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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the sale notice issued under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 and the auction notice published under Rule 9(1) were valid in the post-amendment regime of Section 13(8) of the SARFAESI Act; (ii) Whether the possession notice issued after the Section 13(2) demand notice and the bank's treatment of the borrower's representation were illegal.
Issue (i): Whether the sale notice issued under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 and the auction notice published under Rule 9(1) were valid in the post-amendment regime of Section 13(8) of the SARFAESI Act.
Analysis: The amended Section 13(8) extinguishes the borrower's right of redemption on publication of the sale notice under Rule 9(1), while Rule 8(6) still requires a clear thirty days' notice before sale. Reading the amended provisions with the statutory scheme, a secured creditor must maintain a full thirty day gap between service of the Rule 8(6) notice and publication of the Rule 9(1) notice. On the admitted facts, the Rule 8(6) notice was issued on 01.03.2018 and the Rule 9(1) notice was published on 03.03.2018, which defeated the borrower's statutory opportunity to redeem the secured asset.
Conclusion: The sale notice and the consequential auction notice were invalid and liable to be set aside, in favour of the assessee.
Issue (ii): Whether the possession notice issued after the Section 13(2) demand notice and the bank's treatment of the borrower's representation were illegal.
Analysis: The sixty day period under Section 13(2) is reckoned from the date of the demand notice, and the possession notice was issued after more than sixty days from that date. The borrower also failed to show any substantial payment or bonafide compliance after seeking time, and the bank's conduct did not disclose breach of the obligation to consider the representation in the circumstances found.
Conclusion: The possession notice and the challenge based on non-consideration of the representation were not accepted, against the assessee.
Final Conclusion: The writ petition succeeded only to the extent of the sale process, while the possession stage and related objections were rejected; the bank was left free to proceed afresh in accordance with law.
Ratio Decidendi: After the 2016 amendment to Section 13(8), a secured creditor must preserve a clear thirty day interval between the Rule 8(6) sale notice and publication of the Rule 9(1) auction notice, because the borrower's redemption right continues only until publication of the Rule 9(1) notice.
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