Negotiable Instruments Negotiable Instruments Act , 1881 Act , 1881

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Act,1881 1

NEGOTIABLE INSTRUMENTSNEGOTIABLE INSTRUMENTSThe Negotiable Instruments act,1881 governs the law The Negotiable Instruments act,1881 governs the law

relating to the negotiable instruments in India. The act relating to the negotiable instruments in India. The act relates to Promissory Notes, Bills of Exchange & relates to Promissory Notes, Bills of Exchange & Cheques.Cheques.

CHARACTERISTICS OF NEGOTIABLE INSTRUMENT-CHARACTERISTICS OF NEGOTIABLE INSTRUMENT- Free transferability – It can be transferred by mere delivery or by Free transferability – It can be transferred by mere delivery or by

endorsement & delivery.endorsement & delivery. The Holder of the instrument is presumed to be the owner of the The Holder of the instrument is presumed to be the owner of the

property contained therein.property contained therein. The Holder in due course gets it free from all defects including fraud The Holder in due course gets it free from all defects including fraud

provided he was not party to it.provided he was not party to it. The Holder in due course is entitled to sue for recovery of the sum The Holder in due course is entitled to sue for recovery of the sum

in his own name.in his own name. The instrument is transferable till maturity & in case of cheque till it The instrument is transferable till maturity & in case of cheque till it

becomes stale i.e. on the expiry of 6 months from the date of issue.becomes stale i.e. on the expiry of 6 months from the date of issue.

KINDS OF NEGOTIABLE INSTRUMENTSKINDS OF NEGOTIABLE INSTRUMENTS Promissory NotesPromissory Notes Bills of ExchangeBills of Exchange Cheques Cheques PROMISSORY NOTES PROMISSORY NOTES – It is an instrument in writing – It is an instrument in writing

containing an unconditional undertaking signed by the containing an unconditional undertaking signed by the maker to pay a certain sum of money only to the bearer of maker to pay a certain sum of money only to the bearer of the instrument.the instrument.

PARTIES TO A PROMISSORY NOTES –PARTIES TO A PROMISSORY NOTES – There are There are basically two parties to a promissory notes. The person basically two parties to a promissory notes. The person making or executing the note promising to pay the making or executing the note promising to pay the amount stated is called the amount stated is called the Maker. Maker. The person to whom The person to whom the amount is payable is called the amount is payable is called payee. payee.

CHARACTERISTICS OF PROMISSIORY NOTECHARACTERISTICS OF PROMISSIORY NOTE It must be in writingIt must be in writing It must contain an express promise to pay. An It must contain an express promise to pay. An

implied promise is not enough to constitute a implied promise is not enough to constitute a promissory note.promissory note.

The promise or undertaking to pay must be The promise or undertaking to pay must be definite & unconditional.definite & unconditional.

The maker must sign the negotiable instrument The maker must sign the negotiable instrument without which it is taken as incomplete & without which it is taken as incomplete & ineffective .ineffective .

The negotiable instrument must clearly point out The negotiable instrument must clearly point out the maker.the maker.

The sum payable must be certain without any The sum payable must be certain without any scope of additions or subtractions.scope of additions or subtractions.

CHARACTERISTICS OF NEGOTIABLE INSTRUMENTCHARACTERISTICS OF NEGOTIABLE INSTRUMENT

The payment must be in money & not in kind. The payment must be in money & not in kind. If the instrument contains an agreement to pay If the instrument contains an agreement to pay in kind then it cannot be considered as a in kind then it cannot be considered as a promissory notes.promissory notes.

The promissory note should clearly point out The promissory note should clearly point out the person who is to receive payment on the the person who is to receive payment on the note.note.

The promissory note must be properly The promissory note must be properly stamped in accordance with the provisions of stamped in accordance with the provisions of the Indian Stamp Act.the Indian Stamp Act.

