Basic Rights of Borrowers: SARFAESI Act of 2002 | Corporate Debt Recovery Attorney in Delhi NCR

The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act of 2002 was enacted to fight the menace of Non-Performing Assets (NPA), on the basis of the recommendations made by the Andhyarujina Committee. But many experts were of the belief that the act is draconian and completely favours the Banks, Financial Institution and other Non-Banking Financial Institutions (NBFCs) and hence, it is against the principle of equity and natural justice. The constitutionality of the SARFAESI Act of 2002 had been put to question in the landmark case of Mardia Chemicals v Union of India AIR 2004 SC 2371, wherein the Act was challenged on the grounds of giving arbitrary and onerous powers to Banks and Financial Institutions to fulfill their claims, however, the Hon’ble Supreme Court upheld the constitutional validity of the SARFAESI Act of 2002 and observed that it provides ample opportunity to the borrower to redress their issues before the Debt Recovery Tribunal (DRT) and that no arbitrary powers have been conferred on the Banks, Financial Institution and other Non-Banking Financial Institutions (NBFCs) respectively.