Sarfaesi

Ritika singh (Querist) 23 February 2013 This query is : Resolved
1) an NBFC has lent money to borrowers who have defaulted with time.
2) it has enetered into an assignor-asignee relationship with a Bank (allowed to proceed under Sarfaesi act)and assigned it to proceed against the defaulters under the Act.
3) is this arrangement legal?
4) can such a relationship allow the bank to proceed under sarfeasi against the defaulted borrowers under the Act and on behalf of the NBFC???
if not y ??

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ajay sethi (Expert) 23 February 2013
yes it is legal . bank can proceed against the defaulter

R.K Nanda

(Expert) 23 February 2013
yes, NBFC can proceed under SARFEASI ACT.

prabhakar singh (Expert) 23 February 2013
Mr. Sethi !

What confuses me that if an assignor ,here an NBFC,does not have right on it's own to proceed against it's debtor under the said Act, how can it confer such a right in favor of it's assignee bank just by agreement?

prabhakar singh (Expert) 23 February 2013
If NBFC is notified by central govt. to be treated as a bank with in meaning of the definition laid in section 2(c)(v) of the Act under reference then it would be an other matter.

Ritika singh (Querist) 23 February 2013
Mr Prabhakar , the NBFC is not notified by central government .

Advocate Bhartesh goyal (Expert) 23 February 2013
As the NBFC has not been notified by central Govt so the NBFC can not proceed under Sarfaesi Act.

Rajeev Kumar (Expert) 23 February 2013
As from the given fact, NBFC can't proceed under sarfaesi act.

DEFENSE ADVOCATE.-firmaction@g (Expert) 23 February 2013
Lot of changes have been made in the law for fast recovery of bank loans and since bank staff is lax in taking proper steps so provisions of assignment has been made .

Govt has even recently allowed FII / foreign investors to buy sticky and non performing loans and recover directly.

Section 2(b) of SECURITISATION ACT gives defination for such act and defined it as ASSET RECONSTRUCTION.

prabhakar singh (Expert) 23 February 2013
DEAR ADVOCATE DEFENSE!

WILL YOU KINDLY POST THOSE PROVISIONS RELATING TO ASSIGNMENT WHICH LAYS THAT EVEN IF THE ASSIGNOR DOES NOT HAVE RIGHT TO PROCEED UNDER ACT UNDER REFERENCE,IF THE ASSIGNEE IS A BANK ,THEN ASSIGNEE CAN PROCEED UNDER THE ACT.

prabhakar singh (Expert) 23 February 2013
I HAD ONLY SIMPLE THING IN MY MIND THAT I CAN NOT TRANSFER A RIGHT I DO NOT HAVE.

Raj Kumar Makkad (Expert) 06 March 2013
NBFC cannot invoke SARFAESI Act for the recovery of its debts.

Sarfaesi

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