BILLS OF EXCHANGEBILLS OF EXCHANGE

A Bill of Exchange is an Instrument in writing containing an A Bill of Exchange is an Instrument in writing containing an unconditional order, signed by the maker, directing a certain unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to a certain person person to pay a certain sum of money only to a certain person or to the bearer of the instrument.or to the bearer of the instrument.

PARTIES TO BILL OF EXCHANGE PARTIES TO BILL OF EXCHANGE –– The person who draws the bill is called the Drawer.The person who draws the bill is called the Drawer. The person on whom the bill is drawn is called the Drawee.The person on whom the bill is drawn is called the Drawee. The person who accepts the bill is called the acceptor.The person who accepts the bill is called the acceptor. The person to whom the sum stated in the bill is payable is the payee.The person to whom the sum stated in the bill is payable is the payee. The person who is in the lawful possession of the bill is called the Holder.The person who is in the lawful possession of the bill is called the Holder. The person who indorses the bill in favour of another person is called the The person who indorses the bill in favour of another person is called the

indorser.indorser. The person in whose favour the bill is indorsed is called the indorsee.The person in whose favour the bill is indorsed is called the indorsee.

CHARACTERISTICS OF BILLS OF EXCHANGECHARACTERISTICS OF BILLS OF EXCHANGE

It must be in writing.It must be in writing. It must contain an unconditional order to pay when It must contain an unconditional order to pay when

the drawer draws it.the drawer draws it. The drawer must sign it to make it valid. Absence of The drawer must sign it to make it valid. Absence of

the drawer’s signature will render it invalid and the drawer’s signature will render it invalid and ineffectual. ineffectual.

The parties must be certain. The bill should indicate The parties must be certain. The bill should indicate the person who is the drawee.the person who is the drawee.

The sum payable must be certain.The sum payable must be certain. It must follow with other formalities like number, It must follow with other formalities like number,

date, consideration, stamp etc. date, consideration, stamp etc.

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ChequeCheque

““a bill of exchange drawn on a a bill of exchange drawn on a specified banker and not expressed specified banker and not expressed

to be payable otherwise than on to be payable otherwise than on demand demand

it includes the electronic image of a it includes the electronic image of a truncated cheque and a cheque in truncated cheque and a cheque in

the electronic form.”the electronic form.”

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ChequeCheque

Marking of ChequesMarking of Cheques

At drawer's instanceAt drawer's instance At holder’s instanceAt holder’s instance At collecting Banker’s instanceAt collecting Banker’s instance

Crossing of ChequesCrossing of Cheques

General crossingGeneral crossing Special crossingSpecial crossing

Crossing of ChequesCrossing of Cheques

A cheque can be an A cheque can be an open or crossedopen or crossed cheque cheque Open cheques can be encashed Open cheques can be encashed directly across the counter directly across the counter

by presentingby presenting to drawee bank. But if it is lost or stolen it can to drawee bank. But if it is lost or stolen it can be be encashed by any body unless countermanded (stop encashed by any body unless countermanded (stop payment)payment)

Crossing of the cheque was introduced with a view to Crossing of the cheque was introduced with a view to avoid avoid the losses that may result from the open chequesthe losses that may result from the open cheques

Crossing is a direction to the bankCrossing is a direction to the bank to pay the money to pay the money generally to a bank or to a particular bankgenerally to a bank or to a particular bank

It is made with the intention to make theIt is made with the intention to make the payment secured payment secured Its negotiability is not affected unless Its negotiability is not affected unless

““Not Negotiable“ is inserted but it is still transferableNot Negotiable“ is inserted but it is still transferable

Modes of CrossingModes of Crossing

Where a cheque Where a cheque bears across it facebears across it face an addition of words an addition of words "and "and company” company” or any abbreviation thereof, between or any abbreviation thereof, between two parallel two parallel traverse linestraverse lines, or of two parallel simply, the , or of two parallel simply, the addition shall be addition shall be deemed a crossingdeemed a crossing and it is known as and it is known as ‘general crossing‘general crossing’.’.

