13. Enforcement of security interest.—(1) Notwithstanding anything contained in section 69 or
section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of
any secured creditor may be enforced, without the intervention of court or tribunal, by such creditor in
accordance with the provisions of this Act.
(2) Where any borrower, who is under a liability to a secured creditor under a security agreement,
makes any default in repayment of secured debt or any instalment thereof, and his account in respect of
such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may
require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within
sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any
of the rights under sub-section (4).
1
[Provided that—
(i) the requirement of classification of secured debt as non-performing asset under this
sub-section shall not apply to a borrower who has raised funds through issue of debt securities; and
(ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the
same manner as provided under this section with such modifications as may be necessary and in
accordance with the terms and conditions of security documents executed in favour of the debenture
trustee.]
(3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower
and the secured assets intended to be enforced by the secured creditor in the event of non-payment of
secured debts by the borrower.
2
[(3A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or
raises any objection, the secured creditor shall consider such representation or objection and if the secured
creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall
communicate 3
[within fifteen days] of receipt of such representation or objection the reasons for
non-acceptance of the representation or objection to the borrower:
Provided that the reasons so communicated or the likely action of the secured creditor at the stage of
communication of reasons shall not confer any right upon the borrower to prefer an application to the
Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17A.]
(4) In case the borrower fails to discharge his liability in full within the period specified in
sub-section (2), the secured creditor may take recourse to one or more of the following measures to
recover his secured debt, namely:—
(a) take possession of the secured assets of the borrower including the right to transfer by way of
lease, assignment or sale for realising the secured asset;
4
[(b) take over the management of the business of the borrower including the right to transfer by
way of lease, assignment or sale for realising the secured asset:
1. Ins. by Act 44 of 2016, s. 11 (w.e.f. 1-9-2016).
2. Ins. by Act 30 of 2004, s. 8 (w.e.f. 11-11-2004).
3. Subs. by Act 1 of 2013, s. 5, for “within one week” (w.e.f. 15-1-2013).
4. Subs. by Act 30 of 2004, s. 8, for clause (b) (w.e.f. 11-11-2004).
18
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only
where the substantial part of the business of the borrower is held as security for the debt:
Provided further that where the management of whole of the business or part of the business is
severable, the secured creditor shall take over the management of such business of the borrower
which is relatable to the security for the debt;]
(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the
possession of which has been taken over by the secured creditor;
(d) require at any time by notice in writing, any person who has acquired any of the secured
assets from the borrower and from whom any money is due or may become due to the borrower, to
pay the secured creditor, so much of the money as is sufficient to pay the secured debt.
(5) Any payment made by any person referred to in clause (d) of sub-section (4) to the secured
creditor shall give such person a valid discharge as if he has made payment to the borrower.
1
[(5A) Where the sale of an immovable property, for which a reserve price has been specified, has
been postponed for want of a bid of an amount not less than such reserve price, it shall be lawful for any
officer of the secured creditor, if so authorised by the secured creditor in this behalf, to bid for the
immovable property on behalf of the secured creditor at any subsequent sale.
(5B) Where the secured creditor, referred to in sub-section (5A), is declared to be the purchaser of the
immovable property at any subsequent sale, the amount of the purchase price shall be adjusted towards
the amount of the claim of the secured creditor for which the auction of enforcement of security interest is
taken by the secured creditor, under sub-section (4) of section 13.
(5C) The provisions of section 9 of the Banking Regulation Act, 1949 (10 of 1949) shall, as far as
may be, apply to the immovable property acquired by secured creditor under sub-section (5A).]
(6) Any transfer of secured asset after taking possession thereof or take over of management under
sub-section (4), by the secured creditor or by the manager on behalf of the secured creditor shall vest in
the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made
by the owner of such secured asset.
(7) Where any action has been taken against a borrower under the provisions of sub-section (4), all
costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by
him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is
received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in
trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of
the dues of the secured creditor and the residue of the money so received shall be paid to the person
entitled thereto in accordance with his rights and interests.
2
[(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses
incurred by him is tendered to the secured creditor at any time before the date of publication of notice for
public auction or inviting quotations or tender from public or private treaty for transfer by way of lease,
assignment or sale of the secured assets,—
(i) the secured assets shall not be transferred by way of lease assignment or sale by the secured
creditor; and
1. Ins. by Act 1 of 2013, s. 5 (w.e.f. 15-1-2013).
2. Subs. by Act 44 of 2016, s. 11, for sub-section (8) (w.e.f. 1-9-2016).
19
(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or
assignment or sale of the assets before tendering of such amount under this sub-section, no further
step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such
secured assets.]
