Recoverable enforcement expenses under SARFAESI must be reasonable; fresh action needs renewed notice after liability is cleared.

Section 13 of the Act permits a secured creditor to recover only costs, charges and expenses that have been properly incurred, applying a prudent and reasonable standard. Where the borrower substantially satisfies the liability demanded in the section 13(2) notice, the creditor cannot continue coercive measures under section 13(4) without first verifying any remaining dues and, if required, issuing a fresh notice. In this matter, routine debits for inspection, notices and publication were treated as recoverable, but the additional demand for enforcement or recovery agent fees was found excessive, unreasonable and disproportionate, and therefore not recoverable.

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Issues: Whether the bank was justified in invoking further measures under the Act and in recovering a further sum towards securitisation or enforcement expenses from the borrower after the borrower had substantially liquidated the amount demanded in the notice under section 13(2), and whether such expenses were properly incurred within section 13(7).

Analysis: The framework under section 13 requires the secured creditor to proceed only after the account is classified as a non-performing asset and after following the statutory sequence. Where the borrower clears the liability demanded in the notice under section 13(2), the secured creditor cannot continue to press forward with measures under section 13(4) without verifying the subsisting liability and, where necessary, issuing a fresh notice. As to expenses, section 13(7) permits recovery only of costs, charges and expenses that have been properly incurred. The expression "properly incurred" requires a prudent and reasonable standard, and the bank's own debits for inspection, notices and publication were treated as recoverable. However, the additional demand of Rs. 1,90,000 towards enforcement or recovery agent fees was found to be excessive, unreasonable and disproportionate to the work involved, and therefore outside the permissible ambit of recoverable expenses.

Conclusion: The demand for further enforcement or recovery agent charges was held to be unjustified, and the bank was not entitled to proceed on the impugned basis after the borrower had cleared the liability covered by the notice.

Final Conclusion: The writ petition succeeded, and the borrower was treated as having no further liability to the bank.

Ratio Decidendi: Under section 13(7) of the Act, only expenses that are actually and reasonably incurred in the enforcement process may be recovered from the borrower, and the secured creditor cannot continue coercive measures once the liability demanded under section 13(2) has been satisfied without following the statutory sequence again.

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