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      Question

      Section 9 of the SARFAESI Act lists the measures

      available to an asset reconstruction company for the purpose of 'asset reconstruction'. Which of the following is a measure expressly provided under Section 9(1)?
      A Conversion of any portion of debt into shares of a borrower company Correct Answer Incorrect Answer
      B Filing a complaint before the Consumer Forum Correct Answer Incorrect Answer
      C Issuing garnishee orders to third-party debtors Correct Answer Incorrect Answer
      D Attachment of movable property through Revenue authorities Correct Answer Incorrect Answer
      E Imposition of moratorium on the borrower's obligations Correct Answer Incorrect Answer

      Solution

      Section 9(1) enumerates the following measures for asset reconstruction: (a) change in or take over of management of the borrower's business; (b) sale or lease of part or whole of the borrower's business; (c) rescheduling of payment of debts; (d) enforcement of security interest; (e) settlement of dues; (f) taking possession of secured assets; and (g) conversion of any portion of debt into shares of a borrower company. Importantly, the proviso states that conversion of debt into shares shall be deemed always to have been valid, as if the provision were in force at all material times - giving retrospective validation. ARC must follow RBI policies under Section 9(2) while taking such measures.

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