Time Limit For Taking Action After Notice Is Served

The secured creditor can take action any time after the expiry of 60 days notice. There is no time limit. However action must be taken within reasonable time. The notice cannot be said to be perpetually valid. If the creditor does any act which is contrary to the intention of notice (e.g. reschedules loans or gives further time for repayment), it can be said that the notice has abated and no action can be taken against such notice.

Jurisdiction Of Civil Court Barred

Civil court is barred from entertaining any suit or proceeding where Debt Recovery Tribunal is empowered to determine. No injunction shall be granted by any court or other authority in respect of any action taken in pursuance of any power conferred under this Act. However writ jurisdiction of the High Court remains unaffected.

Magistrate Supervision To Take Over Possession

The secured creditor can take over possession of assets 60 days after giving notice.

Where possession of assets is required to taken or if any asset is required to be sold or transferred and if the secured creditor expects resistance, he can request the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction the assets are located, to take possession of the assets. The Magistrate shall then transfer these assets to secured assets.

Change Of Directors / Appointment Of Administrator

On the management being taken over, the secured creditor can change the directors of borrower company if borrower is a company and appoint administrator if borrower is not a company. A notice to the effect is also published in the newspaper.

On publishing of such notice, the earlier directors (in case of a company) and persons holding any office of power of superintendence (if borrower is not a company) shall be deemed to have vacated their office.

Any contract of management, which borrower had with any director or manager of borrower holding office shall be deemed to be terminated.

The new directors/administrator appointed by secured creditor will take over in custody or control all the property, effects or actionable claims to which the business of the borrower is entitled.

The new directors/administrator shall alone be entitled to exercise all the powers of superintendence, direction and control of business of borrower.