DEFAULT – RIGHTS AND REMEDIES IN RESPECT OF IMMOVABLE PROPERTY
- Application: – This Part applies only to security interests in moveable
- Rights and remedies cumulative: – The rights and remedies mentioned in this Part are cumulative.
- (1) Rights and remedies of secured party: – where the debtor is in default under a security agreement, the secured party has the rights and remedies provided in the security agreement and the rights and remedies provided in this Part. When in possession of the collateral, the rights, remedies and duties provided in Section
- Enforcement by secured party: – The secured party may enforce a security interest by any manner allowed in this Part, or by any other method permitted by law including by way of Court order. If the collateral is or includes documents of title, the secured party may proceed either as to the documents of title or as the goods to which they apply, and any method of enforcement that is permitted with respect to the documents of title is also permitted, with necessary modifications, with respect to the goods covered by the documents of
- Rights and remedies of a debtor: – Where the debtor is in default under a security agreement, the debtor has the rights and remedies provided in the security agreement and the rights and remedies provided in this Part and in Section
- Non- waiver of rights and duties: – Despite Subsection (1), the provisions of Section 33 and Sections 51 to 54, to the extent that they give rights to the debtor and impose duties upon the secured party, shall not be waived or varied except as provided by this
- Where agreement covers both moveable and immovable property: – Where a security agreement covers both immovable and moveable property, the secured party may proceed under this Part as to the moveable property, or may proceed as to both the immovable and the moveable property in accordance with the secured party’s rights, remedies and duties in respect of the immoveable property, with all necessary modifications, as if the moveable property were immovable property, in which case this part does not
- Judgment does not terminate security interest:- A security agreement is not terminated merely because the claim has been reduced to judgment by the secured party or because the secured party has levied execution under such judgment on the
4. (1) Appointment of receivers permitted: –
- The partied to a security agreement may provide that the secured party may appoint a receiver and, except as provided by this Act, determining the rights and duties of the receiver by agreement; or
- A court of competent jurisdiction may appoint a receiver and determine the rights and duties of the receiver by
(2) Application to court:- Upon application of the secured party, debtor or any other person with an interest in the collateral, and after notice to any other person that the Court directs, the Court may,
- remove, replace or discharge the receiver and manager;
- give directions on any matter relating to the duties of the receiver;
- approve the accounts and fix the remuneration of the receiver;
- make any order with respect to the receiver that it thinks fit in the exercise of its general jurisdiction over a
- Collection rights of secured party: – Where so agreed and in any event upon default under a security agreement, a secured is entitled,
- to notify any person obligated on an account or on an instrument to make payment to the secured party whether or not the assignor was previously making collections on the collateral prior to such notice; and
- to take control of any proceeds to which the secured party is entitled under Section
- (1) Possession upon default: – Upon default under a security agreement,
- the secured party has, unless otherwise agreed, the right to take possession of the collateral without first obtaining a Court order, provided the taking of possession does not involve violent confrontation or breach of the peace;
- if the collateral is equipment and the security interest has been perfected by registration, the secured party may in a reasonable manner, render such equipment unusable without removal of the equipment from the debtor’s premises, and upon rendering the equipment unusable the secured party shall be deemed to have taken possession of such equipment; and
- the secured party may dispose the collateral on the debtor’s premises in accordance with Section
(2) Definition of equipment: – For the purpose of this Section equipment means goods that are not inventory, or goods that are not used or acquired for use primarily for personal, family or household purposes.
- (1) Court orders: – Where a secured party is unable to collect payments under Section 48, obtain possession under Section 49, or to enforce any other rights provided in the security agreement or this Part for any reason whatsoever, then upon application of the secured party to the Court and upon the secured party establishing that there has been a default under the security agreement which default entitles the secured party to the rights and remedies provided in the security agreement or this Part, then the Court shall issue an order enabling the secured party to proceed with respect to the moveable property in accordance with the secured party’s rights, remedies and
(2) Police required to enforce court orders: – Upon presentation, the Royal Bhutan Police must enforce orders of the Court under this Act.
