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MCQs on Enforcement of Security Interests Act, 2002 (SARFAESI)

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Q.1:- The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the or such extended period as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months.

  • 20th day of confirmation of sale of the immovable property.
  • 15th day of confirmation of sale of the immovable property.
  • 10th day of confirmation of sale of the immovable property.
  • 5th day of confirmation of sale of the immovable property.
Check Answer

Correct Option: B

Q.2:- How the reserve price for sale of secured immovable property shall be fixed:

  • By obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets.
  • By obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets.
  • By inviting tenders from the public
  • All the options are correct.
Check Answer

Correct Option: D

Q.3:- The certificate of sale issued by the authorised officer shall contain:

  • Price paid
  • The specification of the movable secured assets sold.
  • The name of the purchaser
  • All the options are correct.
Check Answer

Correct Option: D

Q.4:- After taking possession of movable secured asset and in any case before sale, the authorised officer shall obtain the estimated value of the movable secured assets and there after, if considered necessary, fix in consultation with the secured creditor, the of the assets to be sold in realisation of the dues of the secured creditor.

  • Reserve price
  • Un-reserve price
  • Minimum price
  • Free price
Check Answer

Correct Option: A

Q.5:- The authorised officer may sell the movable secured assets taken possession under rule 4(1) in one or more lots to secure maximum sale price for the assets, to be so sold, by adopting:

  • Obtaining quotations from parties dealing in the secured assets or otherwise interested in buying such assets.
  • Holding public auction including through e-auction mode or by private treaty.
  • Inviting tenders from the public.
  • All the options are correct.
Check Answer

Correct Option: D

Q.6:- How the service of demand notice as referred to in section 13(2) of the SARFAESI Act shall be made:

  • By Speed Post or by courier or by any other means of transmission of documents like fax message or electronic mail service.
  • By delivering including hand delivery.
  • By registered post with acknowledgement due
  • All the options are correct.
Check Answer

Correct Option: D

Q.7:- The provisions of the SARFAESI Act or the rules made thereunder shall be in addition to, and not in derogation of:

  • The Securities and Exchange Board of India Act, 1992
  • The Recovery of Debts Due to Banks and Financial Institutions Act, 1993
  • The Securities Contracts (Regulation) Act, 1956
  • All of the above
Check Answer

Correct Option: D

Q.8:- No suit, prosecution or other legal proceedings shall lie, for anything done or omitted to be done in good faith under the SARFAESI Act, against:

  • The Central Registry
  • Any secured creditor or any of its officers
  • The Reserve Bank
  • All of the above.
Check Answer

Correct Option: D

Q.9:- If any person contravenes or attempts to contravene or abets the contravention of the provisions of SARFAESI Act or of any rules made thereunder, he shall be punishable with:

  • Imprisonment for a term which may extend to one year, or with fine, or with both.
  • Imprisonment for a term which may extend to nine months, or with fine, or with both.
  • Imprisonment for a term which may extend to six months, or with fine, or with both.
  • Imprisonment for a term which may extend to three months, or with fine, or with both.
Check Answer

Correct Option: A

Q.10:- The Central Government may delegate its powers and functions under Chapter IV in relation to establishment, operations and regulation of the Central Registry to the subject to such terms and conditions as may be prescribed:

  • Reserve Bank of India
  • Export Import Bank of India
  • National Housing Board
  • National Bank for Agriculture and Rural Development
Check Answer

Correct Option: A

Q.11:- Any borrower residing in the State of Jammu and Kashmir and aggrieved by any order made by the Court of District Judge under section 17A may prefer an appeal, to the High Court having jurisdiction over such Court, from the date of receipt of the order of the Court of District Judge:

  • within forty days
  • within thirty days
  • within twenty days
  • within ten days
Check Answer

Correct Option: B

Q.12:- Any person(including borrower), aggrieved by any of the measures referred to in section 13(4) taken by the secured creditor or his authorised officer under his Chapter, may make an application to the Debts Recovery Tribunal having jurisdiction in the matter from the date on which such measure had been taken.

  • Within 15 days
  • Within 30 days
  • Within 45 days
  • Within 60 days.
Check Answer

Correct Option: C

Q.13:- In case the borrower fails to discharge his liability in full within the period specified in section 13(2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt:

  • Take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset.
  • Take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset.
  • Appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor.
  • All the options are correct.
Check Answer

Correct Option: D

Q.14:- Classification of advance as non• performing advance is not necessary in the following case:

  • Borrower who has raised funds through issue of debt securities.
  • Borrower who has raised non• funds based facility.
  • Borrower who has raised funds cash credit limits.
  • Borrower who has raised funds bills discounting.
Check Answer

Correct Option: A

Q.15:- Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 any security interest created in favour of any secured creditor, by such creditor in accordance with the provisions of this Act.