General Crossing-General Crossing- In general crossing it is the responsibility of In general crossing it is the responsibility of thethe drawee bank not to make payment otherwise than a bank drawee bank not to make payment otherwise than a bank

continued….

Other modesOther modes

Special CrossingSpecial Crossing -Across its face it bears an addition of the -Across its face it bears an addition of the name of a banker with or without the words “ Not name of a banker with or without the words “ Not Negotiable”.Negotiable”.

Restrictive Crossing-Restrictive Crossing-” Account payee” are added to the ” Account payee” are added to the general or special crossing. The amount has to be credited general or special crossing. The amount has to be credited to the account of the payee. They are not negotiable.to the account of the payee. They are not negotiable.

Not Negotiable Crossing-Not Negotiable Crossing- It means that the It means that the title title of the of the transferee cannot be better than the transferor. It is transferee cannot be better than the transferor. It is crossed so, as a crossed so, as a protection to the drawer or holder protection to the drawer or holder of the of the cheque against miscarriage or dishonesty in the course of cheque against miscarriage or dishonesty in the course of transit by transit by making it difficult to get cashedmaking it difficult to get cashed, until it reaches , until it reaches its destination.its destination.

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Distinguishing FeaturesDistinguishing Features Bill of ExchangeBill of Exchange Drawn on any person Bill must be accepted

before drawee can be called for payment

Entitled to 3 days of grace

Not crossed Requires stamp May be protested for

dishonour

ChequeCheque Drawn on a bankerDrawn on a banker Cheque requires no Cheque requires no

acceptanceacceptance Not entitled to any Not entitled to any

days of gracedays of grace May be crossedMay be crossed Does not require Does not require

stampstamp Not protested for Not protested for

dishonourdishonour

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Indorsement:Indorsement: When the maker or holder of a negotiable instrument signs When the maker or holder of a negotiable instrument signs

the same for the purpose of negotiation, on the back or the same for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse completed as a negotiable instrument, he is said to indorse the same, and is called the inndorserthe same, and is called the inndorser

Essentials of Valid Indorsement:Essentials of Valid Indorsement: - -

It must be on the instrument itselfIt must be on the instrument itself It must be signed by the indorserIt must be signed by the indorser It must be completed by the delivery of the It must be completed by the delivery of the

instrumentinstrument

Kinds of endorsement Kinds of endorsement Endorsement in blankEndorsement in blank: If there is only name of the endorser : If there is only name of the endorser

( payable to bearer)( payable to bearer) Endorsement in full-Endorsement in full- If it made to a specified person, A If it made to a specified person, A

blank endorsement may be converted into full.blank endorsement may be converted into full. Sans recourse endorsement- Sans recourse endorsement- Exclude his personal liability Exclude his personal liability

by limiting the liability.by limiting the liability. Conditional endorsement-Conditional endorsement- If a If a condition is specifiedcondition is specified by the by the

endorserendorser Restrictive endorsement- Restrictive endorsement- if it if it specified to one person onlyspecified to one person only Facultative endorsement-If the provisions of Facultative endorsement-If the provisions of giving notice of giving notice of

dishonor is waived by the endorse dishonor is waived by the endorse

Features of indorsementFeatures of indorsement

Intention Intention should be there for negotiating the instrument.should be there for negotiating the instrument. Effected by the signature of drawer or holder of a Effected by the signature of drawer or holder of a

negotiable instrument.negotiable instrument. Indorsement can be made on the Indorsement can be made on the back or face of back or face of

instrumentinstrument generally – it can be made on a plain paper or generally – it can be made on a plain paper or on a stamp paper)on a stamp paper)

The person who signs is called – The person who signs is called – Indorser/endorsorIndorser/endorsor The person in whose favour it is made is called- The person in whose favour it is made is called-

Indorsee/endorseeIndorsee/endorsee.. The additional slip pf paper, if used for indorsement is The additional slip pf paper, if used for indorsement is

called as “ called as “ allongeallonge””

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Capacity Of Partners:Capacity Of Partners:

Every person capable of contracting, according to the law to Every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the which he is subject, may bind himself and be bound by the making, drawing, acceptance, endorsement, delivery and making, drawing, acceptance, endorsement, delivery and negotiation of a promissory note, bill of exchange or negotiation of a promissory note, bill of exchange or cheque.cheque.

