody as a owner of ordinary prudence would, under the similar circumstances, take of such

property.

(4) The authorised officer shall take steps for preservation and protection of secured assets and insure them, if

sary, till they are sold or otherwise disposed off.

(5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorised officer shall

obt. in valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price

of the property and may sell the whole or any part of such immovabnle secured asset by any of the following methods:—

(a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in

buying the such assets; or

(b) by inviting tenders from the public;

(d) by private treaty.

(6) the authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured

asset:., under sub-rule (5):

Provided that if the sale of such secured asset is being effected by cither inviting tenders from the public or by

holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular

language having sufficient circulation in the locality by setting out the terms of sale, which shall include, -

(a) the description of the immovable property to be sold, including the details of the encumbrances known to

the secured creditor;

(b) the secured debt for recovery of which the property is to be sold;

(d) time and place of public auction or the time after which sale by any other mode shall be completed;

(I) any other thing which the authorised officer considers it maierial fora purchaser to know in order to judge

ihe nature and value of the property,

(7 i Every notice of sale shall be affixed on a conspicuous part of the immovable property and may, if the authorised

officer letnis it fit, put on the web-site of the secured creditor on the Internet,

(X) Sale by any methods other than public auction or public tender, shall be on such terms as may be settled

betwec the parties in writing.

9. Time of sale, Issue of sale certificate and delivery of possession, etc.— (I) No sale of immovable property under

these rules shall U'ke place before the expiry of thirty days from the date on which the public notice of sale is published in

newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower,

(2) The siilc shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or lender

or ipomiion or offer to the authorised officer and shall be subject to confirmation by the secured creditor:

Provided that no sale under this rule shall be confirmed , if the amount offered by sale price is less than the reserve

;ir,. e, specified under sub-rule (5) of rule 9 :

Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the

consent of the borrower and the secured creditor effect the sale at such price.

(3) On every sale of immovable property, the purchaser shall immediately pay a deposit of twenty five per cent of

the amount of the sale price, to the authorised officer conducting the sale and in default of such deposit, the property shall

forthwith be sold again.

(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or

before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon

in writing between the parties.

(5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited and the property

shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may

be subsequently sold.

(6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the

authorised officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the

purchaser in the Form given in Appendix V to these rules.

(7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if he thinks fit,

allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon

together with such additional amount that ma> be sufficient to meet the contingencies or further cost, expenses and interest

as may he determined by him.

(8) On such deposit of money for discharge of the encumbrances, the authorised officer may issue or cause the

purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make

the payment accordingly.

(9) The authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured

creditor on deposit of money as specified in sub-rule (7) above,

(10) The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has

purchased the immovable secured asset free from any encumbrances known to the secured creditor or not.

10. Appointment of Manager.— (1) The Board of Directors or Board of Trustees, as the case may be, may appoint

in consultation with the borrower any person (hereinafter referred to as the Manager) to manage the secured assets the

possession of which has been taken over by the secured creditor.

(2) The Manager appointed by the Board of Directors or Board of Trustees, as the case may be, shall be deemed

to be an agent of the borrower and the borrower shall be solely responsible for the commission or omission of acts of the

Manager unless such commission or omission are due to improper intervention of the secured creditor or the authorised

officer.

(3) The Manager shall have power by notice in writing to recover any money from any person who has acquired

any of the secured assets from the borrower, which is due to may become due to the borrower.

(4) The Manager shall give such person who has made payment under sub-rule (3) a valid discharge as if he has

made payments to the borrower.

(5) The Manager shall apply all the monies received by him in accordance with the provisions contained in sub-

section (7) of Section 13 of the Ordinance.

11. Procedure for Recovery of shortfall of secured debt— (1) An application for recovery of balance amount by

any secured creditor pursuant to sub-section (10) of Section 13 of the Ordinance shall be presented to the Debts Recovery

Tribunal in the form annexed as Appendix VI to these rules by the authorised officer or his agent or by a duly authorised

legal practitioner, to the Registrar of the Bench within whose jurisdiction his case falls or shall be sent by registered post

addressed to the Registrar of Debts Recovery Tribunal.

