Question
Section 19 of the SARFAESI Act entitles the borrower to
compensation and costs in certain cases. Under what circumstances does the borrower become entitled to such compensation?Solution
Section 19 provides that if the DRT (on an application under Section 17), the Appellate Tribunal (on an appeal under Section 18), or the High Court holds that possession of secured assets by the secured creditor is not in accordance with the provisions of the Act and its rules, and directs the secured creditor to return such secured assets to the borrower or other aggrieved person, then the borrower or such person shall be entitled to the payment of such compensation and costs as may be determined by such Tribunal/Court. This provision is a safeguard against wrongful enforcement action - the bank is made liable to compensate the borrower if it acted illegally. The compensation is judicially determined, not automatic.
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