1 SARFAESI Act, 2002, came into force on 17 December

2002 which on empowers banks and financial institutions to recover

their non-performing assets (NPAs) by taking possession and
selling the secured assets without the intervention of the court. It
has stated that Protium Finance Limited is a Systemically
Important, Non-Deposit Taking, (having asset size of Rs 500 crore
or more )Non-Banking Financial Company NBFC-ND-SI which was
incorporated 29 Mar 2019.After about five years name of the
company was changed in consideration On 26 April 2022
through a extraordinary General Meeting in special resolution to
the provisions of amendment in 2016 in SARFAESI Act ,2002 and
Companies Act ,2013 subject to approval of the CENTRAL
GOVERNMENT and or any other REGULATORY AUTHORITIES.
So far the financial institution neither listed nor received approval
from authorities. In this case exercise of powers under the Act is
itself under scrutiny.

Systemically Important:
Non-Systemically Important: is below Rs 500 crore

CIN/LLPIN/FCRN U65999MH2019PLC323293

Company No. 323293

Company Classification Public Limited Indian Non-Government

Company

Incorporation Date 29 Mar 2019

Date of AGM 11 Sep 2023

Date of Balance Sheet 31 Mar 2023

Listing Status Unlisted

ROC Code Roc Mumbai

24th February 2020 - The Ministry of Finance, vide its notification

dated 24th February 2020, notified that the NBFCs with asset size
of Rs.100 crores or more are eligible NBFCs that are covered
under the SARFAESI Act to enforce security interest on debts
amounting to at least Rs.50 lacs. Even it is admitted then approval
is rider

SARFAESI Act, 2002

Section 13(2) of SARFAESI Act, 2002 requires a Secured Creditor

to Issue notice to the defaulting borrower stating to clear the due
amount or else they will take the steps under 13(4) and has to wait
for 60 days before taking any steps under 13(4) or else their steps
will be invalid.---------------------------------11 Aug 2023/ 60 days

The time limit for issuing a possession notice under 13(4) is typically 60
days from the date of the notice .If there is no stay of further
proceedings, the Bank will proceed to take physical possession of the
property under Section 14 of the Act through District Magistrate or Chief
Metropolitan Magistrate.

Banks generally put properties for auction only after taking physical
possession i.e. S. 14 CMM/DM order for the same. On the other hand,
sometimes properties are put for auction on Symbolic possession also,
you have to check Sale notice for type of possession before bidding for
auction
13) No borrower shall, after receipt of notice referred to in sub-
section (2), transfer by way of sale, lease or otherwise (other than
in the ordinary course of his business) any of his secured assets
referred to in the notice, without prior written consent of the secured
creditor.

Thus from the above judgments it is clear that under Rule 8(6) of
the Rules of 2002, the petitioners are entitled for a thirty day notice
period enabling them to clear the loan and to redeem the property
as envisaged under Section 13(8) of the SARFAESI Act, and that if

disposal of immovable secured asset under Section 13(4) of the

SARFAESI Act necessarily attracts Rule 8 of the Security Interest
(Enforcement) Rules, 2002.

An analysis of the present judicial precedent further highlights the

difference in implementation of the pre and post amendment of
Section 13(8) of the SARFAESI Act. The unamended provision
allows for the borrower’s right of redemption to be valid until the
sale certificate is registered, and possession is handed over,
however, the post amendment Section 13(8) clarifies that the right
of redemption will expire on the date of publication of the auction
notice.

Rules 8 and 9 of the SI Rules provide the prerequisites with which

a lender must comply, after the issuance of the proceedings under
Sections 13(1) to (4) of the SARFAESI Act and prior to selling the
mortgaged immovable asset in question.

The Apex Court in the case titled Mathew Varghese versus M

Amritha Kumar, concluded that Section 13(8) states that the debtor
or borrower has the complete right to redeem the property by
paying off the debt prior to the property's sale.

