Legal Question in Securities Law in India

Can notice under Section 13(2) of the SARFAESI Act be given through an email or does it have to be strictly written notice? If yes, is there any case law stating the same?

Asked on 8/09/16, 8:30 am

1 Answer from Attorneys

Vivek Mapara Vivek N. Mapara


Rule 3 of the Security Interest Rules, 2002 provides the mode of Service of Demand Notice u/s Section 13(2) of the Act, which reads as under : -

Rule 3 - (1) The service of demand notice as refereed to in sub-section (2) of section 13 of the 1[Act] shall be made by delivering or transmitting at the place where the borrower or his agent, empowered to accept the notice or documents of behalf of the borrower, actually and voluntarily resides or carries on business or personally works for gain, by registered post with acknowledgement due, addressed to the borrower or his agent empowered to accept the service or by Speed Post or by courier or by any other means of transmission of documents like fax message or electronic mail service:

Provided that where authorised officer has reason to believe that the borrower or his agent is avoiding the service of the notice or that for any other reason, the service cannot be made as aforesaid, the service shall be effected by affixing a copy of the demand notice on the outer door or some other conspicuous part of the house or building in which the borrower or his agent ordinarily resides or carries on business or personally works for gain and also by publishing the contents of the demand notice in two leading newspapers, one in vernacular language, having sufficient circulation in that locality.

Thus the aforesaid Rule itself provides for service of Demand Notice u/s 13(2) by way of Electronic Transmission. However, if the borrower disputes the receipt of such Electronic Receipt, then it will be difficult to prove that the Email Address is the correct Email Address of the Borrower and that the Demand Notice was actually received by the Borrower in its 'Inbox'. So though you may serve the notice my Email, but on the safe side also serve by way of a Registered Post A.D.

Should you have any questions, then feel free to contact.

Vivek N Mapara

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Answered on 8/09/16, 10:53 am

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