(2) The provisions of the Debts Recovery Tribunal (Procedure) Rules, 1993 made under Recovery of Debts Due to

Banks and Financial Institutions Act, 1993 (51 of 1993), shall mutatis mutandis apply to any application filed by under sub-

rule (1).

(3) An application under sub-rule (1) shall be accompanied with fee as provided in rule 7 of the Debts Recovery

Tribunal (Procedure) Rules, 1993.

[F.No. 1/3/2002-B.O.I]

SHEKHAR AGARWAL, Jt. Secy.

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART H—SEC. 3(ii)]

APPENDIX-I

[rule-4(l)]

PANCHNAMA

WHEREAS;

Sr.

No.

NameofPanch

and

Father's/ Husband's

Name

Address

Age

Occupation

The above mentioned Panchs on being called by Shri-

, the authorised officer of

(name of the Institution), under the Se curitisation and Reconstruction of Financial Assets and Enforcement of Security

(Second) Interest Ordinance, 2002 (Ore J. 3 of 2002) and in exercise of the powers under Section 13(4) of the said Ordinance

today entered the premises of Shri/M/!>

, and demanded the payment of the dues mentioned in

the demand notice dated

——— in respect of Loan Account bearing No. and on its non-payment, taken over possession

of movable properties as detailed in th ie inventory attached to this Panchnama between the hours

M and

—M in our presence.

We also hereby state that duiring take over of possession

(to be filled in case of occurrence of any

incidence)

Therefore, we declare that the facts of the Panchnama mentioned herein are true and correct to the best of our

observations and knowledge.

1. Signature

Date

Time

Name

Address

2. -do-

Drawn before me

Authorised Officer

APPENDK-H

[rule-4(2)]

INVENTORY

Inventory of movable s taken possession in Loan Account bearing No.

Inventory of

movable properties taken possession of at the premises of Shri/M/s

Plot No.

/Gala No.

H.no.

, Street No.

under Section 13(4) of the Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002 and the Security Interest (Enforcement)

Rules, 2002 made thereunder, o n this

day of

20—by Shri

, authorised officer of

(name of the Institution) under the said Ordinance, between the hours

Sr.

No.

Description of article

Estimated

value

Place where kept for safe

custody (Name of the person

if necessary)

Panchas:

Sr.

Name and Address of Panch

Signatures

No.

Drawn by me today the

20—

Signature of Borrower/Representative

Signature of Authorised Officer

APPENDDC-m

[rule-7(2)]

CERTIFICATE OF SALE

(for movable property)

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 (Second) Ordinance, 2002 and

in exercise of the powers conferred under Sub-section (12) of Section 13 read with rule 8 of the Security Interest (Enforcement)

Rule, 2002 has in consideration of the payment of Rs.

(Rupees

) sold on behalf of the

(name of the secured creditor/institution in favour of

(purchaser), the following movable

property secured in favour of the

(name of the secured creditor) by

(the names of the

borrowers) towards the financial facility

(description) offered by

(secured creditor). The

undersigned acknowledge the receipt of the sale price in full and hand over the delivery and possession of the items listed

below.

Description of the movable property.

Sd/-

Authorised Officer

Date:

Place:

APPENDIX-1V

[rule-80)]

POSSESSION NOTICE

(for Immovable property)

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 (Second) Ordinance, 2002 (Ord. 3 of 2002) and in exercise of powers conferred under Section 13(12) read

with rule 9 of the Security Interest (Enforcement) Rules, 2002 issued a demand notice dated

calling upon the

borrower Shri —

•—-7M/s

to repay the amount mentioned in the notice being Rs.-

——(in words

) with in 60 days from-the date 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

thai 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 Ordinance read with rule 9 of the said rules on this

day of

the year

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART II—SEC. 3(ii)l

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 Rs.—

and interest thereon.

Description of the Immovable Property

All that part and parcel of the property consisting of Flat No.

/Plot No.