(9) 1
[Subject to the provisions of the Insolvency and Bankruptcy Code, 2016, in the case of] financing
of a financial asset by more than one secured creditors or joint financing of a financial asset by secured
creditors, no secured creditor shall be entitled to exercise any or all of the rights conferred on him under
or pursuant to sub-section (4) unless exercise of such right is agreed upon by the secured creditors
representing not less than 2
[sixty per cent.] in value of the amount outstanding as on a record date and
such action shall be binding on all the secured creditors:
Provided that in the case of a company in liquidation, the amount realised from the sale of secured
assets shall be distributed in accordance with the provisions of section 529A of the Companies Act, 1956
(1 of 1956):
Provided further that in the case of a company being wound up on or after the commencement of this
Act, the secured creditor of such company, who opts to realise his security instead of relinquishing his
security and proving his debt under proviso to sub-section (1) of section 529 of the Companies Act, 1956
(1 of 1956), may retain the sale proceeds of his secured assets after depositing the workmen's dues with
the liquidator in accordance with the provisions of section 529A of that Act:
Provided also that liquidator referred to in the second proviso shall intimate the secured creditor the
workmen's dues in accordance with the provisions of section 529A of the Companies Act, 1956 (1 of
1956) and in case such workmen's dues cannot be ascertained, the liquidator shall intimate the estimated
amount of workmen's dues under that section to the secured creditor and in such case the secured creditor
may retain the sale proceeds of the secured assets after depositing the amount of such estimate dues with
the liquidator:
Provided also that in case the secured creditor deposits the estimated amount of workmen's dues, such
creditor shall be liable to pay the balance of the workmen's dues or entitled to receive the excess amount,
if any, deposited by the secured creditor with the liquidator:
Provided also that the secured creditor shall furnish an undertaking to the liquidator to pay the
balance of the workmen's dues, if any.
Explanation.—For the purposes of this sub-section,—
(a) “record date” means the date agreed upon by the secured creditors representing not less than
2
[sixty per cent.] in value of the amount outstanding on such date;
(b) “amount outstanding” shall include principal, interest and any other dues payable by the
borrower to the secured creditor in respect of secured asset as per the books of account of the secured
creditor.
(10) Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured
assets, the secured creditor may file an application in the form and manner as may be prescribed to the
Debts Recovery Tribunal having jurisdiction or a competent court, as the case may be, for recovery of the
balance amount from the borrower.
(11) Without prejudice to the rights conferred on the secured creditor under or by this section, the
secured creditor shall be entitled to proceed against the guarantors or sell the pledged assets without first
1. Subs. by Act 31 of 2016, s. 251 and the Seventh Schedule, for “In the case of” (w.e.f. 15-11-2016).
2. Subs. by Act 1 of 2013, s. 5, for “three-fourth” (w.e.f. 15-1 -2013).
20
taking any of the measured specifies in clauses (a) to (d) of sub-section (4) in relation to the secured
assets under this Act.
(12) The rights of a secured creditor under this Act may be exercised by one or more of his officers
authorised in this behalf in such manner as may be prescribed.
(13) No borrower shall, after receipt of notice referred to in sub-section (2), transfer by way of sale,
lease or otherwise (other than in the ordinary course of his business) any of his secured assets referred to
in the notice, without prior written consent of the secured creditor.
STATE AMENDMENT
Jammu and Kashmir and Ladakh (UTs).—
Amendment of section 13.—In sub-section (3A), in proviso thereto, omit “or the Court of District
Judge under section 17A”.
[Vide Order No. 3807(E) dated 26th October, 2020, the Union Territory of Jammu and Kashmir
Reorganisation (Adaptation of Central Laws) Third Order, 2020 (w.e.f. 26-10-2020) and Vide Union
Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, notification No. S.O.
3774(E), dated (23-10-2020).]