8. Sale of immovable secured assets- (1) to (8)

………………………………………………….
Agarwal Tracom Pvt. Ltd. vs Punjab National Bank
on 27 November, 2017

Jurisdiction

The reason is that Section 17(2) empowers the Tribunal to examine

all the issues arising out of the measures taken under Section
13(4) including the measures taken by the secured creditor under
Rules 8 and 9 for disposal of the secured assets of the borrower. The
expression "provisions of this Act and the Rules made thereunder"
occurring in sub-sections (2), (3), (4) and (7) of Section 17 clearly
suggests that it includes the action taken under Section 13(4) as also
includes therein the action taken under Rules 8 and 9 which deal
with the completion of sale of the secured assets. In other words, the
measures taken under Section 13 (4)
would not be completed unless the entire procedure laid down in
Rules 8 and 9 for sale of secured assets is fully complied with by the
secured creditor. It is for this reason, the Tribunal has been
empowered by Section 17(2),(3) and (4) to examine all the steps
taken by the secured creditor with a view to find out as to whether
the sale of secured assets was made in conformity with the
requirements contained in Section 13(4) read with the Rules or
not?

and end with measures specified in Rule 9.

Rule 9

Rule 9 deals with time of sale, issue of sale certificate and delivery
of possession

. Section 13(4) and Section 17 of the SARFAESI Act, Rules 8 and 9

of the Security Interest(Enforcement) Rules,2002(hereinafter
referred to as “the Rules”) to the extent they are relevant for
deciding the question involved in the SA:

Section 13(4)
13. Enforcement of security interest-
(4) In case the borrower fails to discharge his liability in full within
the period specified in sub-section (2), the secured creditor may take
recourse to one or more of the following measures to recover his
secured debt, namely:-
(a) take possession of the secured assets of the borrower including
the right to transfer by way of lease, assignment or sale for realizing
the secured asset;

8. Sale of immovable secured assets.

Rule 8, which has 8 sub-rules, deals with the manner

of sale of immovable secured assets and provides detail procedure
as to how and in what manner the sale of secured assets, is to be
held.

(1)Where the secured asset is an immovable property, the authorized

officer shall take or cause to be taken possession, by delivering a
possession notice prepared as nearly as possible in Appendix IV to these
rules, to the borrower and by affixing the possession notice on the outer
door or at such conspicuous place of the property.(2)The possession notice
as referred to in sub-rule (1) shall also be published in two leading
newspaper, one in vernacular language having sufficient circulation in that
locality, by the authorized officer.(2A)[ All notices under these rules may
also be served upon the borrower through electronic mode of service, in
addition to the modes prescribed under sub-rule (1) and sub-rule (2) of
rule 8.] [Inserted by Notification No. G.S.R. 1046 (E), dated 3.11.2016
(w.e.f. 20.9.2002).](3)In the event of possession of immovable property is
actually taken by the authorized officer, such property shall be kept in his
own custody or in the custody of any person authorized 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 authorized 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)Before effecting sale of the immovable
property referred to in sub-rule (1) of rule 9, the authorized officer shall
obtain 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 immovable 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;(c)[ by
holding public auction including through e-auction mode; or] [Substituted
by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).]
(d)by private treaty.(6)the authorized officer shall serve to the borrower a
notice of thirty days for sale of the immovable secured assets, under sub-
rule (5):[Provided that if the sale of such secured asset is being effected by
either inviting tenders from the public or by holding public auction, the
secured creditor shall cause a public notice in the Form given in Appendix
IV-A to be published in two leading newspapers including one in
vernacular language having wide circulation in the locality.] [Substituted
by Notification No. G.S.R. 1040(E), dated 17.10.2018 (w.e.f. 20.9.2002).]
(7)[ every notice of sale shall be affixed on the conspicuous part of the
immovable property and the authorised officer shall upload the detailed
terms and conditions of the sale, on the web- site of the secured creditor,
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;(c)reserve price of the immovable secured assets below which the
property may not be sold;(d)time and place of public auction or the time
after which sale by any other mode shall be completed;(e)deposit of
earnest money as may be stipulated by the secured creditor;(f)any other
terms and conditions, which the authorized officer considers it necessary
for a purchaser to know the nature and value of the property.](8)Sale by
any methods other than public auction or public tender, shall be on such
terms as may be settled [between the secured creditors and the proposed
purchaser in writing] [Substituted 'between the parties in writing' by
Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).].The
Lander sale classify the accounts as special mention account or non performing
asset categories in consideration to the following
Parameters

Assets classification shall be done by the Lander as part of day

and process for relevant date and the asset classification date Shall
be the calendar date for which the end day and process is run

Test one

For example due date is in the case of applicant part payment of Rs 7000/on 31
May 2023.