  • Can be enforced at all
  • May be enforced with the intervention of the court or tribunal.
  • Subject to the prior permission of the competent court.
  • May be enforced without the intervention of the court or tribunal
Check Answer

Correct Option: D

Q.16:- The Act which regulates securitisation and reconstruction of financial assets and enforcement of security interest and provide for a Central database of security interests created on property rights, is called as:

  • The Securitisation and Reconstruction of Financial Assets Act, 2002.
  • The Securitisation Act, 2002.
  • The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
  • The Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Check Answer

Correct Option: C

Q.17:- Asset reconstruction company shall have a minimum net owned fund of:

  • Not less than four crore rupees or such other higher amount as the Reserve Bank, may, by notification, specify.
  • Not less than three crore rupees or such other higher amount as the Reserve Bank, may, by notification, specify.
  • Not less than two crore rupees or such other higher amount as the Reserve Bank, may, by notification, specify.
  • Not less than one crore rupees or such other higher amount as the Reserve Bank, may, by notification, specify.
Check Answer

Correct Option: C

Q.18:- Where the management of the business of a borrower being a company as defined in the Companies Act, 2013 is taken over by the secured creditor, then, notwithstanding anything contained in the said Act or in the memorandum or articles of association of such borrower:

  • No resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the secured creditor.
  • It shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company.
  • No proceeding for the winding up of such company or for the appointment of a receiver in respect thereof shall lie in any court, except with the consent of the secured creditor.
  • All of the above.
Check Answer

Correct Option: D

Q.19:- On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a to the authorised officer conducting the sale and in default of such deposit, the property shall be sold again.

  • Deposit of forty per cent of the amount of the sale price, which is inclusive of earnest money deposited, if any.
  • Deposit of thirty per cent of the amount of the sale price, which is inclusive of earnest money deposited, if any.
  • Deposit of twenty five per cent of the amount of the sale price, which is inclusive of earnest money deposited, if any.
  • Deposit of ten per cent of the amount of the sale price, which is inclusive of earnest money deposited, if any.
Check Answer

Correct Option: C

Q.20:- The sale of immovable property under the SARFAESI rules, in first instance shall take place before the expiry of from the date on which the public notice of sale is published in newspapers.

  • Forty days
  • Thirty days
  • Twenty days
  • Ten days
Check Answer

Correct Option: B

Q.21:- The possession notice of secured immovable assets shall be published, as soon as possible but in any case from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer:

  • not later than twelve days
  • not later than ten days
  • not later than seven days
  • not later than four
Check Answer

Correct Option: C

Q.22:- Where the possession of the secured assets to be taken by the secured creditor are movable property in possession of the borrower, the authorised officer shall take possession of such movable property:

  • In the presence of four witnesses after a Panchnama drawn and signed by the witnesses.
  • In the presence of three witnesses after a Panchnama drawn and signed by the witnesses.
  • In the presence of two witnesses after a Panchnama drawn and signed by the witnesses.
  • In the presence of one witness after a Panchnama drawn and signed by the witness.
Check Answer

Correct Option: C

Q.23:- Where the borrower is a body corporate, the demand notice shall be served:

  • On the registered office or any of the branches of such body corporate as specified under rule 3(1).
  • On the head office or any of the branches of such body corporate as specified under rule 3(1).
  • On the corporate office or any of the branches of such body corporate as specified under rule 3(1).
  • On the representative office or any of the branches of such body corporate as specified under rule 3(1).
Check Answer

Correct Option: A

Q.24:- "Authorised officer" means:

  • An officer not less than a Dy. General Manager of a public sector bank or equivalent, as specified by the Board of Directors.
  • An officer not less than a senior manager of a public sector bank or equivalent, as specified by the Board of Directors.
  • An officer not less than a chief manager of a public sector bank or equivalent, as specified by the Board of Directors.
  • An officer not less than a Asst. General Manager of a public sector bank or equivalent, as specified by the Board of Directors.
Check Answer

Correct Option: C

Q.25:- Secured creditor shall be entitled to take all or any of the measures under section 13(4), provided his claim in respect of the financial asset is made:

  • The period of limitation prescribed under the Limitation Act is suspended.
  • Ignoring the period of limitation prescribed under the Limitation Act.
  • And the period of limitation prescribed under the Limitation Act is not important.
  • Within the period of limitation prescribed under the Limitation Act.
Check Answer