14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking
possession of secured asset.—(1) Where the possession of any secured assets is required to be taken by
the secured creditor or if any of the secured assets is required to be sold or transferred by the secured
creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or
control of any such secured assets, request, in writing, the Chief Metropolitan Magistrate or the District
Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be
situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may
be, the District Magistrate shall, on such request being made to him—
(a) take possession of such asset and documents relating thereto; and
(b) forward such asset and documents to the secured creditor:
1
[Provided that any application by the secured creditor shall be accompanied by an affidavit duly
affirmed by the authorised officer of the secured creditor, declaring that—
(i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the
date of filing the application;
(ii) the borrower has created security interest over various properties and that the Bank or
Financial Institution is holding a valid and subsisting security interest over such properties and the
claim of the Bank or Financial Institution is within the limitation period;
(iii) the borrower has created security interest over various properties giving the details of
properties referred to in sub-clause (ii)above;
(iv) the borrower has committed default in repayment of the financial assistance granted
aggregating the specified amount;
(v) consequent upon such default in repayment of the financial assistance the account of the
borrower has been classified as a non-performing asset;
(vi) affirming that the period of sixty days notice as required by the provisions of sub-section (2)
of section 13, demanding payment of the defaulted financial assistance has been served on the
borrower;
1. Ins. by Act 1 of 2013, s. 6 (w.e.f. 15-1-2013).
21
(vii) the objection or representation in reply to the notice received from the borrower has been
considered by the secured creditor and reasons for non-acceptance of such objection or representation
had been communicated to the borrower;
(viii) the borrower has not made any repayment of the financial assistance in spite of the above
notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under
the provisions of sub-section (4) of section 13 read with section 14 of the principal Act;
(ix) that the provisions of this Act and the rules made thereunder had been complied with:
Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or
the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit
pass suitable orders for the purpose of taking possession of the secured assets1
[within a period of thirty
days from the date of application]:
1
[Provided also that if no order is passed by the Chief Metropolitan Magistrate or District Magistrate
within the said period of thirty days for reasons beyond his control, he may, after recording reasons in
writing for the same, pass the order within such further period but not exceeding in aggregate sixty days.]
Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to
proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may
be, on the date of commencement of this Act.]
2
[(1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer
subordinate to him,—
(i) to take possession of such assets and documents relating thereto; and
(ii) to forward such assets and documents to the secured creditor.]
(2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief
Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or
cause to be used, such force, as may, in his opinion, be necessary.
(3) No act of the Chief Metropolitan Magistrate or the District Magistrate 1
[any officer authorised by
the Chief Metropolitan Magistrate or District Magistrate] done in pursuance of this section shall be called
in question in any court or before any authority.
15. Manner and effect of take over of management.—(1) 3
[When the management of business of a
borrower istaken over by a 4
[asset reconstruction company] under clause (a) of section 9 or, as the case
may be, by a secured creditor under clause (b) of sub-section (4) of section 13], the secured creditor may,
by publishing a notice in a newspaper published in English language and in a newspaper published in an
Indian language in circulation in the place where the principal office of the borrower is situated, appoint
as many persons as it thinks fit—
(a) in a case in which the borrower is a company as defined in the Companies Act, 1956 (1 of
1956), to be the directors of that borrower in accordance with the provisions of that Act; or
(b) in any other case, to be the administrator of the business of the borrower.
(2) On publication of a notice under sub-section (1),—
(a) in any case where the borrower is a company as defined in the Companies Act,
1956 (1 of 1956), all persons holding office as directors of the company and in any other case, all
persons holding any office having power of superintendence, direction and control of the business of
1. Ins. by Act 44 of 2016, s. 12 (w.e.f. 1-9-2016).
2. Ins. by Act 1 of 2013, s. 6 (w.e.f. 15-1-2013).
3. Subs. by Act 30 of 2004, s. 9, for “When the management of business of a borrower is taken over by a secured creditor”
(w.e.f. 11-11-2004).
4. Subs. by Act 44 of 2016, s. 3, for “securitisation company or reconstruction company” (w.e.f. 1-9-2016).
22
the borrower immediately before the publication of the notice under sub-section (1), shall be deemed
to have vacated their offices as such;
(b) any contract of management between the borrower and any director or manager thereof
holding office as such immediately before publication of the notice under sub-section (1), shall be
deemed to be terminated;
(c) the directors or the administrators appointed under this section shall take such steps as may be
necessary to take into their custody or under their control all the property, effects and actionable
claims to which the business of the borrower is, or appears to be, entitled and all the property and
effects of the business of the borrower shall be deemed to be in the custody of the directors or
administrators, as the case may be, as from the date of the publication of the notice;
(d) the directors appointed under this section shall, for all purposes, be the directors of the
company of the borrower and such directors or as the case may be, the administrators appointed under
this section, shall alone be entitled to exercise all the powers of the directors or as the case may be, of
the persons exercising powers of superintendence, direction and control, of the business of the
borrower whether such powers are derived from the memorandum or articles of association of the
company of the borrower or from any other source whatsoever.