In Survey No.

/City or Town

Survey No.

/Khasara 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

Scl/-

Authorised Officer

(Name of the Institution)-

Date:

Place:

APPENDK-V

[rule-9(6)1

SALE CERTIFICATE

(for Immovable properly)

Whereas

The undersigned being the authorised officer of the

(name of the Institution) under the

Securitisution nnd Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002 (Ord.

3 of 2002) and in exercise of the powers conferred under Section 13 read with rule 12 of the Security Interest (Enforcement)

Rules, 2002 sold on behalf of the

(name of the secured creditor/institution) in favour of

(purchaser),

the immovable property shown in the schedule below secured in favour of the

(name of the secured creditor)

(the names of the borrowers) towards the financial facility

(description) offered by —

(secured creditor). The undersigned acknowledge the receipt of the sale price in full and handed over the

delivery and possession of the scheduled property, The sale of the scheduled property was made free from all encumbrances

known to the secured creditor listed below on deposit of the money demanded by the undersigned.

DESCRIPTION OF THE MOVABLE PROPERTY

All that part and parcel of the property consisting of Flat No.

/Plot No.

In Survey No.

/City or Town Survey No.

/Khasara No.

Within the registration sub-district-——

and District——

Bounded;

On the North by

On the Suuth by

On the East by

On the West by

List of encumbrances

Sd/-

Authoriscd Officer

(Name of the Institution)

Date:

Place:

APPENDIX VI

FORM

[SeerulellG)]

Application under sub-section (10) of Section 13 of the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest (Second) Ordinance, 2002

For use in Office.

Date of filing

Date of receipt by post

Registration No.

Signature

Registrar

IN THE DEBTS RECOVERY TRIBUNAL

[Name of the place]

BETWEEN

A.B.

APPLICANT

AND

CD.

DEFENDANT

Delete whichever is not applicable.

DETAILS OF APPLICATION:

1. Particulars of the applicant

(i) Name of the applicant

(ii) Address of Registered Office ;

(iii) Address for service of all notices:

2. Particulars of the (defendant):

(i) Name of the (defendant):

(ii) Office address of the (defendant):

(iii) Address for service of all notices:

3. Jurisdiction of the Tribunal:

The applicant declares that the subject-matter of the

recovery of debt due falls within the jurisdiction of

the Tribunal.

3 '| I ' l '

l l u j - ' i

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC. 3(ii)l

4. Limitation :

The applicant further declares that the application is

within the limitation prescribed in section 24 of the

Recovery of Debts Due to Banks and Financial

Institutions (Act), 1993.

5. Facts of the case :

The facts of the case arc given below: -[Give here a

concise statement of facts in a chronological order,

each paragraph containing as nearly as possible a

separate issue, fact or otherwise].

6. Details of recoveries made by sale of securities :

[Give here security wise details of sale/s conducted

and realizations, appropriations of sale proceeds

towards, costs interest and principal amount and the

balance amount to be rccovered.l

7. Relies sought :

In view of me facts mentioned in para 5 above, the

applicant prays for the the following relief(s) :-

[Specify below the relief(s) sought explaining the

ground for relief(s) and the legal provisions (if any

relief upon).]

8. Itcritn order, if prayed for:

Pending final decision on the application, the

applicant seeks issue of the following interim order—

[Give here the nature of the interim order prayed for

with reasons.]

9. Matter not pending with any other court, etc ;

The applicant further declares that the matter

regarding which this application has been made is

not pending before any court of law or any other

authority or any other Bench of the Tribunal.

10. Particulars of Bank Draft/Postal Order in respect

of the application fee :

(1) Name of the Bank on which drawn :

(2) Demand Draft No:

(1) Number of Indian Postal Order(s) :

(2) Name of the issuing Post Office:

(3) Date of issue of Postal Order(s):

(4) Post Office at which payable :

11. Details of Index:

An index in duplicate containing the details of the

documents to be relied upon is enclosed.

[Such documents should include copies of sale

certificates or any other documents relating to sale

of secured assets and sale proceeds realised].