Under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, borrowers have specific rights aimed at ensuring fairness during the process of recovery of secured loans. The Act primarily enables banks and financial institutions to recover non-performing assets (NPAs) by enforcing security interests over the assets pledged by borrowers. However, it also safeguards the rights of borrowers in several ways. Here are the key rights of borrowers under the SARFAESI Act: 1. Right to Notice Before Action: Section 13(2): Before taking action under the SARFAESI Act, the lender (secured creditor) is required to issue a demand notice to the borrower. The notice must specify the default and the amount owed by the borrower. The borrower is given 60 days to make the payment of the outstanding amount to the lender. 2. Right to Representation and Hearing: Section 13(3): If the borrower fails to make the payment within the 60-day period, the borrower has the right to represent their case to the lender. The borrower can request a review of the action the lender intends to take, and the lender must consider the borrower’s representation before proceeding with any enforcement action. 3. Right to Challenge the Action in Court: Section 17: If the borrower is aggrieved by the actions of the lender, such as the possession or sale of the secured asset, the borrower has the right to challenge the lender's action before the Debts Recovery Tribunal (DRT) within 45 days. The DRT will review whether the action taken by the lender is lawful and fair. If the borrower feels the lender has acted improperly, the borrower can appeal to the DRT for relief. 4. Right to Apply for a Settlement: The borrower can approach the lender for an out-of-court settlement or restructuring of the loan. If the borrower has the ability to pay off the dues in a reasonable time frame, they may request the lender to consider a settlement proposal, subject to the lender’s discretion. 5. Right to Seek Assistance from the Appellate Tribunal: If the borrower is dissatisfied with the decision of the DRT, they have the right to appeal to the Appellate Tribunal (DRAT). The borrower can challenge the decisions or actions taken by the secured creditor at the appellate level for further review. 6. Right to Approach Courts for Stay on Enforcement: In cases where the lender has already taken possession of the property or initiated auction proceedings, the borrower can approach the court or the DRT to seek a stay on such actions under Section 17(4), by demonstrating that the lender’s actions were illegal or unfair. The borrower can argue for the suspension of enforcement if the matter is sub-judice or if the borrower has a valid defense. 7. Right to Receive a Fair Market Value for the Secured Asset: In the event of the sale of the secured asset, the borrower has the right to ensure that the sale is conducted at fair market value. The lender is required to follow proper procedures for the sale, including providing due notice of the auction and ensuring that the asset is sold in a transparent manner. 8. Right to Be Given Time to Repay: Under the SARFAESI Act, the borrower is entitled to the right to redeem the security interest by paying the dues in full, even before the lender takes possession of the property. This right is available until the borrower’s property is sold or transferred. 9. Right Against Arbitrary Action: The SARFAESI Act prohibits lenders from taking arbitrary or excessive action. The possession or sale of the property must follow due process and be justifiable. If any act of the lender is found to be unjust, the borrower can seek legal remedies. 10. Right to Clear the Debt Before Auction: Before the asset is auctioned, the borrower can clear their debt to prevent the auction process. If the borrower settles the debt, the lender is obligated to stop the sale process and return the possession of the asset. 11. Right to Access Information: Borrowers are entitled to access information about their outstanding dues and the steps taken by the lender to recover the loan. They can also request details regarding the value of the secured asset or property. 12. Right to Challenge the Action of the Authorized Officer: If the lender’s authorized officer (e.g., the person designated to take possession or sell the property) conducts the proceedings unfairly, the borrower has the right to challenge such actions in the DRT or the DRAT. Conclusion: While the SARFAESI Act grants significant powers to banks and financial institutions for the recovery of secured loans, it also protects the rights of borrowers by ensuring that they have an opportunity to contest the lender's actions, seek relief through legal channels, and obtain fair treatment in the process. Borrowers can challenge actions taken under the Act, approach courts and tribunals for redressal, and seek a reasonable settlement or payment schedule.