Correct Option: D

Q.26:- The provisions of the SARFAESI shall not apply to:

  • A lien on any goods, money or security given by or under the Indian Contract Act, 1872 the Sale of Goods Act, 1930 or any other law for the time being in force.
  • Any case in which the amount due is less than twenty per cent of the principal amount and interest thereon.
  • Any security interest created in agricultural land
  • All of the above.
Check Answer

Correct Option: D

Q.27:- The Central Register of the Central Registry shall have the transactions relating to:

  • Creation of security interest.
  • Securitisation of financial assets
  • Reconstruction of financial assets
  • All of the above.
Check Answer

Correct Option: D

Q.28:- The Central Government may set-up a registry to be known as the Central Registry for the purposes of:

  • Registration of the Assets Reconstruction Companies.
  • Registration of transaction of securitisation.
  • Registration of transaction of securitisation and reconstruction of financial assets and creation of security interest under this Act.
  • Registration of financial transactions involving creation of security interest.
Check Answer

Correct Option: C

Q.29:- For making an appeal before the DRAT how much amount is required to deposited by the borrower:

  • Fifty per cent of the amount of debt due from the borrower, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less.
  • Forty per cent of the amount of debt due from the borrower, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less.
  • Thirty per cent of the amount of debt due from the borrower, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less.
  • Twenty per cent of the amount of debt due from the borrower, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less.
Check Answer

Correct Option: A

Q.30:- An application against measures to recover secured debts under section 17(1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction:

  • The branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being.
  • The cause of action, wholly or in part, arises
  • Where the secured asset is located
  • All the options are correct.
Check Answer

Correct Option: D

Q.31:- In the case of financing of a financial asset by more than one secured creditors or joint financing of a financial asset by secured creditors, no secured creditor shall be entitled to exercise any or all of the rights conferred on him under or pursuant to section 13(4) unless exercise of such right is agreed upon by the secured creditors representing not less than in value of the amount outstanding as on a record date and such action shall be binding on all the secured creditors:

  • Seventy five per cent
  • Sixty per cent
  • Forty per cent
  • Twenty per cent
Check Answer

Correct Option: B

Q.32:- If, on receipt of the notice under section 13(2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower.

  • Within twenty five days.
  • Within twenty days
  • Within fifteen days
  • Within ten days
Check Answer

Correct Option: C

Q.33:- Where on audit or inspection or otherwise, the Reserve Bank is satisfied that business of an asset reconstruction company is being conducted in a manner detrimental to public interest or to the interests of investors in security receipts issued by such asset reconstruction company, the Reserve Bank may, for securing proper management of an asset reconstruction company, by an order:

  • Appoint additional directors on the board of directors.
  • Appoint any of its officers as an observer to observe the working of the board of directors of such asset reconstruction company.
  • Remove the Chairman or any director.
  • All of the above.
Check Answer

Correct Option: D

Q.34:- Any asset reconstruction company registered under section 3, may:

  • Act as receiver if appointed by any court or tribunal
  • Act as an agent for any bank or financial institution for the purpose of recovering their dues from the borrower on payment of such fee or charges as may be mutually agreed upon between the parties
  • Act as a manager referred to in section 13(4)(c) on such fee as may be mutually agreed upon between the parties
  • All of the above.
Check Answer

Correct Option: D

Q.35:- The SARFAESI came into force on:

  • 21st day of August, 2002
  • 21st day of July, 2002
  • 21st day of June, 2002
  • 21st day of May, 2002
Check Answer

Correct Option: C

Q.36:- Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under section 13(4)

  • Non-performing asset/Ninety days
  • Performing asset/Ninety days
  • Non-Performing asset/Sixty days
  • Performing asset/Sixty days
Check Answer

Correct Option: C

Q.37:- An asset reconstruction company may, for the purposes of asset reconstruction, provide for:

  • The sale or lease of a part or whole of the business of the borrower
  • Rescheduling of payment of debts payable by the borrower
  • The proper management of the business of the borrower, by change in, or takeover of, the management of the business of the borrower
  • All of the above.
Check Answer

Correct Option: D

Q.38:- An asset reconstruction company aggrieved by the order of cancellation of certificate of registration may prefer an appeal, within a period offrom the date on which such order of cancellation is communicated to it, to the Central Government.

  • 30 days
  • 25 days
  • 20 days
  • 15 days
Check Answer

Correct Option: A

Q.39:- The SARFAESI Act extends to:

  • The whole of India except the State of Jammu & Kashmir.
  • The whole of India.
  • Only the State of Jammu & Kashmir
  • Only the Union Territories
Check Answer

Correct Option: B