MinorsMinors Persons of unsound mindPersons of unsound mind CorporationsCorporations AgentsAgents PartnersPartners Hindu Joint FamilyHindu Joint Family Legal RepresentativesLegal Representatives

Holder ( Sec 8)Holder ( Sec 8) A person who is A person who is entitled to hold entitled to hold the negotiable instruments the negotiable instruments

in his own name, in his own name, to possess the instrument and to recover to possess the instrument and to recover or receive its amountor receive its amount due from the parties thereto is called due from the parties thereto is called a holder.a holder.

To be a To be a holderholder the person must be named the person must be named in the in the instrument as a payee, or the endorsee or a bearerinstrument as a payee, or the endorsee or a bearer thereof thereof

Holder in due course (HDC)Holder in due course (HDC)

If a person proves that he acquired the instrument If a person proves that he acquired the instrument

for a valuable consideration, then he is known as for a valuable consideration, then he is known as

holder in due course.holder in due course. The holder in due course should show that for The holder in due course should show that for

consideration he became the payee or indorsee of consideration he became the payee or indorsee of

the instrument , if it is payable to the order.the instrument , if it is payable to the order. In such cases, the instrument should have been In such cases, the instrument should have been

indorsed and delivered to him, as his title to the indorsed and delivered to him, as his title to the

instrument will be incomplete without delivery.instrument will be incomplete without delivery.

Important points in dishonour of Important points in dishonour of cheques cheques

1)1) Cheque should presented for payment within Cheque should presented for payment within 6 months 6 months from its date or within its validity from its date or within its validity period.period.

2)2) Within Within thirtythirty days days of the receipt of of the receipt of information by him from the bank regarding the information by him from the bank regarding the return of the cheque as unpaid, a demand notice return of the cheque as unpaid, a demand notice should be given in writing by the payee or holder should be given in writing by the payee or holder in due course to the drawer of the cheque. in due course to the drawer of the cheque.

3)3) Within 15 days of receipt of above notice, if the Within 15 days of receipt of above notice, if the drawer fails to make payment, then the holder or drawer fails to make payment, then the holder or holder in due course has right to file a criminal holder in due course has right to file a criminal complaint for the offence within 30 days from the complaint for the offence within 30 days from the date of cause of action (refer to Section 142).date of cause of action (refer to Section 142).

Punishment for the offence of Punishment for the offence of dishonour of chequedishonour of cheque

i.i. ImprisonmentImprisonment for a term which for a term which may extend to may extend to two two yearsyears, ,

ii.ii. or with or with finefine which may extend which may extend to to twicetwice the amount of the the amount of the chequecheque

iii.iii. or with or with bothboth

The Securitization and The Securitization and

Reconstruction of Financial assets Reconstruction of Financial assets

and Enforcement of Security and Enforcement of Security

Interest Act, 2002Interest Act, 2002. (SARFAESI ACT ). (SARFAESI ACT )

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Act,1881 22

Recovery of DebtRecovery of Debt

The recovery of bad debts was to be executed by The recovery of bad debts was to be executed by establishment of establishment of Debt Recovery TribunalsDebt Recovery Tribunals ( 29 Tribunals). ( 29 Tribunals).

In order to provide opportunity for an appeal from the In order to provide opportunity for an appeal from the decision of the Tribunal the Government had established decision of the Tribunal the Government had established DRAT i.e. DRAT i.e. Debt Recovery Appellant Tribunals (Debt Recovery Appellant Tribunals (5 DRATs).5 DRATs).

