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Notices

SARFAESI Demand Notice (Section 13(2)): format, rules and a free draft

Learners will master the statutory prerequisites, legal drafting mechanics, and mandatory content required for issuing a 60-day demand notice under Section 13(2) of the SARFAESI Act, 2002. By completing this course, you will be able to independently draft an enforceable, watertight demand notice that withstands judicial scrutiny before the Debt Recovery Tribunal.

Why it matters

  • A Section 13(2) notice is the mandatory statutory condition precedent to enforcing security interests without court intervention.
  • Preconditions include valid security creation, contractual default, and proper NPA classification under RBI prudential norms.
  • The notice provides a mandatory 60-day period calculated from the date of receipt by the addressees to clear all dues.
  • Defects in the Section 13(2) notice invalidate subsequent enforcement actions under Section 13(4) before the DRT.

What it must contain

  • The notice must be issued specifically by the Authorised Officer of the secured creditor.
  • Every obligor—borrower, co-borrower, guarantor, and mortgagor—must be formally addressed.
  • NPA classification date and complete breakdown of dues must be explicitly stated.
  • Detailed property schedules under Section 13(3) and mandatory statutory cautions under Sections 13(13), 13(8), and 13(3A) are essential.

Mistakes to avoid

  • Always compute 60 days from the 'date of receipt of the notice' by the addressee.
  • Issue separate notices to every borrower, co-borrower, personal guarantor, and mortgagor.
  • Provide exhaustive property descriptions (boundaries, survey numbers, carpet area) under Section 13(3).
  • Reconcile outstanding amounts and post-NPA credits prior to finalizing numbers.

Sample format

DEMAND NOTICE UNDER SECTION 13(2) OF THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002

Ref No: BNB/MCB/SARFAESI/2023-24/104
Date: 05/04/2023

To,
1. M/s Zenith Precision Tools Private Limited
Through its Directors,
Registered Office: Plot No. C-45, TTC Industrial Area,
MIDC Pawane, Navi Mumbai - 400705.
(Borrower)

2. Mr. Vikram Shah
S/o Shri Ramesh Shah,
Flat No. 12A, Sea View Towers, Worli, Mumbai - 400018.
(Director & Personal Guarantor)

3. Mrs. Anjali Shah
W/o Shri Vikram Shah,
Flat No. 12A, Sea View Towers, Worli, Mumbai - 400018.
(Director & Personal Guarantor)

4. Mr. Ramesh Shah
15, Park Avenue, Bandra West, Mumbai - 400050.
(Third-Party Mortgagor & Personal Guarantor)

Dear Sir(s) / Madam,

SUB: DEMAND NOTICE UNDER SECTION 13(2) OF THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT) IN RESPECT OF CREDIT FACILITIES AVAILED BY M/S ZENITH PRECISION TOOLS PR

See the full format, or let the AI fill it in from your facts.

Draft this free

Before you issue it

  • Verify that the notice is issued and signed specifically by the designated Authorised Officer.
  • Confirm that every primary borrower, co-borrower, guarantor, and mortgagor is individually addressed.
  • Check that the loan facility details, sanction dates, and loan account numbers are accurate.
  • Ensure the NPA classification date strictly matches bank records and RBI prudential criteria.
  • Account for and explicitly mention all post-NPA part-payments made by the borrower.
  • Verify that outstanding balances and interest rates are correctly stated in both figures and words.
  • Confirm that the demand period is explicitly stated as '60 days from the date of receipt of the notice'.
  • Provide complete descriptions, boundaries, and survey/carpet area details for all secured assets under Section 13(3).
  • Include mandatory statutory notices under Section 13(13) (restraint), Section 13(3A) (representation), and Section 13(8) (redemption).
  • Dispatch via Registered Post AD / Speed Post to all addresses and maintain tracking receipts in a legal dossier.

Common questions

What is the statutory time period given to a borrower to discharge their liability under a Section 13(2) SARFAESI notice?

60 days from the date of receipt of the notice. Section 13(2) of the SARFAESI Act, 2002 explicitly mandates that the borrower/guarantor must be given 60 days from the date of receipt of the notice to discharge their liabilities in full.

Which specific detail is mandatory regarding secured assets in a Section 13(2) notice as required by Section 13(3)?

Full details of the secured assets proposed to be enforced by the secured creditor. Section 13(3) requires that the demand notice under Section 13(2) shall give full details of the specific secured assets intended to be enforced by the secured creditor.

Under Section 13(13) of the SARFAESI Act, what legal restraint applies once a Section 13(2) notice is served?

The borrower is restrained from transferring the secured assets by sale, lease, or otherwise without prior written consent. Section 13(13) prohibits the borrower from transferring, by way of sale, lease, or otherwise, any of the secured assets referred to in the notice without prior written consent of the secured creditor.

To whom among the following must the Section 13(2) demand notice be addressed and served?

Every borrower, co-borrower, guarantor, and mortgagor liable for the loan. To legally enforce security against all secured assets and obligors under Section 13(4), individual demand notices must be served on every borrower, co-borrower, guarantor, and mortgagor.

General information to help you draft, not legal advice. Check the facts and current law for each case.