- (1) Disposal of collateral: – Upon default under a security agreement, the secured party may dispose off any of the collateral in its condition either before or after any commercially reasonable repair, processing or preparation for disposition, and the proceeds of the disposition shall be applied consecutively to,
- the reasonable expenses of the secured party, including the cost of insurance and payment of taxes and other charges incurred in retaking, holding, repairing, processing and preparing for disposition and disposing of collateral and, to the extent provided for in the security agreement, any other reasonable expenses incurred by the secured party; and
- the satisfaction of the obligation secured by the security interest of the party making the disposition,
and the surplus, if any, shall be dealt with in accordance with Section 52.
- Methods of disposition: – Collateral may be disposed of in whole or in part, and any such disposition may be by public sale, private sale, lease or otherwise and, subject to Subsection (4), may be made at any time and place and on any terms so long as every aspect of the disposition is commercially
- Secured party’s right to delay disposition: – The secured party may delay disposition of all or part of the collateral for such period of time as is commercially
- Notice required: – Subject to Subsection (6), the secured party shall give not less than thirty days notice in writing of the matters described in Subsection (5) to,
- the debtor who owes payment or performance of the obligation secured;
- every person who is known by the secured party, before the date that the notice is served on the debtor, to be an owner of the collateral or a person who may owe payment or performance of the obligation secured;
- every person with a security interest in the collateral who has delivered a written notice to the secured party of their interest in the collateral before the date that the notice is served on the
- every person with an interest in the collateral who has delivered a written notice to the secured party of their interest in the collateral before the date that the notice is served on the
- Contents of Notice: – The notice mentioned in Subsection (4) shall set out,
- a brief description of the collateral;
- the amount required to satisfy the obligation secured by the security interest;
- the amount of the applicable expenses referred to in Subsection (1) (a) or, in a case where the amount of such expenses has not been determined, a reasonable estimate of such expenses;
- a statement that upon payment of the amounts due under Subsection (1) (b) and (c), any person entitled to receive notice may redeem the collateral;
- a statement that unless the amounts due are paid the collateral will be disposed off and the debtor may be liable for any deficiency; and
- the date, time and place of any public sale, or the date after which any private disposition of the collateral is to be
- Manner of giving notice, general rules: – A notice under this section shall be given by personal service or by registered mail addressed to the person to whom it is to be given at the person’s usual or last known place of address, or the address that is shown on the registered instrument under which the person acquired an interest in the
- When notice by mail effective: – A notice under this section shall, if given by registered mail, be mailed in Bhutan and such notice shall be deemed to have been given on the fifteenth day following the day on which it was
- Notice not required: – The notice mentioned in Subsection (4) is not required where,
- the collateral is perishable;
- the secured party believes on reasonable grounds that the collateral will decline rapidly in value;
- the collateral is of a type customarily sold on a recognized market;
- the cost of care and storage of the collateral is disproportionately large relative to its value;
- for any reason not otherwise provided for in this subsection, the Court, on an application made without notice to any other person, is satisfied that a notice is not required;
- after default, every person entitled to receive a notice of disposition under Subsection
(4) consents in writing to the immediate disposition of the collateral; or
- a receiver disposes off the collateral in the course of the debtor’s
- Secured party’s right to purchase collateral: – The secured party may buy the collateral, or any part of the collateral only to public sale unless the Court, on application, orders otherwise, or the debtor otherwise
- Effect on disposition of collateral: – Where collateral is disposed off in accordance with this section, the disposition discharges the security interest of the secured party making the disposition and, if the disposition is made to a buyer who buys in good faith for value, discharges also any security interest of lower priority and terminates the debtor’s interest in the collateral.
- (1) Distribution of surplus:- Where the secured party has dealt with the collateral under Section 48, or has disposed of it, the secured party shall account for and, subject to Subsection (4), pay over any surplus consecutively as follows,
- if no written claim of interest in proceeds is received by the secured party prior to disbursement, the secured party may proceeds over to the debtor;
- if written claims of interest in the proceeds are received by the secured party prior to
disbursement, the secured party may pay the proceeds into court and the surplus shall not be paid out except upon application under Section 55 by a person claiming entitlement thereto.
(2) Deficiency: – Unless otherwise agreed in the security agreement, or unless otherwise provided under this or any other Act, the debtor is liable for any deficiency.
