SARFAESI Act: Security Interest (Enforcement) Rules, 2002

Complete procedural rules for Section 13 demand notices, immovable asset possession under Rule 8, public auction under Rule 9, and statutory sale notices.

Substantive Sections (1–42)

Rule 3 – Demand Notice under Section 13(2)

Demand Notice
(1) The service of demand notice as referred to in sub-section (2) of section 13 of the Act shall be made by delivery in person or by registered post with acknowledgement due, or by Speed Post or by courier or by fax or by email to the borrower.
(4) Where the authorized officer has reason to believe that the borrower is avoiding service, the service may be effected by affixing a copy of the notice on the outer door and publishing in two leading newspapers, one in vernacular language.

Rule 3A – Reply to Representation / Objection of Borrower

Statutory Timeline

After issue of demand notice under sub-section (2) of section 13, if the borrower makes any representation or raises any objection, the authorized officer shall consider such representation or objection and if such representation or objection is not acceptable or tenable, he shall communicate the reasons for non-acceptance within fifteen days of receipt of such representation or objection to the borrower.

Rule 8 – Sale of Immovable Secured Assets

Possession & Valuation
(1) Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in the form given in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property.
(2) The possession notice referred to in sub-rule (1) shall also be published, as soon as possible but not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality.
(5) Before effecting sale of the immovable property, the authorized officer shall obtain estimation of the value of the property from an approved valuer and, in consultation with the secured creditor, fix the reserve price of the property.
(6) The authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets: Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in the form given in Appendix IV-A to be published in two leading newspapers.

Rule 9 – Time of Sale, Issue of Sale Certificate & Delivery of Possession

Mandatory Auction Slabs
(1) No sale of immovable property under these rules, in first instance, shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) of rule 8 or notice of sale has been served to the borrower. In case of subsequent sale, notice period shall be not less than fifteen days.
(3) On every sale of immovable property, the purchaser shall immediately pay a deposit of twenty-five per cent of the amount of the sale price, which is inclusive of earnest money deposited, to the authorized officer conducting the sale and in default of such deposit, the property shall forthwith be sold again.
(4) The balance amount of purchase price payable (seventy-five per cent) shall be paid by the purchaser to the authorized officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months.
(5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited to the secured creditor and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property.
(6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorized officer shall issue a certificate of sale of the property in favour of the purchaser in the form given in Appendix V.

Statutory Appendix Forms Summary

Prescribed Forms
Appendix IV – Possession Notice:

Delivered under Rule 8(1) declaring that the Authorized Officer has taken symbolic/physical possession of the secured asset upon the borrower's failure to repay the Section 13(2) demand amount within 60 days.

Appendix IV-A – Notice for Sale of Immovable Properties:

30-day public auction announcement published in two leading newspapers specifying borrower names, property description, reserve price, earnest money deposit (EMD), and inspection schedule under Rule 8(6).

Appendix V – Certificate of Sale (Immovable Property):

Statutory title conveyance document issued by the bank under Rule 9(6) certifying that the auction purchaser has purchased the immovable property free from all encumbrances known to the secured creditor.

All 42 Sections of SARFAESI Act