Protection of Action Taken in Good Faith as per SARFAESI Act

Section 32 of the SARFAESI Act provides protection to any person who takes any action in good faith under the Act. This means that no suit, prosecution or other legal proceeding shall lie against such person for anything done or omitted to be done in good faith under the Act.

The following are some of the key aspects of Section 32 of the SARFAESI Act:

  • The protection is available to any person who takes any action in good faith under the Act. This includes the secured creditor, its officers, the Recovery Officer, and any other person authorized by the secured creditor.
  • The action taken must be in good faith. This means that the person taking the action must have honestly believed that it was the right thing to do.
  • The action must be taken under the SARFAESI Act. This means that the action must be one of the actions that are authorized by the Act, such as taking possession of the secured assets, taking over the management of the secured assets, or selling the secured assets.

Here are some MCQs on the protection of action taken in good faith as per SARFAESI Act:

  1. Which of the following persons is not protected by Section 32 of the SARFAESI Act?
    • Secured creditor
    • Recovery Officer
    • Borrower
    • Authorized officer of the secured creditor
    • The answer is Borrower. Section 32 of the SARFAESI Act only protects persons who take action in good faith under the Act. The borrower is not a person who takes action under the Act.
  2. An action taken by a secured creditor in good faith under the SARFAESI Act is:
    • Void
    • Voidable
    • Valid
    • Illegal
    • The answer is Valid. Section 32 of the SARFAESI Act provides that no suit, prosecution or other legal proceeding shall lie against any person for anything done or omitted to be done in good faith under the Act. This means that an action taken by a secured creditor in good faith under the SARFAESI Act is valid and cannot be challenged in court.
  3. The protection under Section 32 of the SARFAESI Act is available only for actions taken:
    • Before the commencement of the Act
    • After the commencement of the Act
    • Both before and after the commencement of the Act
    • Only after the commencement of the Act
    • The answer is Both before and after the commencement of the Act. Section 32 of the SARFAESI Act provides that the protection is available for actions taken both before and after the commencement of the Act.