The recovery performance was not encouraging and The recovery performance was not encouraging and therefore the Government wanted to enact an Act for therefore the Government wanted to enact an Act for controlling on the NPA’s and on the creditor’s right of controlling on the NPA’s and on the creditor’s right of enforcement of security interest.enforcement of security interest.

Therefore the Parliament enacted the Therefore the Parliament enacted the SARFAESI Act, SARFAESI Act, 20022002

Objectives of the ActObjectives of the Act

It has laid down the legal framework for It has laid down the legal framework for securitization securitization of the Assetsof the Assets..

The transfer of The transfer of NPA’s to asset reconstruction NPA’s to asset reconstruction companiescompanies for the disposal of the assets and to realize for the disposal of the assets and to realize the proceeds.the proceeds.

To enforce the security interest without the Court To enforce the security interest without the Court intervention.intervention.

One of the provisions in the Act One of the provisions in the Act empowers the banks empowers the banks and financial institutions to take over the immovable and financial institutions to take over the immovable propertyproperty that is hypothecated or charged to enforce that is hypothecated or charged to enforce the recovering of debt by directly seizing the the recovering of debt by directly seizing the property property . .

PurposePurpose The Act was made to help banks and other financial The Act was made to help banks and other financial

institutions in recovering the NPA’s. institutions in recovering the NPA’s. It has been made with a combination of three conceptsIt has been made with a combination of three concepts SecuritizationSecuritization Asset Reconstruction andAsset Reconstruction and Enforcement of security interest without the Court Enforcement of security interest without the Court

interventionintervention

An amendment is brought to this Act for facilitating SARFAESI An amendment is brought to this Act for facilitating SARFAESI Act,2002, Debt Recovery law, 1993 and Companies Act by Act,2002, Debt Recovery law, 1993 and Companies Act by passing passing The Enforcement of Security Interest and Recovery The Enforcement of Security Interest and Recovery of Debts Laws ( Amendment ) Act, 2004.of Debts Laws ( Amendment ) Act, 2004.

The Amendment was based on the ruling of the SC in The Amendment was based on the ruling of the SC in Mardia Mardia Chemicals Vs. ICICI BankChemicals Vs. ICICI Bank

What are the benefits of the Act?What are the benefits of the Act?

Securitization and Asset ReconstructionSecuritization and Asset Reconstruction:: The main objective is to sell the secured NPA The main objective is to sell the secured NPA

loans to investors through a special purpose loans to investors through a special purpose

vehicle called Securitization Company.vehicle called Securitization Company. Such Company will take over the financial assets Such Company will take over the financial assets

and the company which takes over will be treated and the company which takes over will be treated

as a as a secured creditorsecured creditor for all purpose for all purpose..

What will the Securitization Company What will the Securitization Company Do?Do?

The Securitization Company will formulate a separate The Securitization Company will formulate a separate scheme for each assets or set of assets.scheme for each assets or set of assets.

Then it will invite Then it will invite Qualified Institutional Buyers (QIB’s)Qualified Institutional Buyers (QIB’s) for investing in such a scheme.for investing in such a scheme.

Then such company will issue security receipts to QIB’s.Then such company will issue security receipts to QIB’s. Such receipts will represent the individual interest in Such receipts will represent the individual interest in

such financial assets.such financial assets. The company will The company will realize the financial assets and realize the financial assets and

redeem the investmentredeem the investment by paying the proceeds by paying the proceeds to QIB’s to QIB’s under each scheme.under each scheme.

Asset Reconstruction (AR)Asset Reconstruction (AR) It involves securitization and enforcement of the security It involves securitization and enforcement of the security

interest. Such company has to register with the RBI. interest. Such company has to register with the RBI. It will be considered to be a Public Financial Institution under It will be considered to be a Public Financial Institution under

the Companies Act.the Companies Act.

The Purpose of the AR isThe Purpose of the AR is : : Registration of SecuritizationRegistration of Securitization or Reconstructions of or Reconstructions of

Companies with the RBI and to comply with the formalities for Companies with the RBI and to comply with the formalities for their registration and their registration and

The effect of non -registration or rejection of such application The effect of non -registration or rejection of such application of such companies.of such companies.