(3) Where the management of the business of a borrower, being a company as defined in the
Companies Act, 1956 (1 of 1956), is taken over by the secured creditor, then, notwithstanding anything
contained in the said Act or in the memorandum or articles of association of such borrower,—
(a) it shall not be lawful for the shareholders of such company or any other person to nominate or
appoint any person to be a director of the company;
(b) no resolution passed at any meeting of the shareholders of such company shall be given effect
to unless approved by the secured creditor;
(c) no proceeding for the winding up of such company or for the appointment of a receiver in
respect thereof shall lie in any court, except with the consent of the secured creditor.
(4) Where the management of the business of a borrower had been taken over by the secured creditor,
the secured creditor shall, on realisation of his debt in full, restore the management of the business of the
borrower to him.
1
[Provided that if any secured creditor jointly with other secured creditors or any asset reconstruction
company or financial institution or any other assignee has converted part of its debt into shares of a
borrower company and thereby acquired controlling interest in the borrower company, such secured
creditors shall not be liable to restore the management of the business to such borrower.]
16. No compensation to directors for loss of office.—(1) Notwithstanding anything to the contrary
contained in any contract or in any other law for the time being in force, no managing director or any
other director or a manager or any person in charge of management of the business of the borrower shall
be entitled to any compensation for the loss of office or for the premature termination under this Act of
any contract of management entered into by him with the borrower.
(2) Nothing contained in sub-section (1) shall affect the right of any such managing director or any
other director or manager or any such person in charge of management to recover from the business of the
borrower, moneys recoverable otherwise than by way of such compensation.
17. 2
[Application against measures to recover secured debts].—(1) Any person (including
borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the
1. Ins. by Act 44 of 2016, s. 13 (w.e.f. 1-9-2016).
2. Subs. by s. 14, ibid., for “Right to appeal” (w.e.f. 1-9-2016).
23
secured creditor or his authorised officer under this Chapter,1
[may make an application along with such
fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within fortyfive days from the date on which such measure had been taken:
2
[Provided that different fees may be prescribed for making the application by the borrower and the
person other than the borrower.]
3
[Explanation.—For the removal of doubts, it is hereby declared that the communication of the
reasons to the borrower by the secured creditor for not having accepted his representation or objection or
the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not
entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this
sub-section.]
4
[(1A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within
the local limits of whose jurisdiction—
(a) the cause of action, wholly or in part, arises;
(b) where the secured asset is located; or
(c) the branch or any other office of a bank or financial institution is maintaining an account in
which debt claimed is outstanding for the time being.]
5
[(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in
sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance
with the provisions of this Act and the rules made thereunder.
6
[(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and
evidence produced by the parties, comes to the conclusion that any of the measures referred to in
sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of
this Act and the rules made thereunder, and require restoration of the management or restoration of
possession, of the secured assets to the borrower or other aggrieved person, it may, by order,—
(a) declare the recourse to any one or more measures referred to in sub-section (4) of section 13
taken by the secured creditor as invalid; and
(b) restore the possession of secured assets or management of secured assets to the borrower or
such other aggrieved person, who has made an application under sub-section (1), as the case may be;
and
(c) pass such other direction as it may consider appropriate and necessary in relation to any of the
recourse taken by the secured creditor under sub-section (4) of section 13.]
(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under
sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made
thereunder, then, notwithstanding anything contained in any other law for the time being in force, the
secured creditor shall be entitled to take recourse to one or more of the measures specified under
sub-section (4) of section 13 to recover his secured debt.
