Home  /  Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002  /  Section 40

Section 40: Power to remove difficulties

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 39 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 41

Legal Commentary & Landmark Judgments: Section 40

Section 40 of the SARFAESI Act, 2002 vests the Central Government with limited statutory power to remove difficulties arising in giving effect to the provisions of the Act, subject to strict constitutional boundaries and a three-year sunset clause.

  • Removal of Difficulties Scope: Central Government may issue executive orders not inconsistent with the provisions of the Act to remove operational difficulties.
  • Strict Three-Year Sunset Clause: Section 40(1) proviso explicitly prohibits the making of any removal of difficulty order after the expiry of three years from commencement of the Act.
  • Mandatory Parliamentary Scrutiny: Every order made under Section 40 must be laid before each House of Parliament as soon as may be after it is made.
Key Landmark Precedents:
  • Madeva Upendra Sinai v. Union of India (1975) 3 SCC 765: A Constitution Bench held that Henry VIII removal-of-difficulties clauses can only be exercised to iron out operational creases in implementing the statute, and cannot alter the policy or substantive scheme of the enactment.
  • Mardia Chemicals Ltd. v. Union of India (2004) 4 SCC 31: The Supreme Court examined the executive powers conferred under SARFAESI, including Section 40, upholding the parliamentary design providing institutional flexibilities during early implementation.
Courtroom Practice & Strategic Litigation Guidance:

Removal of difficulty orders under Section 40 cannot override express substantive statutory provisions or judicial pronouncements; challenge any executive notification that attempts to alter the statutory scheme under the guise of removing difficulties beyond the 3-year statutory limit.

Section 39 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 41