Miscellaneous Provisions: Jaiib/DBF Paper 3 (Module C) Unit-7

Miscellaneous Provisions: Jaiib/DBF Paper 3 (Module C) Unit-7

Dear bankers,

As we all know that is Miscellaneous Provisions for JAIIB Exam. JAIIB exam conducted twice in a year. So, here we are Miscellaneous Provisions (Unit-7), Banking Related Laws (Module C), Legal & Regulatory Aspects of Banking -Paper 3.

♦Non-Applicability of the Provisions of the SARFAESI Act in Certain Cases

The Object of the SARFAESI Act is to give powers to the banks and financial institutions to enforce the securities given to the loans and advance by the borrowers without the intervention of Court. It should be noted that the securities not in possession of the bank or financial institution are only covered by this Act.

Section 31 gives the exclusion for securities that can be taken possession of and to some other specific securities to which Act is not applicable.

  • A lien, on any goods, money or security given by or under the Indian Contract Act, 1872 or the Sale of Goods Act, 1930 or any other law for the time being in force.
  •  A pledge of movable, within the meaning of Section 172 of the Indian Contract Act, 1872. (iii) Creation of security interest in any vessel as defined within the meaning of Section 3(55) of the Merchant Shipping Act, 1958.
  •  Creation of security in any aircraft as defined in Section 2 of Aircraft Act 1934.
  • Any conditional sale, hire-purchase or lease or any other contract in which no security Interest has been created.
  • Any rights of unpaid seller under Section 47 of the Sale of Goods Act, 1930.
  • Any properties not liable for attachment or sale under the first proviso to Section 60(1) of the Civil Procedure Code, 1908.
  • Any security interest for securing repayment of any financial asset not exceeding one lakh rupees
  • Any security interest created in agricultural land
  • Any case, in which the amount due is less than twenty per cent of the principal amount and interest thereunder.

♦Civil Court not to have Jurisdiction

  • Civil courts not to have jurisdiction, jurisdiction has conferred to DRT and AT. Under this Act as well as under Recovery of Debts Due to Bank and Financial Institutions Act, 1993.

♦Limitation

  • Section 36 SARFAESI Act: The action has to be taken within 3 years from date on which a cause of action arose.

♦Power of the Central Government to Make Rules

  • For Carrying out the Provision of this Act, the Central Government can frame rules and notify them in the official Gazette. The Act also allows the Government to notify the rules in the Electronic Gazettee as defined in the Information Technology act 2000, on the Website of the Government.

♦Amendments to Certain other Enactments

For effective purpose of this Act, it has amended some related provisions of the Companies Act, 1956 (now ICA, 2013), The Securities Contracts (Regulation) Act, 1956 and the Sick industrial Companies (special provision) Act, 1956.

The amendments are as under

  • Section 4A of the Companies Act, 1956 is amended for the purpose of declaring any securitization company or reconstruction company registered with the Reserve Bank of India as a Public financial Institution within the meaning of Section 4A of the Companies Act, 1956.
  • The Securities Contracts (Regulation) Act, 1956 is amended at Clause (h) of Section (2) for including securities receipt as defined in Clause (zg) of Section 2 of the SARFAESI Act.
  • Amendment to the Sick Industrial Companies (Special Provision) Act, 1985 is made to provide that.
  • No Reference to the Board for Industrial and Financial Reconstruction (BIFR) shall lie, where financial assets are acquired by any securitisaton company or reconstruction company under sub-Section 5 of the SARFAESI Act
  • For the purpose of providing that a reference pending before BIFR shall abate if the secured creditor, representing not less than 60% in value of the amount outstanding, take any measures to recover their secured debt under sub-section(4) of Section 13 of SARFAESI Act.

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