Special mention account 0 -------------------31 May 2023

Special mention account 1 -----------------30 June

…………………………………………………………30 days

Special mention account 2 -----------------31 July

………………………………………………………. 31 days

Special mention account 3-----------------30 August

…………………………………………………….30 days

If ,this being the situation NPA in consideration to 8 August 2023 then NPA
declared in advance and invalid.

Test Two

For example in the case of applicant part payment of Rs 7000/on 31 May 2023.

Special mention account 1 -------------------31 May 2023

…………………………………………….31 days

Special mention account 1 --------------------30 June

……………………………………………………30 days

Special mention account 2 -----------------31 July

……………………………………………………… 31 days

If, this being the situation NPA in consideration to 8 August 2023 t became valid.

Test Two

The finance institution imposed special conditions where in

3 security post dated check to be taken from each co applicant/ guaran

Six security post dated check to be taken from the main applicant

Examination of cell notice examination of

 8. Sale of immovable secured assets.
(1)Where the secured asset is an immovable property, the authorized officer shall take or
cause to be taken possession, by delivering a possession notice prepared as nearly as
possible in Appendix IV to these rules, to the borrower and by affixing the possession
notice on the outer door or at such conspicuous place of the property.(2)The possession
notice as referred to in sub-rule (1) shall also be published in two leading newspaper, one in
vernacular language having sufficient circulation in that locality, by the authorized officer.
(2A)[ All notices under these rules may also be served upon the borrower through electronic
mode of service, in addition to the modes prescribed under sub-rule (1) and sub-rule (2) of
rule 8.] [Inserted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).]
(3)In the event of possession of immovable property is actually taken by the authorized
officer, such property shall be kept in his own custody or in the custody of any person
authorized 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 authorized 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)Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the
authorized officer shall obtain 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 immovable 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;(c)[ by holding
public auction including through e-auction mode; or] [Substituted by Notification No.
G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).](d)by private treaty.(6)the authorized
officer shall serve to the borrower a notice of thirty days for sale of the immovable secured
assets, under sub-rule (5):[Provided that if the sale of such secured asset is being effected by
either inviting tenders from the public or by holding public auction, the secured creditor
shall cause a public notice in the Form given in Appendix IV-A to be published in two
leading newspapers including one in vernacular language having wide circulation in the
locality.] [Substituted by Notification No. G.S.R. 1040(E), dated 17.10.2018 (w.e.f.
20.9.2002).](7)[ every notice of sale shall be affixed on the conspicuous part of the
immovable property and the authorised officer shall upload the detailed terms and
conditions of the sale, on the web- site of the secured creditor, 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;(c)reserve price of the immovable secured assets below which the property may not
be sold;(d)time and place of public auction or the time after which sale by any other mode
shall be completed;(e)deposit of earnest money as may be stipulated by the secured creditor;
(f)any other terms and conditions, which the authorized officer considers it necessary for a
purchaser to know the nature and value of the property.](8)Sale by any methods other than
public auction or public tender, shall be on such terms as may be settled [between the
secured creditors and the proposed purchaser in writing] [Substituted 'between the parties in
writing' by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).].

