Power of the Central Government to Make Rules as per SARFAESI Act

Section 38 of the SARFAESI Act gives the Central Government the power to make rules for carrying out the provisions of the Act. The rules made by the Central Government must be published in the Official Gazette.

The following are some of the matters that can be prescribed by rules made by the Central Government:

  • The form and manner in which a security interest shall be created and registered.
  • The manner in which a notice of default shall be given to the borrower.
  • The procedure for taking possession of the secured assets.
  • The manner in which the secured assets shall be sold.
  • The fees and charges that may be levied by the secured creditor.

Here are some MCQs on the power of the Central Government to make rules under the SARFAESI Act:

  1. Which of the following matters can be prescribed by rules made by the Central Government?
    • The form and manner in which a security interest shall be created and registered.
    • The manner in which a notice of default shall be given to the borrower.
    • The procedure for taking possession of the secured assets.
    • All of the above
    • The answer is All of the above. The Central Government has the power to make rules for all of the matters mentioned in the question.
  2. The rules made by the Central Government under the SARFAESI Act must be:
    • Published in the Official Gazette
    • Laid before each House of Parliament
    • Approved by both Houses of Parliament
    • All of the above
    • The answer is All of the above. The rules made by the Central Government under the SARFAESI Act must be published in the Official Gazette, laid before each House of Parliament, and approved by both Houses of Parliament.
  3. The rules made by the Central Government under the SARFAESI Act can be challenged in court:
    • Yes
    • No
    • Only if they are ultra vires the Act
    • Only if they are unreasonable
    • The answer is Only if they are ultra vires the Act. The rules made by the Central Government under the SARFAESI Act can only be challenged in court if they are ultra vires the Act, i.e., if they go beyond the powers given to the Central Government by the Act.