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The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 was enacted to enable banks and financial institutions to recover their loans and dues from borrowers by enforcing the security interest created in their favor. The Act empowers banks and financial institutions to take possession of the secured assets and sell them through public auction to recover the dues. In this article, we will discuss the rights of an auction purchaser under SARFAESI Act.
Introduction The SARFAESI Act is a powerful tool for banks and financial institutions to recover their loans and dues from defaulting borrowers. One of the key provisions of the Act is the power to take possession of the secured assets and sell them through public auction. The auction purchaser, who buys the property at the auction, has certain rights under the Act.
Right to Obtain Delivery of Possession The auction purchaser has the right to obtain delivery of possession of the property from the borrower. If the borrower refuses to hand over possession, the auction purchaser can seek the assistance of the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, to take possession of the property.
Right to Inspect the Property The auction purchaser has the right to inspect the property before the auction. This is important to ensure that the property is in good condition and free from encumbrances. The auction purchaser should exercise due diligence before participating in the auction.
Right to Receive Marketable Title The auction purchaser has the right to receive marketable title to the property. The title should be free from any encumbrances or defects. The auction purchaser should ensure that all necessary documents and approvals are in place before taking possession of the property.
Right to Claim Compensation If the auction purchaser suffers any loss or damage due to the wrongful possession or dispossession of the property, they have the right to claim compensation from the borrower. The auction purchaser can also claim compensation from the secured creditor if the creditor has failed to disclose any material defects in the property.
Right to Seek Redressal If the auction purchaser faces any issues or disputes with respect to the auction or the property, they have the right to seek redressal. The auction purchaser can approach the Debts Recovery Tribunal (DRT) or the High Court, depending on the amount involved.
Conclusion The SARFAESI Act is an important legislation that empowers banks and financial institutions to recover their loans and dues from defaulting borrowers. The auction process under the Act is a crucial part of the recovery process. The auction purchaser has certain rights under the Act, including the right to obtain possession, inspect the property, receive marketable title, claim compensation, and seek redressal. The auction purchaser should exercise due diligence and take necessary precautions before participating in the auction to avoid any issues or disputes in the future.