1. Subs. by Act 30 of 2004, s. 10, for “may prefer an appeal” (w.e.f. 21-6-2002).
2. Ins. by s. 10, ibid. (w.e.f. 21-6-2002).
3. Ins. bys. 10, ibid. (w.e.f. 11-11-2004).
4. Ins. by Act 44 of 2016, s. 14 (w.e.f. 1-9-2016).
5. Subs. by Act 30 of 2004, s.10, for sub-sections (2) and (3) (w.e.f. 11-11-2004).
6. Subs. by Act 44 of 2016, s. 14,for sub-section (3) (w.e.f. 1-9-2016).
24
1
[(4A) Where—
(i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights
upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and
evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of
security interest, have the jurisdiction to examine whether lease or tenancy,—
(a) has expired or stood determined; or
(b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or
(c) is contrary to terms of mortgage; or
(d) is created after the issuance of notice of default and demand by the Bank under subsection (2) of section 13 of the Act; and
(ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in
secured asset falls under the sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) of
clause (i), then notwithstanding anything to the contrary contained in any other law for the time being
in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the
provisions of this Act.]
(5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as
expeditiously as possible and disposed of within sixty days from the date of such application:
Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons
to be recorded in writing, so, however, that the total period of pendency of the application with the Debts
Recovery Tribunal, shall not exceed four months from the date of making of such application made under
sub-section (1).
(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four
months as specified in sub-section (5), any part to the application may make an application, in such form
as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious
disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may,
on such application, make an order for expeditious disposal of the pending application by the Debts
Recovery Tribunal.
(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be,
dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder.]
17A. [Making of application to Court of District Judge in certain cases.] Omitted by the Jammu and
Kashmir Reorganization (Adaptation of Central Laws) Order, 2020, vide notification No. S.O. 1123(E)
dated (18-3-2020) and Vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws)
Order, 2020, notification No. S.O. 3774(E), dated (23-10-2020).
1. Ins. by Act 44 of 2016, s. 14 (w.e.f. 1-9-2016).
25
18. Appeal to Appellate Tribunal.—(1) Any person aggrieved, by any order made by the Debts
Recovery Tribunal1
[under section 17, may prefer an appeal along with such fee, as may be prescribed] to
the Appellate Tribunal within thirty days from the date of receipt of the order of Debts Recovery
Tribunal.
2
[Provided that different fees may be prescribed for filing an appeal by the borrower or by the person
other than the borrower:]
3
[Provided further that no appeal shall be entertained unless the borrower has deposited with the
Appellate Tribunal fifty per cent. of the amount of debt due from him, as claimed by the secured creditors
or determined by the Debts Recovery Tribunal, whichever is less:
Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the
amount to not less than twenty-five per cent. of debt referred to in the second proviso.]
(2) Save as otherwise provided in this Act, the Appellate Tribunal shall, as far as may be, dispose of
the appeal in accordance with the provisions of the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 (51 of 1993) and rules made thereunder.
4
[18A. Validation of fees levied.—Any fee levied and collected for preferring, before the
commencement of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act,
2004, an appeal to the Debts Recovery Tribunal or the Appellate Tribunal under this Act, shall be deemed
always to have been levied and collected in accordance with law as if the amendments made to sections
17 and 18 of this Act by sections 10 and 12 of the said Act were in force at all material times.
18B. [Appeal to High Court in certain cases.] Omitted by the Jammu and Kashmir Reorganization
(Adaptation of Central Laws) Order, 2020, vide notification No. S.O. 1123(E) dated (18-3-2020) and Vide
Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, notification
No. S.O. 3774(E), dated (23-10-2020).
5
[18C. Right to lodge a caveat.—(1) Where an application or an appeal is expected to be made or
has been made under sub-section (1) of section 17 or section 17A or sub-section (1) of section 18or
section 18B, the secured creditor or any person claiming a right to appear before the Tribunal or the Court
of District Judge or the Appellate Tribunal or the High Court, as the case may be, on the hearing of such
application or appeal, may lodge a caveat in respect thereof.
(2) Where a caveat has been lodged under sub-section (1),—
(a) the secured creditor by whom the caveat has been lodged (hereafter in this section referred to
as the caveator) shall serve notice of the caveat by registered post, acknowledgement due, on the
person by whom the application has been or is expected to be made under sub-section (1);
(b) any person by whom the caveat has been lodged (hereafter in this section referred to as the
caveator) shall serve notice of the caveat by registered post, acknowledgement due, on the person by
whom the application has been or is expected to be made under sub-section (1).