Operative parts of notice

Demand notice on 11 August 2023 issued by the respondent under

section 13(2)of SARFAESI Act, 2002 for total Rs 2,35,19,991/-with
further from 12 August 2023 until payment in full in respect of both
loans
The authorized officer of the Protium Finance Limited has taken
possession of the property with the assistants of local Police Force on
14 December 2023

This notice for sale is issued in exercise of power conferred on him

under the section 13 (4 ) of the said Act read with rule 9 of the said
rule on 14th December 2023 in respect of loan account of the applicant

Now proposes to sell the secured assets by public auction and/or any
other method s as prescribed under the provisions of rule 8(5) of
Security Interest (Enforcement) Rules 2002 after a period 30 days from
the date of this notice

Provided further that if sale of immovable property by any one of the

methods specified by sub rule (5) of rule 8 fails and sale is required to
be conducted again, the authorized officer shall serve, affix and publish
notice of sale of not less than fifteen days to the borrower, for any
subsequent sale.] [Substituted by Notification No. G.S.R. 1046 (E),
dated 3.11.2016 (w.e.f. 20.9.2002)

Rule 9. Time of sale, issue of sale certificate and

delivery of possession, etc.
[(1) No sale of immovable property under these rules, in
first instance shall take 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) of rule 8 or notice of sale
has been served to the borrower:

Deduction

Proviso to sub-rule (6) of rule 8

No sale in first instance before the expiry of thirty days

from the date on which the public notice of sale is published in
newspapers or notice of sale has been served to the borrower

Argument

Sale notice

Sale notice of the secured assets was issued on 22

December 2023 under the provisions of rule 8(5) of Security Interest
(Enforcement) Rules 2002 instead of on 14th December 2023

sub rule (5) of rule 8

 if sale is fails under sub rule (5) of rule 8 and sale is
required to be conducted again, serve, affix and publish notice of sale
of not less than fifteen days to the borrower for any subsequent sale

Substituted by Notification No. G.S.R. 1046 (E), dated

3.11.2016 (w.e.f. 20.9.2002

Facts -Publication on 8 January 2024

Test 1

Sale notice 22 December 2023, statutory period 30

days. In normal situation/pass time line reaches to 21 January
2024 .If counted further 15 days on account of failed condition
then time line reaches to 5 February 2024.

Test 2

Sale notice 14 December 2023, statutory period 30

days .Time line reaches to 15 January 2024 in normal
conditions .If counted further 15 days on account of failed
condition then time line reaches to 30 January 2024.

Neither Proviso to sub-rule (6) of rule 8 nor sub rule (5) of rule 8
followed by the respondent

8. Sale of immovable secured assets.

(5) Before effecting sale of the immovable property referred to in sub-rule
(1) of rule 9, the authorized officer shall obtain 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 immovable secured asset by any of the following
methods:

PSale notice 14 December 2023

Reading together of sale notice and rule position then it is

clear that sale was failed in first instance and fifteen days
was calculated from 22 December 2023 to serve, affix
and publish notice of sale 8 January 2024
Provided further that if sale of immovable property by any
one of the methods specified by sub rule (5) of rule 8 fails and
sale is required to be conducted again, the authorized officer
shall serve, affix and publish notice of sale of not less than
fifteen days to the borrower,.]

[).]

(2)The sale shall be confirmed in favour of the purchaser who has offered
the highest sale price in his bid or tender or quotation or offer to the
authorized 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 price, specified
under sub-rule (5) of [rule 8] [Substituted by Notification No. G.S.R.
1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).]:

Provided further that if the authorized 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, i.e. on the same day
or not later than next working day, as the case may be, pay a deposit of
twenty five per cent. of the amount of the sale price, which is inclusive of
earnest money deposited, if any, to the authorized officer conducting the
sale and in default of such deposit, the property shall be sold again;]

[Substituted by Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f.

20.9.2002).]

(4)The balance amount of purchase price payable shall be paid by the

purchaser to the authorized 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 purchaser and the secured
creditor, in any case not exceeding three months] [Substituted by
Notification No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).].

(5) In default of payment within the period mentioned in sub-rule (4), the
deposit shall be forfeited [to the secured creditor] [Inserted by Notification
No. G.S.R. 1046 (E), dated 3.11.2016 (w.e.f. 20.9.2002).] 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 authorized 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 authorized 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 may be sufficient to meet the contingencies or further cost,
expenses and interest as may be determined by him.(8)On such deposit of
money for discharge of the encumbrances, the authorized 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 authorized 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.