- (1) Acceptance of collateral: – After default, a secured may propose to accept the collateral in satisfaction of the obligation secured. If the secured party decides to do so it must serve notice of the proposal on the persons mentioned in Subsection 51(4).
- Objection: – If any person whose interest in the collateral would be adversely affected by the secured party’s proposal, and who is entitled to notification under Subsection (1) delivers to the secured party a written objection within thirty days after service of the notice, the secured party shall dispose of the collateral in accordance with Section
- Proof of interest: – The secured party may require any person who has made an objection to the proposal to furnish proof of that person’s interest in the collateral and, unless the person furnishes the proof within ten days after demand by the secured party, the secured party may proceed as if no objection had been
- Application to judge:- Upon application to the Court by the secured party, and after notice to every person who has made an objection to the proposal, the Court may order that an objection to the proposal of the secured party is ineffective because,
- the person made the objection for a purpose other than the protection of the person’s interest in the collateral or in the proceeds of a disposition of the collateral; or
- the fair market value of the collateral is less than the total amount owing to the secured party and the estimated expenses recoverable under Subsection 51(1)(a).
- Foreclosure: – If no effective objection is made, the secured party is at the expiration of the thirty day period mentioned in Subsection (2), deemed to have irrevocably elected to accept the collateral in full satisfaction of the obligation secured. The secured party is entitled to the collateral free from all rights and interests in the collateral of any person entitled to notification under Subsection (1) whose interest is lower in priority to that of the secured party and who was served with such
- Effect of disposition: – When a secured party disposes of the collateral after expiration of the period mentioned in Subsection (5) and the buyer
- buys in good faith for value;
- who takes possession of the collateral or, in the case of an intangible, receives assignment of it,
the buyer acquires the collateral free from any interest of the secured party and the debtor and free from every interest which is lower in priority to that of the secured party.
- (1) Redemption of collateral: – At any time before the secured party has
- disposed off the collateral or contracted for such disposition under Section 51, or
- before the secured party shall be deemed to have irrecoverably elected to accept the collateral under Subsection 53 (5),
any person entitled to receive notice under Subsection 51 (4) may, unless the person has otherwise agreed in writing after default, redeem the collateral by tendering fulfillment of all obligations secured by the collateral together with a sum equal to the reasonable expenses referred to in Section 51(1) (a) incurred by the secured party.
(2) Where more than one wishes to redeem: – Where more than one person elects to redeem under Subsection (1), the priority of their rights to redeem shall be the same as the priority of their respective interests in the collateral.
- (1) Court orders and directions:- Upon application to the Court by the debtor, a creditor of the debtor, a secured party, a person who may owe payment or performance of the obligation secured, or any person who has interest in collateral which may be affected by an order under Section 50(1), the Court may,
- make any order, including binding declarations of rights and injunctive relief, that is necessary to ensure compliance;
- give directions to any party regarding the exercise of the party’s rights or the discharge of the party’s
- make any order necessary to determine questions of priority or entitlement in, or to the collateral or its proceeds;
- relieve any party from compliance with the requirements of the Act, but only on terms that are just for all parties concerned;
- make any order necessary to ensure protection of the interests of any person in the collateral, but only on terms that are just for all parties concerned; and
- make an order requiring a secured party to make good any default in connection with the secured party’s custody, management or disposition of the collateral of the debtor,
or to relieve the secured party from any default on such terms as the Court considers just, and to confirm any act of the secured party.
- Compensation for loss or damages: – Where a person fails to discharge any duties or obligation imposed upon the person by the Part IV, Section 33 or Subsection 41(1) or (2), the person to whom the duty or obligation is owed has a right to recover compensation equal to the actual loss or damage suffered because of the
- Obligations under this Act cannot be waived:- Except as otherwise provided in this Act, any provisions in any security agreement which attempts to exclude any duty or obligation imposed under this Act, or to exclude or limit liability for failure to discharge duties or obligation imposed by this Act is
- Extension or abridgment of time: – Where in this Act a time is prescribed within which, or before which any act or thing must be done, the Court, on an application without notice to any other person, may extend or abridge the time for compliance on terms that the Court considers just, but the Court may not extend or abridge times stipulated in Part III, VI and in this