(3) Where after a caveat has been lodged under sub-section (1), any application or appeal is filed
before the Tribunal or the court of District Judge or the Appellate Tribunal or the High Court, as the case
1. Subs. by Act 30 of 2004, s. 12, for “under section 17, may prefer an appeal” (w.e.f. 21-6-2002).
2. Ins. by s. 12, ibid. (w.e.f. 21-6-2002).
3. Ins. by s. 12, ibid. (w.e.f. 11-11-2004).
4. Ins. by s. 13, ibid. (w.e.f. 11-11-2004).
5. Ins. by Act 1 of 2013, s. 7 (w.e.f. 15-1-2013).
*. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu and
Kashmir and the Union territory of Ladakh.
26
may be, the Tribunal or the District Judge or the Appellate Tribunal or the High Court, as the case may be,
shall serve a notice of application or appeal filed by the applicant or the appellant on the caveator.
(4) Where a notice of any caveat has been served on the applicant or the Appellant, he shall periodically
furnish the caveator with a copy of the application or the appeal made by him and also with copies of any
paper or document which has been or may be filed by him in support of the application or the appeal.
(5) Where a caveat has been lodged under sub-section (1), such caveat shall not remain in force after the
expiry of the period of ninety days from the date on which it was lodged unless the application or appeal
referred to in sub-section (1) has been made before the expiry of the said period.]
STATE AMENDMENT
Jammu and Kashmir (UT).—
Amendment of section 18(C)—(i) in sub-section (1), omit “or section 17A”, “or section 18B”, “or the
court of District Judge” and “or the High Court”; and
(ii) in sub-section (3), omit “or the court of District Judge” and “or the High Court”.
[Vide Order No. 3807(E) dated 26th October, 2020, the Union Territory of Jammu and Kashmir
Reorganisation (Adaptation of Central Laws) Third Order, 2020 (w.e.f. 26-10-2020)
Ladakh (UT).—
Amendment of section 18(C)—
(a) In sub-section (1), omit,—
(i) “or section 17A” and “or section 18B”; and
(ii) “or the court of District Judge” and “or the High Court” whenever they occur;
(b) in sub-section (3) omit “or the court of District Judge” and “or the High Court”.
[Vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, notification No.
S.O. 3774(E), dated (23-10-2020).]
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[19. Right of borrower to receive compensation and costs in certain cases.—If the Debts Recovery
Tribunal or the Court of District Judge, on an application made under section 17 or section 17A or the
Appellate Tribunal or the High Court on an appeal preferred under section 18 or section 18A, holds that the
possession of secured assets by the secured creditor is not in accordance with the provisions of this Act and
rules made thereunder and directs the secured creditors to return such secured assets to the
2
[concerned borrowers or any other aggrieved person, who has filed the application under section 17 or section
17A or appeal under section 18 or section 18A, as the case may be, the borrower or such other person] shall be
entitled to the payment of such compensation and costs as may be determined by such Tribunal or Court of
District Judge or Appellate Tribunal or the High Court referred to in section 18B.]
STATE AMENDMENT
Union Territory of Jammu and Kashmir
Amendment of section 19.—(i) Omit “or the Court of District Judge”, occurring at both the places;
(ii) Omit “or section 17A” occurring at both the places;
(iii) Omit “or the High Court;
(iv) Omit “or section 18A” occurring at both the places; and
(v) Omit “or the High Court referred to in section 18B” occurring at the end.
Insertion of new section:—After section 19, insert—
19A. Transfer of Pending Applications.—All the pending applications before the court of District Judge
and the High Court under sections 17A and 18B respectively, shall stand transferred to the Tribunal and the
Appellate Tribunal, as the case may be.
[Vide Order No. 3807(E) dated 26th October, 2020, the Union Territory of Jammu and Kashmir
Reorganisation (Adaptation of Central Laws) Third Order, 2020 (w.e.f. 26-10-2020)].
Union Territory of Ladakh—
Section 19.—In section 19,—
(i) omit "or the court of District Judge", "or the High Court" and "or the High Court referred to in
section 18B";
(ii) omit “or section 17A" and "or section 18A".
1. Subs. by Act 30 of 2004, s. 14, for section 19 (w.e.f. 11-11-2004).
2. Subs. by Act 44 of 2016, s. 15, for “concerned borrowers, such borrower” (w.e.f. 1-9-2016).
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[Vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, notification No.
S.O. 3774(E), dated (23-10-2020).]