Exemptions under sarfaesi act.

If security interest is created in the leasehold rights of the property, then bank can proceed under SARFAESI Act for sale of the said leasehold  rights for recovery of the dues.

If lease hold rights are mortgaged and the mortgagee accepts such charge,the mortgagee can enforce such securoty interest subject to the following terms and conditions:-

1.  The lessor gives his consent for creating charge in favour of the creditor to secure financial assistance;

2.   The lessor agrees to extend the lease favouring the lessee or permit the secured creditor to enforce the security interest  and agrees to execute the lease in favour of any succesful purchaser (under any one of the modes of sale) found by the mortgagee of the lease hold rights, according to law.

3.    What will be sold in case mortgage of lease hold rights is  not the tangible property but the prospective lease hold rights that would be given afresh in favour of succesful purchaser.

4. The value of lease hold rights depends upon the status of the property leased out and the duration of the lease period.

5.Lease hold right is also squarely covered by the defintion of "security interest" under Sec.2 (zf) of SARFAESI Act which reads thus:

(zf) "security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified insection 31"