Once the Once the Asset Reconstruction Company (ARC)Asset Reconstruction Company (ARC) takes over the takes over the assets, the company will be treated as a lender or secured assets, the company will be treated as a lender or secured creditor.creditor.

ARC will acquire NPA loan from banks and Financial ARC will acquire NPA loan from banks and Financial Institutions by issuing debentures, bonds or by entering Institutions by issuing debentures, bonds or by entering into into special arrangements.special arrangements.

What does ARC do?What does ARC do?

ARC formulates a scheme for each of financial assets taken ARC formulates a scheme for each of financial assets taken over and invites investment from QIB’sover and invites investment from QIB’s in such schemes. in such schemes.

ARC issues security receipts to ARC issues security receipts to QIB’sQIB’s.. ARC realizes the financial assets and redeems the ARC realizes the financial assets and redeems the

investment and pays returns to QIB’s under each scheme.investment and pays returns to QIB’s under each scheme. AR involves any one or more of the following measuresAR involves any one or more of the following measures:: Rescheduling of payment of dues payable by the borrowerRescheduling of payment of dues payable by the borrower Enforcement of security interest in accordance with the Enforcement of security interest in accordance with the

provisions of the Actprovisions of the Act Settlement of dues payable by the borrowerSettlement of dues payable by the borrower Taking possession of securitiesTaking possession of securities

Provisions of the actProvisions of the act

The provisions of this act are applicable only for The provisions of this act are applicable only for NPA loans with outstanding above Rs. 1.00 lac. NPA loans with outstanding above Rs. 1.00 lac. NPA loan accounts where the amount is less than NPA loan accounts where the amount is less than 20 % of the principal and interest are not eligible 20 % of the principal and interest are not eligible to be dealt with under this Act.to be dealt with under this Act.

Non-performing assets should be backed by Non-performing assets should be backed by securities charged to the bank by way of securities charged to the bank by way of hypothecation or mortgage or assignment . hypothecation or mortgage or assignment . Security interest by way of Lien, pledge, hire Security interest by way of Lien, pledge, hire purchase and lease not liable for attachment purchase and lease not liable for attachment under sec. 60 of CPC, are not covered under this under sec. 60 of CPC, are not covered under this act.act.

Process for enforcement under Process for enforcement under the actthe act

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Act,1881 31

se

Secured NPA

Exceeding 1 lakh Default amount more

than 20% principal and interest

Other than exempted categories under section 31

Bank empowered as secured creditor under the Act

Notice to borrower

60 days time Objections

answered

Enforcement proceedings

Authorized officer

Chief metropolitan magistrate

Sec 34 bars civil proceedings

Sec 35 overriding clause

Right to appeal to DRT

Within 45 days DRT to dispose of within

60 days Max 4 months with

recording of reasons

Appeal to DRAT

Deposit of 50 % of debt claimed/determined by DRT

Within 30 days from date of receipt of DRT order

Sale

Notice of 30 days

Reserve Price fixation

Demand on holder of security

Management

takeover

Possession

Lease Assignment

ProcessProcessIn case borrower fails to discharge his In case borrower fails to discharge his

liability in full within the period specified liability in full within the period specified in subsection(2) , the secured creditor in subsection(2) , the secured creditor may,may,

take possession of secured assets of take possession of secured assets of the borrower including the right to the borrower including the right to transfer by way of lease , assignment or transfer by way of lease , assignment or sale for realizing the secured asset;sale for realizing the secured asset;

Take over the management of secured Take over the management of secured asset of the borrower including the right asset of the borrower including the right to transfer by the lease , assignment or to transfer by the lease , assignment or sale and realize the secured asset;sale and realize the secured asset;

Appoint any person to mange the Appoint any person to mange the secured assets the possession of secured assets the possession of which has been taken over by which has been taken over by secured creditorsecured creditor

The Act empowers the BankThe Act empowers the Bank

To issue demand notice to the defaulting To issue demand notice to the defaulting borrower and guarantor, calling upon them to borrower and guarantor, calling upon them to discharge their dues in full within 60 days discharge their dues in full within 60 days from the date of the notice.from the date of the notice.

