The Kerala High Court has ruled that a demand notice to be valid and effective in law should be issued by a secured creditor or its authorized officer and not by their lawyer.
The petitioners (debtors) defaulted on a home loan and hence were served with a demand notice by the creditor through their lawyer.
Petitioners contend that a lawyer is not competent to issue a repayment notice, as he is not an authorized officer of the bank within the meaning of section 2(a) of the Security Interest (Enforcement) Rules, 2002. Under section 2(b) of the Security Interest Rules, a notice to be valid and effective in law ought to be issued by a secured creditor or an authorized officer.
Accepting petitioners’ contention, the Court ruled that only an officer of the bank, as specified by the Board of Directors, can issue a notice of demand of demand under Section 13(2) of the Act as contemplated under Rule 2(b) of the Security Interest Rules, 2002.