Defending the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, before the Supreme Court on Monday, Attorney-General Soli Sorabjee proposed to infuse elements of natural justice and fair play in the Act.
Sorabjee's submission came after the Supreme Court asked the government to dilute the provisions of the Act in order to make it borrower-friendly.
He proposed that secured creditors should serve a detailed notice to the borrower, furnishing details of the amount due. The borrower will have 10 days to take up the issue with the creditor if he does not agree with the liabilities specified in the notice. The creditor, in turn, will have 60 days to dispose of the representation.
If aggrieved by any measure actually taken by the creditor, the borrower can appeal to the Debt Recovery Tribunal as well as the Debt Recovery Appellate Tribunal, which will have to dispose of the appeal within 60 days.
In case either of the tribunals grants interim relief, the secured creditor can make an application seeking its vacation. Such an application will have to be disposed of within four weeks of the 60-day period. In case the application is not disposed of within schedule, the interim order shall stand vacated.
Moreover, if the secured creditor takes possession of assets, it will not sell them for 30 days, during which the borrower can seek legal redress.
While companies that have been served notices by banks and financial institutions claimed this as a victory, creditors said it would benefit them as cases would not drag on indefinitely.
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