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Section 38: Power of Central Government to make rules

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

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2002
Section 37 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 39

Legal Commentary & Landmark Judgments: Section 38

Section 38 of the SARFAESI Act, 2002 confers statutory rule-making power upon the Central Government to carry out the provisions of the Act, governing the enactment and parliamentary vetting of the Security Interest (Enforcement) Rules, 2002 and Central Registry Rules.

  • Delegated Rule-Making Power: The Central Government is empowered to make rules by Official Gazette notification for carrying out all statutory provisions.
  • Specific Regulatory Domains: Framing rules for possession notices, valuation of secured assets, public auction procedures, and Central Registry operations.
  • Mandatory Parliamentary Tabling: Under Section 38(3), every rule must be laid before each House of Parliament for thirty days and is subject to parliamentary modification or annulment.
Key Landmark Precedents:
  • Mathew Varghese v. M. Amritha Kumar (2014) 5 SCC 610: The Supreme Court held that rules framed by the Central Government under Section 38—specifically Security Interest (Enforcement) Rules, 2002 (Rules 8 & 9)—are mandatory statutory rules, and breach thereof vitiates the auction sale completely.
  • Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd. (2024) 2 SCC 1: A 2-Judge Bench analyzed the 2016 amendments to Section 13(8) and Rule 9 framed under Section 38, holding that the borrower's right of redemption extinguishes on publication of the auction notice, underscoring the binding statutory force of the Enforcement Rules.
Courtroom Practice & Strategic Litigation Guidance:

Always evaluate whether any executive action, notice, or public auction strictly adheres to the Security Interest (Enforcement) Rules, 2002 framed under Section 38. Any violation of statutory timelines (30 days under Rule 8(6)/9(1) or 15 days under amended rules) renders the bank's action unlawful.

Section 37 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 39