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Section 1: Short title, extent and commencement

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 • Official Statutory Text & Practice Guide

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Act 2002
All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 2

Legal Commentary & Landmark Judgments: Section 1

Section 1 of the SARFAESI Act, 2002 defines the short title, universal territorial extent across India, and statutory commencement of the special legal framework governing the securitisation, asset reconstruction, and extrajudicial enforcement of security interests.

  • Universal Pan-Indian Extent: Extends to the whole of India; following the Jammu and Kashmir Reorganisation Act, 2019, its provisions apply uniformly across all States and Union Territories without regional exception.
  • Statutory Commencement and Retrospective Anchoring: Deemed to have come into force on June 21, 2002, replacing and preserving all enforcement measures initiated under Presidential Ordinances 2 and 3 of 2002.
  • Paramount Legislative Architecture: Establishes a non-adjudicatory, summary statutory recovery mechanism for banks and financial institutions to recover non-performing assets (NPAs) without the protracted delays of civil courts.
Key Landmark Precedents:
  • Mardia Chemicals Ltd. v. Union of India (2004) 4 SCC 31: A 3-Judge Bench of the Supreme Court upheld the constitutional validity of the SARFAESI Act in its entirety (striking down only the onerous 75% pre-deposit condition in Section 17(2)), ruling that Parliament was fully competent under Entry 45 of List I (Banking) to enact summary debt recovery mechanisms to tackle non-performing assets.
  • State Bank of India v. Santosh Gupta (2017) 2 SCC 538: The Supreme Court held that the SARFAESI Act applies to the State of Jammu & Kashmir and does not conflict with local property transfer enactments, establishing that parliamentary competence under Entry 45 of List I overrides state property laws under the doctrine of pith and substance.
Courtroom Practice & Strategic Litigation Guidance:

In preliminary objections before the DRT or High Court, verify lender qualification as a notified 'secured creditor' under Section 2(1)(zd). Cite Section 1 r/w Mardia Chemicals to repel threshold challenges regarding legislative competence or lack of jurisdiction.

All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 2