To give notice to any person who has To give notice to any person who has acquired any of the secured assets from the acquired any of the secured assets from the borrower to the surrender the same to the borrower to the surrender the same to the bank.bank.

To ask any debtor of the borrower to pay any To ask any debtor of the borrower to pay any sum due or becoming due to the borrower.sum due or becoming due to the borrower.

Any security interest created over Any security interest created over Agricultural land cannot proceeded with. Agricultural land cannot proceeded with.

Sec 13 (3)Sec 13 (3) If on receipt of demand notice, the If on receipt of demand notice, the

borrower makes any representation or borrower makes any representation or raises any objection, Authorized Officer raises any objection, Authorized Officer shall consider such representation or shall consider such representation or objection carefully and if he comes to the objection carefully and if he comes to the conclusion that such representation or conclusion that such representation or objection is not acceptable within 1 week objection is not acceptable within 1 week of receipt of such representation or of receipt of such representation or objection.objection.

Sec 13 (4)Sec 13 (4) The Act provides for four measures which The Act provides for four measures which

can be taken by the secured creditor in can be taken by the secured creditor in case of non-compliance with the notice case of non-compliance with the notice served upon the borrower.served upon the borrower.

2. under clause (a) of sub-section (4), the 2. under clause (a) of sub-section (4), the secured creditor may take possession of secured creditor may take possession of the secured assets including the right to the secured assets including the right to transfer the secured assets by way of transfer the secured assets by way of lease, assignment or sale.lease, assignment or sale.

3.under clause (b) of sub-section (4), the 3.under clause (b) of sub-section (4), the secured creditor may take over the secured creditor may take over the management of the secured assets management of the secured assets including right to transfer.including right to transfer.

4. Under clause (c) of sub-section (4), the 4. Under clause (c) of sub-section (4), the secured creditor may require any secured creditor may require any person who has acquired any secured person who has acquired any secured assets from the borrower or from whom assets from the borrower or from whom any money is due to the borrower to any money is due to the borrower to pay the same to him as it may be pay the same to him as it may be sufficient to pay the secured debtsufficient to pay the secured debt

Sec 13 (10)Sec 13 (10)

Where dues of the secured creditor are not Where dues of the secured creditor are not fully satisfied with the sale proceeds of fully satisfied with the sale proceeds of the secured assets, the SECURED the secured assets, the SECURED CREDITOR may file an application in the CREDITOR may file an application in the form and manner as may be prescribed to form and manner as may be prescribed to the DRT having jurisdiction or a the DRT having jurisdiction or a competent court , as the case may be , competent court , as the case may be , for recovery of the balance amount from for recovery of the balance amount from the borrower/guarantorsthe borrower/guarantors

Exemptions from EnforcementExemptions from Enforcement

LienLien PledgePledge Security in Air Crafts/ Shipping VesselsSecurity in Air Crafts/ Shipping Vessels Conditional Sale/ Hire Purchase/ LeaseConditional Sale/ Hire Purchase/ Lease Unpaid Sellers RightsUnpaid Sellers Rights Security Interest in Agricultural LandSecurity Interest in Agricultural Land Properties not liable for Attachment Properties not liable for Attachment (Civil Procedure Code)(Civil Procedure Code) Any Financial asset: not exceeding Rs 1.00 lakh or where Any Financial asset: not exceeding Rs 1.00 lakh or where

the amount due is less than 20% of the Principal amount the amount due is less than 20% of the Principal amount

and Interest.and Interest.

THANK YOUTHANK YOU

Anjali KumariAnjali Kumari

Manali TongiaManali Tongia

Megha KharkwalMegha Kharkwal

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Act,1881 41